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key takeaway

More than 6 in 10 households in California earning less than $35,000 had difficulty paying for basic expenses from March to mid-July of 2023.

All Californians should be able to put food on the table, keep themselves and their families safely housed, and thrive in their communities. However, high costs of living, inflation, and the end of pandemic-era supports, such as CalFresh emergency food benefits and the expanded federal Child Tax Credit, put a strain on the ability of Californians to make ends meet.

Not everyone bears these challenges equally. Californians with the lowest incomes are hit the hardest when basic costs go up. More than 6 in 10 households in California earning less than $35,000 had difficulty paying for basic expenses such as food, housing, and medical costs from March to mid-July of this year.

A bar chart showing the share of households reporting difficulty paying for basic expenses where Californians with low incomes were the most likely to struggle to pay for basic expenses from March to July of 2023.

Black, Latinx, and other Californians of color were more likely to struggle paying for basic expenses. Past racist policies and ongoing discrimination have made Californians of color more likely to have low incomes. For example, more than half (54%) of Black Californians reported facing difficulty paying for essential needs like food and housing. Additionally, LGBTQ+ individuals in the state disproportionately struggle to afford basic expenses.

A bar chart showing the share of households reporting difficulty paying for basic expenses where Black, Latinx, and other Californians of color were most likely to struggle paying for basic expenses.

Many California households with children are also struggling to pay for basic expenses. This is even more pronounced in households with low incomes. Overall, almost half of all California households with children (46%) struggled to pay for basic expenses between March and mid-July, compared to 35% of households without children. Among households with incomes under $35,000, over half (59%) of those without kids struggled paying for basic necessities. And while that share is very high, it’s even higher for households with low incomes and children — 71%, or 12 percentage points higher.

A bar chart showing the share of households reporting difficulty paying for basic expenses where households with children, especially those with low incomes, were more likely to struggle paying for basic expenses.

Millions of Californians are struggling to make ends meet every day. This is especially true for those with low incomes, Black, Latinx, and other Californians of color, and households with children. Pandemic-era supports that helped families and individuals pay for basic needs in recent years have expired. However, inflation and the high cost of living relative to workers’ earnings continue to strain families’ budgets. This points to the urgent need for policymakers to further invest in resources to ensure that all Californians can thrive. This includes affordable housing, affordable health care, and a strong safety net. In a state as wealthy as California, policymakers have the tools to build communities where all can share in our state’s prosperity.

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key takeaway

Nearly six in 10 Californians say that recent price increases have caused hardship. Strengthening the state’s refundable income tax credits is a proven way policymakers can improve Californians’ economic security.

Every Californian deserves to be able to put food on the table, pay the rent, and support their families. But millions of people across California struggle to make ends meet every day. Although inflation has slowed in recent months, the cost of basic needs like food and housing remain high and continue to strain family budgets.

Nearly six in 10 Californians say that price increases have caused hardship. Additionally, nearly half — including 63% of low-income Californians — say that their housing costs are placing a financial strain on them and their families. On top of this, the number of Californians living in poverty has likely risen because policymakers let pandemic supports expire. This includes emergency food assistance and expansions of the federal Earned Income Tax Credit (EITC) and Child Tax Credit.

A key and proven way policymakers can improve Californians’ economic security is by strengthening the state’s refundable income tax credits. These tax credits provide tax refunds to people with low incomes. California’s largest of such credits — the California Earned Income Tax Credit (CalEITC) — helps millions of Californians with low incomes meet basic needs each year.

Last year, the CalEITC put over $700 million back in the pockets of workers with low incomes and their families. So far this year, it’s provided well over $800 million. These dollars help families and individuals. Additionally, it supports local businesses, jobs, and economies by boosting the spending power of tax credit recipients. Research on the expanded federal Child Tax Credit as well as the federal EITC shows that the vast majority of families with low incomes spend their credits on basic household needs, with food being the most common expense.

Increasing the amount of cash provided through the CalEITC is a simple, effective way for state policymakers to help more Californians in working families make ends meet while also supporting local businesses and jobs. This investment is especially imperative now that federal pandemic supports have expired. This expiration makes it more difficult for many Californians to make ends meet. Tens of thousands of households in every legislative district across the state currently benefit from the CalEITC. Further investments in the credit could inject significant resources into their communities.

