As Californians are often reminded, the state is the fifth largest economy in the world and is currently enjoying a recovery from the Great Recession. However, with one of the highest child poverty rates in the country, California’s good fortune is not widely enjoyed. Under the Supplemental Poverty Measure, which accounts for the high cost of living in many parts of California, more than 2 million (22.4%) children live below the poverty threshold, while just under 550,000 (6.0%) live in deep poverty (half the poverty threshold). Deep poverty imposes significant costs to children and to the state, impeding the development of a healthy society and economy. State policymakers should make a concerted effort to combat deep child poverty and better invest in California’s children and families because we all benefit when everyone has the opportunity to succeed.
What Does Deep Poverty Look Like in California?
Poverty is most often defined in terms of the official federal poverty measure, under which California’s child poverty and deep child poverty rates are 20% and 8%, respectively. Overall, around 5.5 million state residents have incomes below the official federal poverty line — about $19,750 for a single adult with two kids. Within this population, more than 2 million people have incomes below half the poverty line, living with an annual cash income of less than $9,875 for a family of three. These families have to struggle to survive on less than $200 in cash income a week in a high cost state. With such low incomes, Californians living in deep poverty can barely meet their most basic needs of food, housing, and clothing, without even accounting for child care, education, or transportation. These challenges are particularly salient for women and children, who are disproportionately affected by deep poverty relative to their share of the overall state population. Under the official federal poverty measure, more than one-half (55%) of those in deep poverty are female, while 30% of Californians living in deep poverty are children. Children of color also bear greater risk, with 15% of African American children and 10% of Latino/a children living in deep poverty, compared to 4% of white children.
A Work-Focused Safety Net Has Left Millions Behind
Deep poverty has risen in the US as policymakers have weakened the safety net for those with the lowest income through cuts and a growing focus on working families and individuals. In 1996, federal policymakers replaced Aid to Families with Dependent Children (AFDC), which had provided cash assistance to families with little or no earnings, with the Temporary Assistance for Needy Families (TANF) block grant, which introduced time limits and work requirements, and limited low-income families’ access to cash assistance, causing many to fall deeper into poverty. This focus on work ignores those who face significant personal and structural employment barriers, such as the majority of Californians age 25 or older living in deep poverty who had not worked in the past year. Many of these adults face challenges such as physical disabilities, poor mental and physical health, homelessness, and low levels of educational attainment. For those that are working, they often face obstacles of not being able to obtain enough work or enough well-paying work (relative to other costs, such as child care). As a result, it is unlikely that these Californians are not working simply because they lack sufficient resolve. These challenges make it difficult to move up the economic ladder, even preventing families from making use of TANF’s employment services. According to research on parents who reached their time limits or did not comply with welfare-to-work rules, almost nine in 10 (89%) faced at least two significant barriers to work.
California’s Policy Decisions Have Kept Some Families in Deep Poverty
In California, state leaders’ decisions have not always made things better. During the Great Recession, the state made significant reductions to the California Work Opportunity and Responsibility to Kids (CalWORKs) program, which is California’s version of TANF. By eliminating the annual state cost-of-living adjustment (COLA), shortening time limits from 60 months to 48 months, and cutting cash grants for families, state policymakers squeezed families at the very bottom. Recent years’ budgets have incrementally increased CalWORKs grant levels, but this has not been adequate to restore cuts made in prior years. Absent a significant grant increase in the 2018-19 fiscal year, the annualized maximum grant for a family of three in a high-cost county will equal just 41.2% of the poverty line, leaving it below the deep-poverty line for the eleventh straight calendar year. Meanwhile, state policymakers have continued to divert a significant share of California’s TANF dollars (at least $1.1 billion annually since 1998-99, when adjusting for inflation) to the state’s General Fund instead of investing in cash grants and support services for CalWORKs families.
Deep Child Poverty Comes at a Cost to California
Living in poverty imposes substantial costs on children and their families. Individuals who experience poverty during their childhood are more likely to face poverty as adults, compared to those who were never poor. When family incomes cannot meet basic needs, children can have difficulty concentrating in school, face increased illness in crowded housing, and experience increased levels of stress, which undermines the immune system and impairs neurological development. Allowing poverty to persist threatens prosperity for all of us because it puts our state’s future at stake. Living in poverty for any amount of time limits opportunities for children to reach their full-potential and the entire community suffers that lost potential. However, deep poverty poses particular challenges, both for children and for California in the long-term.
- Deep poverty significantly limits a child’s chances of success. According to one national study, 14% of those who were born in deep poverty will be deeply poor at age 40, a disadvantage three times greater than for those not born into deep poverty. Additionally, 40% of children born to deep poverty will stay in the bottom income quintile, compared to 30% of poor (but not deeply poor) children and 18% of kids born into middle-income families. Indeed, being born into deep poverty lowers the chance that a child will succeed in all stages of life, with the gap between the deeply poor and the poor growing over time.
