The official poverty measure published annually by the US Census Bureau does a poor job of capturing the true extent of economic hardship in California. This is because it doesn’t account for the high cost of housing in many parts of the state, and it doesn’t factor in many of the non-cash public supports (such as CalFresh food assistance) and post-tax supports (like the Earned Income Tax Credit (EITC)) that families use to meet basic needs.
To address these shortcomings, the Census Bureau developed the Supplemental Poverty Measure (SPM), which offers a much more accurate picture of poverty in California (and shows a much higher poverty rate in our state than the official poverty measure). While the SPM can only be used to measure poverty at the state level, a related measure developed by the Stanford Center on Poverty and Inequality and the Public Policy Institute of California (PPIC) — the California Poverty Measure (CPM) — can be used to examine how levels of poverty vary within California.
A recently released update of the CPM data published by PPIC shows that economic hardship is considerably higher in many parts of the state under this better measure of poverty. In fact, in over 20 counties — primarily urban, coastal counties with high housing costs — the CPM poverty rate is much higher than the official poverty rate (see figures below). These include five counties (Santa Cruz, San Francisco, Santa Barbara, San Mateo, and Orange) where the CPM poverty rate exceeds the official poverty rate by over 9 percentage points. In Santa Cruz, for example, about 1 in 4 county residents live in poverty based on the CPM (24.8 percent) — 11.0 percentage points higher than the official poverty rate (13.8 percent). In other words, the CPM shows that economic hardship is more widespread than the official poverty figures suggest in parts of the state where the cost of living is high. This is not only because high housing costs in these places make it harder for families and individuals to make ends meet, but also because many public supports that reduce poverty, such as the EITC, generally don’t account for differences in the cost of living. In other words, households in high-cost areas do not receive more assistance than similar households in low-cost areas even though they likely need more assistance to cover basic expenses.
Not all of California’s counties have higher rates of hardship under this better measure. In several Central Valley counties, where local housing costs are relatively low, poverty rates are lower based on the CPM. In Tulare County, for instance, 22.1 percent of residents live in poverty based on the CPM — 6.0 percentage points lower than the official poverty rate (28.1 percent). The CPM poverty rate is also lower than the official poverty rate in Fresno, Merced, and Kern counties. This does not mean that economic hardship is less severe in these counties. In fact, these places have among the highest poverty rates in the state by any measure. Rather, the CPM shows that the level of economic hardship is not exacerbated by high costs of living in these counties. In addition, public supports that reduce hardship are more effective at cutting poverty (as measured with the CPM) in low-cost places since eligibility and benefit levels are generally determined based on the official poverty line, and the CPM poverty line is similar to the official poverty line in places with a low cost of living.
In nearly half of California’s counties, there is not a detectable difference between the CPM and the official poverty rate. These include several counties, such as Sacramento, San Bernardino, and San Joaquin, where the gap between the two poverty rates is very small. These also include less populous counties, such as those in the Sierra Nevada, where the poverty estimates are based on samples that are not large enough to detect a meaningful difference between the two poverty rates.
— Alissa Anderson and Sara Kimberlin