Assembly District Order

Assembly DistrictAssemblymemberPartyNumber of Households Benefitting from the CalEITC Tax Year 2021Amount of CalEITC Credits Going to Households Tax Year 2021
1Megan DahleRepublican38,800$7,307,300
2Jim WoodDemocrat40,900$7,511,700
3James GallagherRepublican44,900$9,364,300
4Cecilia M. Aguiar-CurryDemocrat34,700$6,171,900
5Joe PattersonRepublican27,500$4,552,000
6Kevin McCartyDemocrat45,200$9,098,200
7Josh HooverRepublican39,300$7,274,100
8Jim PattersonRepublican40,900$7,736,200
9Heath FloraRepublican39,700$7,596,200
10Stephanie NguyenDemocrat49,000$10,131,400
11Lori D. WilsonDemocrat38,300$7,196,200
12Damon ConnollyDemocrat27,100$4,651,000
13Carlos VillapuduaDemocrat48,400$11,172,200
14Buffy WicksDemocrat30,400$5,364,700
15Timothy S. GraysonDemocrat38,000$7,510,100
16Rebecca Bauer-KahanDemocrat16,900$2,438,600
17Matt HaneyDemocrat31,200$5,287,000
18Mia BontaDemocrat37,500$7,570,200
19Philip Y. TingDemocrat27,400$3,949,300
20Liz OrtegaDemocrat35,700$6,276,200
21Diane PapanDemocrat20,700$3,417,000
22Juan AlanisRepublican47,900$10,521,200
23Marc BermanDemocrat15,300$2,272,100
24Alex LeeDemocrat24,900$3,892,500
25Ash KalraDemocrat39,700$7,222,400
26Evan LowDemocrat19,700$3,151,700
27Esmeralda Z. SoriaDemocrat61,500$14,809,700
28Gail PellerinDemocrat22,000$3,498,000
29Robert RivasDemocrat51,100$11,484,600
30Dawn AddisDemocrat31,600$5,232,100
31Dr. Joaquin ArambulaDemocrat65,800$17,041,200
32Vince FongRepublican47,100$10,464,000
33Devon J. MathisRepublican60,800$15,246,800
34Tom LackeyRepublican49,300$11,402,400
35Jasmeet Kaur BainsDemocrat67,500$17,022,400
36Eduardo GarciaDemocrat60,100$14,462,800
37Gregg HartDemocrat40,700$8,009,800
38Steve BennettDemocrat46,200$9,110,500
39Juan CarrilloDemocrat60,500$15,277,800
40Pilar SchiavoDemocrat40,600$6,916,900
41Chris R. HoldenDemocrat35,500$6,024,500
42Jacqui IrwinDemocrat28,700$4,279,200
43Luz M. RivasDemocrat64,000$13,048,000
44Laura FriedmanDemocrat42,500$6,309,100
45James C. RamosDemocrat61,900$14,078,900
46Jesse GabrielDemocrat50,500$9,333,600
47Greg WallisRepublican48,200$9,378,200
48Blanca E. RubioDemocrat53,200$9,508,500
49Mike FongDemocrat53,200$8,654,500
50Eloise Gómez ReyesDemocrat54,200$10,656,200
51Rick Chavez ZburDemocrat36,900$5,207,900
52Wendy CarrilloDemocrat59,200$11,011,300
53Freddie RodriguezDemocrat55,300$10,734,700
54Miguel SantiagoDemocrat63,600$13,057,200
55Isaac G. BryanDemocrat44,900$8,402,600
56Lisa CalderonDemocrat52,600$9,400,700
57Reginald B. Jones-Sawyer, Sr.Democrat70,400$17,673,400
58Sabrina CervantesDemocrat52,000$10,111,000
59Phillip ChenRepublican33,300$5,400,700
60Dr. Corey A. JacksonDemocrat55,600$12,396,800
61Tina S. McKinnorDemocrat53,000$10,988,700
62Anthony RendonDemocrat57,800$12,008,900
63Bill EssayliRepublican42,100$7,895,700
64Blanca PachecoDemocrat56,500$10,634,100
65Mike A. GipsonDemocrat63,300$14,612,200
66Al MuratsuchiDemocrat29,300$4,855,700
67Sharon Quirk-SilvaDemocrat48,200$8,547,200
68Avelino ValenciaDemocrat57,300$10,921,900
69Josh Lowenthal Democrat48,500$9,086,200
70Tri TaRepublican55,200$9,556,700
71Kate A. SanchezRepublican31,900$5,182,500
72Diane B. DixonRepublican29,700$4,467,900
73Cottie Petrie-NorrisDemocrat32,700$5,280,000
74Laurie DaviesRepublican37,200$6,207,900
75Marie WaldronRepublican35,400$6,434,400
76Brian MaienscheinDemocrat32,500$5,614,400
77Tasha BoernerDemocrat25,500$3,542,300
78Christopher M. WardDemocrat38,200$5,977,400
79Dr. Akilah Weber, M.D.Democrat57,100$11,188,500
80David A. AlvarezDemocrat65,000$12,615,700

Notes: Number of households is rounded to the nearest hundred. It reflects those receiving the CalEITC in tax year 2021 as of 12/31/22. Just over 49,000 households that received the CalEITC (1.4%) filed taxes from zip codes outside of California. These households are not included in this analysis. Another 48,000 households that received the CalEITC & filed taxes from within California (1.3%) are not included in this analysis. They could not be matched to an Assembly or Senate district or because FTB did not report the zip code from which they filed in order to meet confidentiality standards. 

