Dan Walters

By Dan Walters
July 18, 2015

  • California’s official poverty rate isn’t bad
  • Its real poverty rate is among nation’s highest
  • More jobs would be the best cure for malady

When the Census Bureau began calculating poverty a half-century ago – as a “war on poverty” became a hot issue in Washington – it devised a rather simple formula.

The formula defined income that would be counted – excluding non-cash income such as food stamps and housing subsidies – and applied it to a narrow “market basket” of food and other living necessities.

All the data were nationwide, with no adjustments for regional or local differentials.

By the official poverty index, California doesn’t fare too badly, with 17 percent of its residents impoverished, a bit above the national rate of 15.9 percent.

However, it’s long been recognized that the formula is flawed, not only because it excludes some kinds of income, but because its living costs are incomplete and there is no adjustment for the very wide differences in housing and other costs from state to state and community to community.

Responding to the criticism, the Census Bureau a few years ago promulgated an alternative method that addressed those deficiencies. And by that formula, California’s poverty rate climbed to 24.3 percent, the nation’s highest, due mostly its very high costs of housing.

Subsequently, the Public Policy Institute of California used a similar method to calculate poverty for the state’s 58 counties that revealed wide geographic differences.

Last week, United Ways of California released results of an even more sophisticated, cost-based study of poverty. Its “real cost measure” concluded that 31 percent of California’s households “struggle each month to meet basic needs,” also with wide variances among ethnic groups and communities.

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