Key Facts About the Governor’s Proposed Budget, Part 5: Many Californians Still Hurting in the Aftermath of the Recession

February 6, 2013

This is the latest in a CBP chart series highlighting some of the most important aspects of Governor Brown’s 2013-14 budget proposal and the context for it.

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As pointed out earlier in this chart series, the significant new revenues approved by voters in November have positioned California to turn the corner on years of severe budget shortfalls. But with the state’s fiscal situation improving, it is important that policymakers not lose sight of the fact that millions of Californians continue to suffer in the wake of the Great Recession.

California’s poverty rate is at its highest point in 15 years and has increased by more than one third — from 12.2 percent to 16.9 percent — since the year before the Great Recession began. About one in six Californians were living in poverty in 2011, according to the most recent Census figures. That means that there are more Californians living in poverty than there are residents of the cities of Los Angeles, San Diego, and San Francisco combined.

California’s child poverty rate is even higher than that of the population as a whole, with approximately one out of four children (24.3 percent) living in poverty in 2011. The long-term consequences for children raised in poverty include lower levels of educational attainment and lower earnings as adults. Childhood poverty not only can mean a life of hardship for individual children — a reason for concern in its own right — but also can impose significant costs on society as a whole through these children’s lost potential.

Meanwhile, California’s weak job market poses a serious and persistent challenge. The state’s current jobless rate of 9.8 percent is still nearly double the rate before the Great Recession began. Only recently — in November 2012 — did the jobless rate finally reach single digits after spending 45 consecutive months in double figures. Long-term unemployment remains near a record high, with more than one in three of California’s unemployed reporting that they have been searching for a job for at least one year.

Our state’s budget policy choices should reflect the fact that many Californians are still confronting the harsh aftereffects of the Great Recession. As lawmakers consider the Governor’s budget proposal and work toward a budget agreement in the coming months, priority should be given to strengthening programs and services — such as child care — that help individuals find and keep jobs and also to ensuring a strong social safety net for those struggling to make ends meet. Wise investment of state dollars can help blunt the impact of our state’s economic challenges while also speeding the state’s recovery and laying the groundwork for widely shared prosperity over the long term.

— Phaelen Parker

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State Poverty Rate Remains at One in Six

September 12, 2012

Census Bureau data released today show that 6.4 million Californians – about one in six state residents – were living in poverty in 2011. That means there were more Californians living in poverty last year than there were residents of the cities of Los Angeles, San Diego, and San Francisco combined. The state’s poverty rate increased by a statistically significant 4.7 percentage points from 12.2 percent in 2006, the year before the Great Recession began, to 16.9 percent in 2011 – the highest poverty rate in 15 years. The change in the poverty rate between 2010 and 2011 was not statistically significant.

Children represent a disproportionate share of Californians living in poverty. While individuals under age 18 accounted for only one-quarter (24.7 percent) of the state’s residents in 2011, they accounted for more than one-third (35.6 percent) of Californians living in poverty that year. The child poverty rate also far exceeds that for adults. Approximately one out of four children (24.3 percent) lived in poverty last year, compared to 15.6 percent of Californians ages 18 to 64.

California’s child poverty rate is particularly troubling given research documenting lasting consequences for children raised in poverty, from lower levels of educational attainment to lower earnings as adults. Childhood poverty not only can mean a life of hardship for individual children – a reason for concern in its own right – but also can impose significant costs to society as a whole through these children’s lost potential.

The Census data released today highlight the importance of fostering a faster recovery in California’s job market by avoiding deeper state spending cuts that cost jobs. Poverty tends to rise and fall in tandem with unemployment, and the state’s jobless rate has remained stubbornly high – in recession-like double digits – due to limited job growth since the national recession ended more than three years ago. As we documented in a recent report, continued job losses due to budget cuts are partly to blame for holding back California’s job market recovery. K-12 public schools and community colleges, for example, have lost tens of thousands of jobs since the downturn ended, and these job losses have offset a portion of the state’s private sector job gains.

This November, voters will have the opportunity to approve new revenues that not only would prevent significant midyear cuts to public schools, colleges, and universities – the building blocks of a strong economy – but also could help avoid deeper cuts to the state’s social safety net at a time when millions of Californians remain in poverty in the aftermath of the Great Recession. By raising significant new revenues – predominantly from the wealthiest 1 percent of Californians – Proposition 30 would begin to reverse years of disinvestment in our state and create a solid foundation on which to rebuild, as we discuss in our analysis of the measure published yesterday.

– Alissa Anderson

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Falling Behind

February 2, 2012

A new CBP report, Falling Behind: The Impact of the Great Recession and the Budget Crisis on California’s Women and Their Families, looks at the economic downturn’s effect on the state’s women, especially low-income women and single mothers.