Source: Budget Center analysis of Franchise Tax Board data

Senate District Order

Senate DistrictSenatorPartyNumber of Households Benefiting from the CalEITC
Tax Year 2021
Amount of CalEITC Credits Going to Households
Tax Year 2021
1Brian Dahle Republican94,100$17,456,600
2Mike McGuireDemocrat70,100$12,915,800
3Bill DoddDemocrat72,700$12,736,000
4Marie Alvarado-GilDemocrat88,500$17,803,500
5Susan Talamantes EggmanDemocrat99,100$21,230,400
6Roger W. NielloRepublican84,200$15,812,600
7Steven M. GlazerDemocrat56,500$10,301,400
8Angelique V. AshbyDemocrat87,700$17,980,800
9Nancy SkinnerDemocrat84,300$15,805,000
10Aisha WahabDemocrat57,300$9,389,700
11Scott D. WienerDemocrat57,500$9,073,100
12Shannon GroveRepublican97,400$21,370,000
13Josh BeckerDemocrat37,900$6,036,700
14Anna M. CaballeroDemocrat158,700$39,116,600
15Dave CorteseDemocrat56,800$9,870,400
16Melissa HurtadoDemocrat122,900$30,957,300
17John LairdDemocrat69,300$12,383,700
18Steve PadillaDemocrat144,600$30,670,200
19Monique LimónDemocrat86,700$16,999,400
20Caroline MenjivarDemocrat139,000$26,503,300
21Scott WilkRepublican109,500$25,102,600
22Susan RubioDemocrat141,700$25,980,200
23Rosilicie Ochoa BoghRepublican133,900$28,638,200
24Benjamin Allen Democrat65,100$9,310,900
25Anthony J. PortantinoDemocrat85,000$13,519,600
26María Elena DurazoDemocrat125,900$24,237,900
27Henry I. Stern Democrat74,600$12,569,600
28Lola Smallwood-CuevasDemocrat106,400$22,981,400
29Josh NewmanDemocrat88,900$15,325,300
30Bob ArchuletaDemocrat107,900$19,269,800
31Richard D. RothDemocrat141,900$28,535,500
32Kelly SeyartoRepublican96,400$17,757,800
33Lena A. GonzalezDemocrat124,500$27,371,400
34Thomas J. UmbergDemocrat115,500$21,410,800
35Steven BradfordDemocrat122,900$26,426,700
36Janet NguyenRepublican83,500$13,528,800
37Dave MinDemocrat68,800$11,102,800
38Catherine BlakespearDemocrat66,600$10,406,900
39Toni G. Atkins Democrat93,900$15,232,500
40Brian W. JonesRepublican78,500$13,860,400

Notes: Number of households is rounded to the nearest hundred. This reflects those receiving the CalEITC in tax year 2021 as of 12/31/22. Just over 49,000 households that received the CalEITC (1.4%) filed taxes from zip codes outside of California. These households are not included in this analysis. Another 48,000 households that received the CalEITC and filed taxes from within California (1.3%) are not included in this analysis. They could not be matched to an Assembly or Senate district or because FTB did not report the zip code from which they filed in order to meet confidentiality standards.

Source: Budget Center analysis of Franchise Tax Board data

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key takeaway

LGBTQ+ Californians — who make up about 1 in 10 adults in the state — are more likely to experience economic hardship than other Californians.

California should be a place where everyone — regardless of gender identity or sexual orientation — can afford to support themselves and their families. Many Californians struggle with the high costs of living in the state. They face uncertainty over whether they will be able to make their next housing payment, keep enough food on the table, and pay for their health expenses.

LGBTQ+ Californians — who make up about 1 in 10 adults in the state — are more likely than other Californians to have a hard time covering the basics. Around 2 in 5 LGBTQ+ adults in the state had difficulty paying for usual household expenses, according to data from the US Census Bureau’s Household Pulse Survey collected between July 2021 and June 2023.1Based on Budget Center analysis of Household Pulse Survey data. These data likely exclude some LGBTQ+ Californians since they do not allow for the clear identification of other non-cisgender, non-straight identities such as nonbinary, two-spirit, pansexual, and asexual. See notes on the limitations of the Household Pulse Survey data in Kayla Kitson and Adriana Ramos-Yamamoto, State Leaders Should Prioritize LGBTQ+ Californians’ Mental Health (California Budget & Policy Center: May 2022). Broken down by gender identity and sexual orientation, about 47% of transgender Californians and 38% of lesbian, gay, or bisexual Californians had difficulty covering their expenses.2Note that LGBTQ+ gender identity and sexual orientation categories are not mutually exclusive; for example, transgender individuals may identify as lesbian, gay, bisexual, or straight.

A comparative column chart showing the share of LGBTQ+ adults in California reporting difficulty paying for basic expenses from July 2021 to June 2023 where LGBTQ+ Californians are more likely to have trouble paying for basic expenses.

Barriers to Economic Stability

Many LGBTQ+ people face barriers to economic stability, including employment and housing discrimination, a lack of family support, and mental health concerns.3Harvard T.H. Chan School of Public Health, Robert Wood Johnson Foundation, and National Public Radio, Discrimination in America: Experiences and Views of LGBTQ Americans (November 2017), 1; Kitson and Ramos-Yamamoto, State Leaders Should Prioritize LGBTQ+ Californians’ Mental Health. And while California is far ahead of many other states in enacting legal protections for LGBTQ+ individuals and families, the degree of social acceptance of LGBTQ+ people varies across the state, which likely impacts their economic as well as social well-being.4Snapshot: LGBTQ Equality By State,” Movement Advancement Project (webpage), accessed March 31, 2023 ; The Williams Institute, The LGBT Divide in California: A look at the socioeconomic well-being of LGBT people in California (June 2015).

Other intersecting identities — such as race and ethnicity, age, and ability — may make some LGBTQ+ people more susceptible to financial insecurity. For example, LGBTQ+ Californians of color are more likely to face barriers to economic security than both white LGBTQ+ Californians and non-LGBTQ+ Californians of color. LGBTQ+ youth and young adults are more likely to experience homelessness due to an unaccepting family environment, which can result in lasting adverse health, educational, and economic outcomes.5LGBTQ+,” youth.gov (webpage), accessed March 31, 2023.