- Deep poverty is also associated with worse health outcomes. Three times as many young kids in deep poverty have elevated blood lead levels (indicating lead exposure requiring case management) as do other poor children. There are no safe levels of lead exposure, which has been linked to a variety of negative outcomes, including learning disabilities and attention disorders, lower educational attainment, various chronic illnesses, or even death. Research suggests that the economic benefits of reducing children’s exposure to lead are substantial, including large savings to health care and criminal justice systems, as well as billions of dollars in increased earnings and tax revenue. Young children in deep poverty are also more likely to be obese than other poor children. Obesity is associated with higher risks of developing other chronic conditions and can trigger high health costs, ranging from $12,660 to $19,000 per child, according to some national estimates.
State Policymakers Have the Tools to End Deep Poverty
Faced with seemingly overwhelming statistics and prospects of negative outcomes, it can be tempting to throw our hands up in defeat or brush this “intractable” problem aside to tackle “one day.” However, the good news is that we already know that public policies can greatly reduce poverty and deep poverty. According to Budget Center calculations applying the California Poverty Measure, the child poverty rate would have been two-thirds higher in 2015 without public supports. Additionally, researchers at the Public Policy Institute of California determined that without CalWORKs, 186,400 more Californians would be in deep poverty (91,600 adults and 94,900 children).
Expanding and shoring up state public supports can do even more for the children still left in deep poverty. Specifically, state policymakers can:
- Increase cash assistance through CalWORKs. The maximum CalWORKs grant does not provide enough support on its own to lift a parent raising two children above the deep poverty line. Policymakers should raise the CalWORKs grant so no family has to live in deep poverty. Furthermore, state leaders should restore the annual state COLA to ease the impact of inflation, as the maximum grant has lost more than one-quarter of its purchasing power since 2007-08.
- Expand efforts to promote awareness of the CalEITC. The CalEITC is California’s refundable state earned income tax credit, which boosts the incomes of low-earning workers and their families and helps them afford basic expenses. The CalEITC provides the largest credits to families with children with very low earnings, including many families in deep poverty. However, according to a 2016 Budget Center survey of visitors to county human services offices, most people who were likely eligible for the CalEITC had not even heard of it. Moreover, only half of likely eligible respondents had filed their taxes, as many people who qualify for the CalEITC are not required to file state income taxes. State policymakers should use state data to better assess CalEITC utilization gaps, increase support for community-based efforts to promote the credit, and support promotional efforts at county human services offices.
- Expand and promote free tax preparation services for CalEITC recipients. The majority of families who do claim the CalEITC do not receive the full benefit of the credit because they’ve paid commercial tax preparers to file their taxes, likely losing a substantial portion of their tax refunds to tax prep fees. Expanding free tax prep services like Volunteer Income Tax Assistance sites would allow more families to receive their full tax refunds and better target California’s investment in the CalEITC to the families it’s intended to reach.
- Increase participation in CalFresh, which provides vital food assistance to low-income Californians. Between 2009 and 2012, CalFresh lifted close to an average of 260,000 children out of deep poverty each year, under the Supplemental Poverty Measure. CalFresh will provide food assistance to an estimated 4 million Californians on average each month during the 2017-18 state fiscal year, but currently does not reach about 30% of those who are eligible. Expanding participation in the program would lift even more Californians out of deep poverty.
- Continue to increase payment rates for subsidized child care providers, including license-exempt providers. For those families in deep poverty who are able to work, subsidized child care and development programs can increase parents’ employment and earnings while reducing the chance that parents miss work or cut back on their hours due to child care needs. Families access subsidized child care via licensed providers that contract directly with the state or by using vouchers to select the child care provider (licensed or license-exempt) that is best for them. Many low-income mothers rely on license-exempt providers — typically relatives and friends — to watch their children on short notice or during non-traditional work hours. However, during the Great Recession policymakers failed to update the payment rates for subsidized child care providers, and even cut the payment rate for license-exempt care. Recent investments in provider payment rates have resulted in modest gains, but policymakers have much further to go. The current reimbursement rate for license-exempt providers is 70% of the licensed rate, down from 90% in 2007-08. For license-exempt providers who watch children on a part-time basis, the payment rate is even lower. If reimbursement rates are not increased annually to keep pace with the minimum wage, this will continue to place a strain on providers that offer subsidized care, making them less willing to accept vouchers and limiting families’ access to child care and their ability to work enough to raise their incomes.
In the coming days, the Assembly and Senate will agree on a budget proposal, which could include some of the policy recommendations mentioned in this blog post. That budget proposal will then need Governor Brown’s approval, meaning that these negotiations are an important chance for the Legislature and the Governor to make a clear statement through the budget that California is committed to ending deep child poverty and to investing in the state’s children and families. If they fail to act, all Californians will continue to bear the serious economic and social costs of our children living in deep poverty.
— Esi Hutchful