The report shows that the budget crisis has resulted in severe cuts to supports for families as well as to programs that help women prepare for, find, and keep employment. These include major spending reductions to CalWORKs as well as to child care, Medi-Cal, in-home care, and postsecondary education. The report also shows that these cuts have come amid an economic downturn that has been hard on California’s women, especially single mothers.

The report finds that:

  • Employment and earnings among single mothers have dropped significantly during the economic downturn. In just three years – from 2007 to 2010 – the share of single mothers with jobs fell by more than 10 percentage points to 59 percent, its lowest point in almost 15 years, while the percentage of single-mother families living in poverty jumped to 36 percent.
  • The state cut a total of more than $3 billion from CalWORKs between 2008-09 and 2011-12, equal to about $3,000 for each of the 1.1 million children in the program.
  • The state has cut child care and preschool funding by a total of $1.5 billion over the past three years, eliminating services for tens of thousands of children – including 35,000 children in the current year alone.
  • Since 2007-08, state support for community colleges has dropped by almost one-fifth. Community college enrollment has dropped by almost 130,000 during this period, with women accounting for more than 80 percent of the decline.

Support for Falling Behind was provided by a grant from the Women’s Foundation of California. You can read the full report here and an executive summary of the report here.

– Steven Bliss

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Deep Poverty Stands in Stark Contrast to Vast Wealth

September 23, 2011

Additional Census Bureau data released yesterday provide a fuller picture of the Great Recession’s human cost. The share of the population living in deep poverty, with incomes below half of the federal poverty line (FPL), increased in 40 states, including California, between 2007 and 2010. Last year, more than two out of five Californians living in poverty – 2.5 million people – had annual incomes below half of the FPL, which was just $11,000 for a family of four with two children. That’s an income well below what’s sufficient for an adequate standard of living, particularly considering California’s high cost of living. Fair market rent for a two-bedroom apartment in Los Angeles, for example, totaled $17,000 last year.

The depth of poverty of millions of Californians stands in stark contrast to the vast wealth in our state. The latest Franchise Tax Board (FTB) data show that millionaires, who represent just 0.2 percent of California personal income taxpayers, had combined adjusted gross incomes of $104 billion in 2009. That’s 11 times the income needed to lift every single Californian out of poverty ($9.3 billion), according to the latest Census data. The data also show that California ranks seventh in the nation for the widest gap between rich and poor. That gap has widened in both California and the nation as a whole over the past generation as income gains largely accrued to the very top of the distribution. The total income for all of California’s taxpayers increased by over $200 billion between 1987 and 2009 – the longest period for which FTB data are available. More than a third of that increase (35.5 percent) – about $78 billion – went to the wealthiest 1 percent. That’s an amount just less than the size of California’s 2011-12 budget going to fewer than 145,000 people – approximately equal to the number of residents of Humboldt County.

– Alissa Anderson

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Rising Poverty Could Limit Our Future

September 14, 2011

The income and poverty data released yesterday by the Census Bureau paint a sobering portrait of the economic hardship facing millions of Californians, many of them children. Last year, 2.2 million California children lived in poverty. This is nearly one out of four (23.4 percent) of the state’s children, up from 18.1 percent in 2006, the year before the recession began. In fact, the number of children living in poverty in 2010 exceeded the combined populations of the cities of San Diego and San Francisco.

We all should be deeply concerned about rising poverty among California’s children. Poverty imposes enormous costs on society through the lost potential of children who grow up in families with very low incomes. Children raised in poverty tend to have lower levels of educational attainment and lower earnings as adults, and they are more likely to remain in poverty later in life. That means rising poverty could diminish the productivity of our future workforce and limit our ability to compete in an increasingly globalized economy.

Even poverty brought about by downturns in the economy can have devastating consequences for children. One analysis of families who fell into poverty during a national recession concluded that the children in those families:

Will live in households with lower incomes, they will earn less themselves, and they have a greater chance at living in or near poverty as adults. They will achieve lower levels of education, and they will be less likely to be gainfully employed. Children who experience recession-induced poverty will even have poorer health than their peers who [stay] out of poverty during the childhood recession.

Given that the Great Recession was far more severe than any downturn in recent history, its impact on children – and society as a whole – is likely to be more substantial than that of prior recessions, with longer-lasting consequences.

Rising childhood poverty highlights the need for policymakers to provide a solid safety net for families most affected by the downturn. Even a modest boost to very low-income families’ incomes – such as the boost provided by the federal Earned Income Tax Credit – can increase children’s opportunities later in life. Research shows that a $3,000 annual increase in income for families with incomes below $25,000 can boost the future earnings of children raised in those families by nearly 20 percent.

– Alissa Anderson

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