Inclusive Policies for LGBTQ+ Californians

State leaders should ensure that policies aiming to reduce economic hardship take into account the unique challenges faced by LGBTQ+ Californians and that supports are available and accessible to address the needs of these communities. Policymakers at all levels of government should also take steps to improve data collection methods to make sure that LGBTQ+ individuals — and the many identities underneath the LGBTQ+ umbrella — are represented. Having reliable and accurate data on the challenges that different LGBTQ+ communities are facing is vital in order to inform the most effective policy solutions to address these challenges.

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Key takeaway

California paid sick leave law is inadequate and leaves many workers vulnerable to going to work while sick or losing their paycheck. California must catch up to other states and provide workers with more paid sick time.

Every California worker deserves to take paid time off to care for themselves and their loved ones when they are sick. While a few California cities offer more generous paid sick leave, the state’s law lags far behind other states (see Table). That leaves many workers in the state with the impossible choice between going to work while sick or losing their paycheck.

California state law only requires employers to provide up to 24 hours of paid sick leave, depending on how many hours the employee worked. That results in many workers —especially those with low wages who are disproportionately women, Black, and Latinx —only having three days of paid sick leave for an entire year.

Some cities in California have recognized the need Californians have for more paid sick time. Seven cities in the state — Oakland, San Francisco, Berkeley, Santa Monica, Emeryville, Los Angeles, and San Diego —  have their own paid sick leave laws that provide workers with more than the state’s 24 hours of paid sick leave.

While these cities have taken an important step in providing workers with necessary benefits so they can adequately care for themselves and their loved ones, it is not enough. Only 17% of Californians are covered by these more generous paid sick leave laws. That leaves 83% of California workers subject to the state’s paid sick leave law, which is inadequate, especially compared to other states. Three days of paid sick leave for an entire year does not allow Californians sufficient time to take care of themselves or their families when they are sick.

COVID-19 demonstrated the critical importance of paid sick leave. Unfortunately, the supplemental paid sick leave put in place during the early days of the pandemic has expired, leaving all workers — especially people of color and workers with low wages — vulnerable to inadequate paid sick leave. Workers need more paid time off when they or their family members are sick. It’s time for California to catch up to these seven cities, as well as other states around the country, and provide workers with more paid sick time.

CityHow Many Hours Must Employees
Be Allowed to Earn?
Applies to Which Employers?
Oakland40 or 72 hoursEmployers with less than 10 workers (40 hours)
Employers with 10+ workers (72 hours)
San Francisco40 or 72 hoursEmployers with less than 10 workers (40 hours)
Employers with 10+ workers (72 hours)
Berkeley 48 or 72 hoursEmployers with less than 25 workers (48 hours)
Employers with 25+ workers (72 hours)
Santa Monica40 or 72 hoursEmployers with less than 26 workers (40 hours)
Employers with 26+ workers (72 hours)
Emeryville48 or 72 hoursEmployers with less than 56 workers (48 hours)
Employers with 56+ workers (72 hours)
Los Angeles48 hoursAll employers
San Diego40 hoursAll employers
California24 hoursAll employers

*Employers may choose to provide more paid sick leave than required by law, but these laws establish a minimum requirement that workers can earn.
Note: Most cities exclude workers from paid sick leave eligibility if they are not eligible for minimum wage in California.
Source: Data from A Better Balance and Budget Center analysis of city paid sick leave laws

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All Californians deserve to be able to care for themselves or their loved ones when they are ill. While California is set to become the world’s fourth-largest economy, the state lags behind when comparing paid sick leave laws across the US (see Table). As a result, many California workers face the impossible decision of going to work while sick or losing their paycheck.

In California, state law mandates that eligible workers can earn up to 24 hours of paid sick leave, depending on how many hours they work. Employers may provide workers with more paid sick time. However, workers with low wages — who are disproportionately women and people of color — are far less likely to have additional employer-provided time off. This means many workers have just three days of paid sick leave for an entire year.

How are workers left behind in California?

Left behind: A father works as a janitor and has a daughter who gets the flu. He needs to stay home and care for her. He has earned the maximum amount of paid sick leave mandated by his state, but his employer doesn’t provide any further leave.

  • In California, he uses up his 24 hours to care for his daughter because she needs to stay home from school for three days. He is now left with zero paid sick leave for the remainder of the year.
  • In Colorado, he has 48 hours of paid sick leave. He uses 24 of those hours to care for his daughter, and has 24 hours left for other illnesses that arise.

Left behind: A grocery store cashier tests positive for COVID-19. She needs to stay home for at least five days. While she worked enough hours to accumulate the maximum amount of leave provided by her state, her employer does not provide additional leave.

  • In California, she uses up her 24 hours in the first three days — leaving her with no sick leave for the rest of the year — and must stay home for two more days, unpaid. She wants to stay home for more than five days to fully recover, but that would mean going even longer without pay or working while sick.
  • In New Mexico, she has 64 hours of paid sick leave. She uses 40 hours for her isolation period, and still has 24 hours remaining to further recover.

COVID-19 demonstrated the critical importance of paid sick leave. Unfortunately, the supplemental paid sick leave put in place during the early days of the pandemic has expired. Workers need more paid time off when they or their family members are sick. It’s time for California to catch up to the states that are leading on this issue.

