California Is The ‘Poverty Capital Of America’

“Guess which state has the highest poverty rate in the country? Not Mississippi, New Mexico, or West Virginia, but California, where nearly one out of five residents are poor.”   L.A. Times Kerry Jackson.

California has only 12% of the American population, it is home to about 1/3 of the nation’s welfare recipients.

The GDP of California increased approximately twice as much as the U.S. national average (12.5%, compared with 6.27%).

California policymakers waged a war on poverty, spending between the years 1992 and 2015 $958 billion in social welfare programs.

“The generous spending, then, has not only failed to decrease poverty; it actually seems to have made it worse,” states L.A. Times Kerry Jackson.

Why?

In the late 1980s and early 1990s, some states — principally Wisconsin, Michigan, and Virginia — initiated welfare reform, as did the federal government under President Clinton and a Republican Congress. Tied together by a common thread of strong work requirements, these overhauls were a big success: Welfare rolls plummeted and millions of former aid recipients entered the labor force.

The state and local bureaucracies that implement California’s antipoverty programs, however, resisted pro-work reforms. In fact, California recipients of state aid receive a disproportionately large share of it in no-strings-attached cash disbursements. It’s as though welfare reform passed California by, leaving a dependency trap in place. Immigrants are falling into it: 55% of immigrant families in the state get some kind of means-tested benefits, compared with just 30% of natives.  LATimes

Lack of welfare reform that would require those receiving government assistance to work.

So the first answer Jackson gives to the question, why would poverty be rising even in the face of this incredible anti-poverty spending? Is the fact that there is a decoupling, a moral decoupling of receiving the benefits and the expectation of work. As I’ve pointed out many times, that’s a biblical principle now verified in public policy. AlbertMohler

The self-interest of 883,000 full-time employees of the social-services community.

Self-interest in the social-services community may be at fault. As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort and security. To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its “customer” base. With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.  LATimes

The high cost of living is a disincentive to work.

Further contributing to the poverty problem is California’s housing crisis. More than four in 10 households spent more than 30% of their income on housing in 2015. A shortage of available units has driven prices ever higher, far above income increases. And that shortage is a direct outgrowth of misguided policies.

“Counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings,” explains analyst Wendell Cox. “Middle-income households have been forced to accept lower standards of living while the less fortunate have been driven into poverty by the high cost of housing.” The California Environmental Quality Act, passed in 1971, is one example; it can add $1 million to the cost of completing a housing development, says Todd Williams, an Oakland attorney who chairs the Wendel Rosen Black & Dean land-use group. CEQA costs have been known to shut down entire homebuilding projects. CEQA reform would help increase housing supply, but there’s no real movement to change the law.

Extensive environmental regulations aimed at reducing carbon dioxide emissions make energy more expensive, also hurting the poor. By some estimates, California energy costs are as much as 50% higher than the national average. LATimes