Paid Sick Leave Policies in Effect in the US, 2023

StateHow Many Hours Employees Must Be Allowed to Earn*Applies to Which Employers?
WashingtonNo cap: 1 hour earned for every 40 hours workedAll employers
New Mexico 64 hoursAll employers
Colorado48 hoursAll employers
Minnesota**48 hoursAll employers
Vermont40 hoursAll employers
New Jersey40 hoursAll employers
New York40 or 56 hoursEmployers with < 100 workers (40 hours)***

Employers with 100+ workers (56 hours)
Oregon40 hoursEmployers with 10+ workers
Massachusetts40 hoursEmployers with 11+ workers
Arizona24 or 40 hoursEmployers with < 15 workers (24 hours)

Employers with 15+ workers (40 hours)
Maryland40 hoursEmployers with 15+ workers
Rhode Island40 hoursEmployers with 18+ workers
Connecticut40 hoursEmployers with 50+ workers
Michigan40 hoursEmployers with 50+ workers
Washington DC3, 5, or 7 daysEmployers with < 25 workers (3 days)

Employers with 25-99 workers (5 days)

Employers with 100+ workers (7 days)
California24 hoursAll employers

* Employers may choose to provide more paid sick leave than required by state law, but these laws establish a minimum requirement that workers can earn.

** This will go into effect on January 1, 2024.

*** For employers with 4 or fewer workers, the requirement to provide at least 40 hours of paid sick leave applies only if the employer’s annual net income exceeded $1 million in the previous tax year.

Source: Data from A Better Balance and Budget Center analysis of state paid sick leave laws

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All parents should have the support they need to ensure economic security for their children and themselves. CalWORKs is California’s primary program to help families with children that are struggling to secure a basic income to meet their needs. Recent state reforms to CalWORKs are designed to improve the program’s capacity to effectively focus on supporting parents to identify goals, address barriers, and secure durable improvements in economic stability and family well-being.

However, state CalWORKs policy continues to threaten counties with financial penalties tied to the federally-defined Work Participation Rate (WPR), incentivizing counties and caseworkers to direct CalWORKs participants away from supportive activities to address barriers that do not fully count toward meeting the federal WPR.

Removing this threat of financial penalty could better align state policy with the CalWORKs program’s current focus, facilitating full implementation of strategies designed to effectively support parents and families in securing long-term stability and well-being. Policymakers also have options to build on these reforms to further support families participating in CalWORKs.

CalWORKs Participants Face Multiple Challenges to Securing Economic Security

CalWORKs is California’s version of the federal Temporary Assistance for Needy Families (TANF) program and supports more than 300,000 families throughout the state, providing modest monthly cash grants while helping stabilize families and supporting parents in addressing barriers to employment and finding jobs.1For additional discussion of the CalWORKs program, recent reforms, work requirements, and the federal WPR, see also Esi Hutchful, Undercutting the Needs of California Families: The Harm of Racist, Sexist Work Requirements & Penalties in CalWORKs (California Budget & Policy Center, 2022). CalWORKs parents face a labor market in which gender- and race-based discrimination are ongoing, as well as workplace expectations and practices that make it difficult for parents to balance work with caregiving responsibilities. These dynamics significantly affect CalWORKs parents, who are predominantly women, people of color, and parents of young children.

A column chart showing the percentage of CalWORKS clients with welfare-to-work participation requirements in 2020 where CalWORKs clients are particularly exposed to an economy that discriminates against women, people of color and parents.

CalWORKs parents also face an economy where a postsecondary credential is increasingly required to access all but the lowest-paying jobs. Yet nearly half of CalWORKs household heads do not have a high school degree or equivalent, reflecting structural barriers to education that many have encountered, again pointing to the effects of racism and sexism embodied by past and ongoing policies and practices across a variety of domains.2Adriana Ramos-Yamamoto and Monica Davalos, Confronting Racism, Overcoming COVID-19, & Advancing Health Equity (California Budget & Policy Center, 2021).

A donut chart showing that nearly half of CalWORKs household heads have not completed high school.

In addition, many CalWORKs parents also experience significant health challenges. Among parents completing appraisals of strengths and barriers at program entry, 28% faced mental health challenges, 5% struggled with substance abuse, and 18% had faced domestic abuse.3Data reflect the share of CalWORKs participants recommended for services to address mental health, substance abuse, or domestic abuse among those completing Online CalWORKs Appraisal Tool (OCAT) assessments during fiscal year 2019-20. Source: Budget Center analysis of Department of Social Services data from Department of Social Services, CalWORKs Annual Summary (November 2022). These additional barriers can negatively affect both parents’ employment prospects and their families’ broader well-being.

Supporting Parents to Address Barriers Can Improve Long-Term Employment and Child and Family Well-Being

There are multiple reasons for the CalWORKs program to prioritize supporting parents in addressing the barriers they face:

  • Challenges related to limited education and mental health, substance use, and domestic abuse barriers limit parents’ capacity to work at all and limit the quality of jobs parents can secure. Addressing these barriers improves parents’ likelihood of success in securing and retaining jobs and improves parents’ access to jobs with higher pay and more job security over the short-term and the long-term.
  • Addressing these challenges also promotes child well-being and family stability. Parental struggles with mental health, substance use, and domestic abuse are risk factors linked to child neglect leading to child welfare involvement.4Lindsey Palmer, et al. “What Does Child Protective Services Investigate as Neglect? A Population-Based Study.” Child Maltreatment (July 13, 2022), doi: 10.1177/10775595221114144. Supporting parents to address these challenges can help families stabilize and safely remain intact, facilitating prevention of child maltreatment and the need for child removal and foster care placement.

Recent State Reforms to CalWORKs Recognize that Effective and Respectful Services Should Focus on Supporting Families…

Recognizing the significant challenges facing CalWORKs families – and the importance of respectfully addressing these challenges to enable families to secure long-term stability – in recent years state policymakers have made several changes to CalWORKs policy intended to improve support for participants.

Through Senate Bill 1041 of 2012, California established its own CalWORKs participation standards that are distinct from federal standards.5Senate Bill 1041 (Committee on Budget and Fiscal Review, Chapter 47, Statutes of 2012). These state standards include no rigid time limits on activities to address barriers or advance education, treating these activities as equal to employment activities for demonstrating engaged program participation.

The state has also adopted an evidence-based behavioral approach to guide families in setting goals (CalWORKs 2.0) and created more holistic outcome measures to evaluate the program (the California CalWORKs Outcome and Accountability Review or Cal-OAR). California also implemented a voluntary home visiting program to support family health and engaged parenting.

… But Continued Threat of County Penalties Linked to the Federal Work Participation Rate Hinders Full Implementation of Reforms

These recent constructive CalWORKs reforms are hindered from full implementation, however, because state policy continues to threaten counties with potential financial penalties linked to the Workforce Participation Rate as defined by federal TANF rules.

The federal government defines success for state TANF programs not based on how well the programs meet families’ needs, but only based on whether programs meet specific WPR targets, determined by the percentage of parents receiving assistance that are engaged in a narrowly-defined set of welfare-to-work activities. These federal activities focus on getting parents into paid employment as quickly as possible, despite the fact that such work requirements have racist and sexist roots and research suggests they do not lead to meaningful long-term improvements in employment and are linked to increases in deep poverty.6Elisa Minoff, The Racist Roots of Work Requirements (Center for the Study of Social Policy, February 2020); LaDonna Pavetti, TANF Studies Show Work Requirement Proposals for Other Programs Would Harm Millions, Do Little to Increase Work (Center on Budget and Policy Priorities, November 2018). Like many other states, California has sometimes struggled to meet its federal WPR targets. The state has at times been required to submit appeals and corrective plans, but has never had to pay a WPR penalty.

Current state policy would require counties that miss federal WPR targets to pay half of any financial penalty the state received for not meeting targets. This policy incentivizes counties and caseworkers to direct CalWORKs participants into the narrowly-defined activities that count toward meeting the federal WPR. However, the federal WPR does not acknowledge the value of fully supporting parents to address education and health barriers. Many activities to address barriers faced by large shares of CalWORKs participants – that the state approves without time limits for participants to meet state CalWORKs participation expectations – do not fully count toward meeting the federal WPR.

The Federal WPR Does Not Fully Count Activities That Address Barriers Faced by Many CalWORKs Participants

State-Approved Barrier Removal That Does Not Fully Count for Federal WPRShare of CalWORKs Participants Assessed With Need for Barrier Removal
Adult basic education or secondary education (e.g., high school or GED), for participants without a high school or equivalent degreeNearly 1 in 2 heads of household lack a high school or equivalent degree
Mental health servicesMore than 1 in 4 participants recommended for mental health services
Substance abuse servicesAbout 1 in 20 participants recommended for substance abuse services
Domestic abuse servicesMore than 1 in 6 participants recommended for domestic abuse services

*Note: Federal rules limit countable participation in listed education activities to no more than 10 hours per week, and limit countable participation in mental health, substance abuse, and domestic abuse services to no more than four consecutive weeks, not to exceed six weeks in a 12-month period. CalWORKs participant data reflect the share of CalWORKs participants recommended for services to address mental health, substance abuse, or domestic abuse among those completing Online CalWORKs Appraisal Tool (OCAT) assessments during fiscal year 2019-20.
Source: Budget Center analysis of Department of Social Services data, Congressional Research Service

Removing County Liability for Federal WPR Targets Could Better Align State Policy with Recent CalWORKs Reforms

Threatening to penalize counties financially for not meeting federal WPR targets creates an incentive for counties to direct parents away from activities to address barriers that may be their best investments to improve stability and long-term employment prospects – and toward more narrowly-defined “work-first” activities that may not be in families’ best long-term interests but will meet rigid federal WPR criteria. This financial penalty policy therefore works at cross-purposes with extensive recent CalWORKs reform efforts. Repealing this policy could better align state policy with the CalWORKs program’s current focus, facilitating full implementation of strategies designed to effectively support parents and families in securing long-term stability and well-being.

State Policymakers Have Options to Further Build on Recent Reforms to Support CalWORKs Parents and Families

Additional state changes to CalWORKs program rules could extend recent reforms to further bolster support for parents and children. Examples include:

  • Continuing to increase the size of cash grants to enable families to cover their costs to meet basic needs,
  • Expanding policies and practices that help parents avoid and quickly resolve sanctions that reduce access to cash grants,
  • Reducing sanction penalties in order to minimize negative impacts on child and parent basic needs and well-being, and
  • Recognizing county performance that demonstrates strong participant engagement and effectively identifies and addresses participant barriers.

As California’s primary program to help families that are struggling to secure a basic income to meet their needs, CalWORKs provides a unique opportunity to support thousands of children and parents in addressing the challenges of poverty and the barriers put before them. Continuing to align state policy and build on recent reforms can help CalWORKs reach its potential to help ensure that every California child and family can thrive.


Support for this report was provided by the Conrad N. Hilton Foundation.

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California workers of all races, genders, and ages worry about how they will pay for basic needs and support their loved ones if they are laid off from work or struggle to secure a job. And all workers need a job market that provides ample opportunities for stable work with fair pay and work conditions. But the job market over the past three years has been a rollercoaster for workers.

Early in the COVID-19 pandemic, many businesses closed, and unemployment skyrocketed to a record-breaking peak, devastating the economic security of millions of California workers and their families. Policymakers acted to stabilize the economy, and strategies for living with the pandemic evolved, allowing businesses to reopen — and employers rapidly rehired workers and added new jobs, bringing California’s overall unemployment rate as of fall 2022 down to a level similar to the low level of unemployment in the months immediately before the pandemic. More recently, as federal policymakers have taken actions intended to slow down inflation, economists expect that employers will slow hiring and increase layoffs, bringing the hardship of unemployment once again for many workers and their families.

Throughout these recent job market upswings and downswings, one thing has remained constant: not all California workers have been hit equally by the devastation of job insecurity. The wide-ranging inequitable effects of structural racism and discrimination are clear when examining the unemployment experiences of Black, Latinx, Asian and white California workers.1As described below in more detail, data limitations prevented detailed analysis of unemployment rates for California workers with race or ethnicity other than Asian, Black, Latinx, and white, and analysis of the diversity of experiences of workers within these race/ethnicity categories. Black and Latinx Californians — particularly Black men — have consistently been most likely to be hit by the damaging impact of unemployment, with its cascading effects on their families and communities.

A Mexican restaurant adapts to the Covid-19 lockdown. The workers are assembling bags of orders for pick-up, take-out and delivery.

“Racist policies and practices in the past and in the present, in the workplace and across many other arenas, drive the inequitably high rate of unemployment for these Black and Latinx workers.”

This inequity is not new. For decades, Black and Latinx workers have been blocked from equitable access to job security, whether the job market is booming or bottoming out. Racist policies and practices in the past and in the present, in the workplace and across many other arenas, drive the inequitably high rate of unemployment for these Black and Latinx workers. These inequities may be especially harmful for young Black and Latinx workers, since young workers risk especially harsh long-term consequences if they do not secure stable work early in their careers.

State and federal policymakers have many opportunities to tackle inequities in job access and job security, and to address the effects on California workers and families. Specifically, policymakers can adopt policies that reduce overall unemployment, push back against the drivers of inequitable racial disparities, and strengthen support for the Black, Latinx and other workers who experience the highest rates of unemployment in good economic times and bad.

Racial Inequities in Unemployment Reflect Structural Racism, Discrimination

Black and Latinx Californians’ more precarious access to secure employment results from explicitly and implicitly racist policies and practices, past and present, across many different areas:

All of these factors have funneled workers of color disproportionately into occupations and industries with lower wages and less job security.6Olugbenga Ajilore, The Persistent Black-White Unemployment Gap Is Built Into the Labor Market (Center for American Progress, 2020); Marina Zhavoronkova, Rose Khattar, and Mathew Brady, Occupational Segregation in America (Center for American Progress, 2022); Danyelle Solomon, Connor Maxwell, and Abril Castro, Systematic Inequality and Economic Opportunity (Center for American Progress, 2019).

Workplace discrimination also plays a direct role in driving the persistent inequities in which Californians are most likely to experience the devastation of unemployment. This is particularly true for Black workers. A recent national survey found that about 1 in 4 Black workers, and about 1 in 4 Latinx workers, had experienced discrimination at work in the past year, compared to 18% of workers overall — with younger workers most likely to report discrimination, and Black workers most likely to name race as central to the discrimination they experienced.7Camille Lloyd, One in Four Black Workers Report Discrimination at Work (Gallup, 2021).

“Research finds that there has been no decline in anti-Black discrimination in hiring over the past few decades, and only a modest decline in anti-Latinx discrimination in hiring.”

Waiter standing in empty coffee shop

Research finds that there has been no decline in anti-Black discrimination in hiring over the past few decades, and only a modest decline in anti-Latinx discrimination in hiring.8Lincoln Quillian, Devah Pager, Ole Hexel, and Arnfinn Midtboen, “Meta-analysis of field experiments shows no change in racial discrimination in hiring over time,” PNAS 114, no. 41 (2017): 10870-10875, https://doi.org/10.1073/pnas.1706255114. Other research demonstrates that Black workers are more likely to face unemployment at every education level, and their higher unemployment rate largely cannot be explained by other differences in worker characteristics like age, education, marital status, or place of residence.9Tomaz Cajner et al.,Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle,” Board of Governors of the Federal Reserve System, Finance and Economics Discussion Series 2017-071 (2017); Jared Bernstein and Janelle Jones, The Impact of the COVID19 Recession on the Jobs and Incomes of Persons of Color (Center on Budget & Policy Priorities, 2020); Jhacova Williams and Valerie Wilson, Black Workers Endure Persistent Racial Disparities in Employment Outcomes (Economic Policy Institute, 2019).

Unemployment Hit Black and Latinx Californians Hardest During Recent Job Market Upswings and Downswings

California workers of all races and ethnicities saw unemployment rates rise dramatically from where they were during the strong labor market right before the pandemic to the high rates during the peak period of pandemic layoffs and business closures.10The official unemployment rate reported each month by the Bureau of Labor Statistics is widely understood to have underreported the extent of joblessness during the pandemic. This is because a large number of workers who reported being employed, but absent from work, were in fact on temporary layoff and should have been counted as unemployed. Unemployment rates during the peak of the pandemic are considerably higher when these potentially misclassified workers are counted as unemployed: 15.5% for Black Californians, 14.1% for Latinx Californians, 12.4% for Asian Californians, and 11.5% for white Californians. In this analysis we present the official unemployment rate, excluding these potentially misclassified workers, for consistency across the full long-term time period examined. But the effects of structural racism and discrimination are clear in the fact that unemployment rates were highest for Black and Latinx workers pre-pandemic, and their rates shot up to the highest levels when unemployment peaked early in the pandemic. As the job market overall recovered quickly after the pandemic peak, unemployment declined for all racial groups — yet Black workers especially, and Latinx workers to a lesser degree, continued to be hit hardest by the devastation of unemployment.

For California’s Black workers, in particular, unemployment during the post-peak pandemic period remained extremely high, at 8% for the 12 months from October 2021 to September 2022. That rate is almost twice California’s 4.5% overall unemployment rate during that period. The overall state unemployment rate has only reached this level in the past during periods of peak unemployment in the wake of major recessions.

A bar chart showing the twelve-month average unemployment rates pre-pandemic, peak pandemic, and current where the unemployment rate for Black Californians remains high after peaking early in the pandemic.

Due to data limitations, it is not possible to report reliable California unemployment figures for these time periods for workers who are American Indians and Alaska Natives, Native Hawaiians and other Pacific Islanders, or people who identify with more than one race or ethnicity.11Data limitations also mean it is not possible to report reliable estimates that would show the diverse range of experiences within the groups of Californians presented in this report, such as Asian or Pacific Islander Californians. National studies show that unemployment rates among the diverse communities who identify as Asian or Pacific Islander varied widely during the pandemic. Joint Economic Committee, The Economic State of Asian Americans, Native Hawaiians and Pacific Islanders in the United States (May 26, 2022). However, national data suggest that unemployment rates for these workers likely remained high in California as well, despite job gains since the peak of the pandemic. The unemployment rate for American Indians and Alaska Natives nationwide was 6.3% for the 12 months ending September 2022, compared to the overall national unemployment rate of 4.0%.12Budget Center analysis of Bureau of Labor Statistics data. For consistency with other data shown, these data do not include American Indians or Alaska Natives who identify with more than one race or ethnicity, though more than 3 in 5 people who identify as Native American identify with at least one other race or ethnicity. See Robert Maxim, Randall Akee, and Gabriel R. Sanchez, For the first time, the government published monthly unemployment data on Native Americans, and the picture is stark (Brookings Institution, February 9, 2022). The Federal Reserve Bank of Minneapolis’s Center for Indian Country Development’s data dashboard provides more complete labor market data for American Indians and Alaska Natives, including individuals who report being American Indian or Alaska Native, whether alone or in combination with other races and ethnicities. However, the dashboard does not provide unemployment rates for the specific time periods examined in this analysis. Similarly, the national unemployment rate was 5.8% for people who identify with more than one race during that period, and it was 4.1% for Native Hawaiians and other Pacific Islanders.

Young Black and Latinx Workers Are Especially Likely to Suffer the Toll of Unemployment

Californians of color who are young workers are especially likely to be blocked from job security, with young workers overall consistently hit by higher unemployment than older workers. Young California workers ages 16 to 24 were especially likely to lose their jobs or be unable to find jobs during the peak of the pandemic recession. Their unemployment rate spiked to 19% at the height of pandemic job losses. This was nearly twice the unemployment rate of prime-age workers (ages 25 to 54) in California. Although the unemployment rate for young workers essentially fell back to the pre-pandemic level as jobs returned, it remained more than double that of prime-age workers.

A bar chart showing the twelve-month average unemployment rates pre-pandemic, peak pandemic, and current where unemployment for young California workers spiked at the peak of the pandemic and remains higher than for older workers.

National data show that young Black and Latinx workers continued to bear a heavy burden of unemployment post-peak pandemic, as employers added back jobs. The unemployment rate for Latinx workers ages 16 to 24 was 8.5% for the 12 months ending September 2022 — about the same as the national rate for young workers overall (8.2%). For young Black workers (including those who also identify as Latinx), the rate was 13.8% — more than one and one-half times the rate for all young workers.13Budget Center analysis of US Bureau of Labor Statistics data. The national unemployment rate for young white workers, including those who identify as Latinx, was 7.0% — lower than the overall national unemployment rate for young workers. The national unemployment rate for young Asian workers, including those who identify as Latinx, was 8.2% — the same as the overall national unemployment rate for young workers.

This inequitable access to job security for young Black and Latinx workers is particularly cause for concern because young people can face harsh long-term consequences when they are blocked from work opportunities early in their careers. Research shows that young people who do not have stable employment by their early twenties are likely to have lower earnings and face a higher risk of joblessness over the long term.14Kristen Lewis and Rebecca Gluskin, Two Futures: The Economic Case for Keeping Youth on Track. (Measure of America, Social Science Research Council, 2018).

High Unemployment for Black and Latinx Californians — Both Women and Men — Has Persisted Over Decades

The inequitable pattern of higher unemployment for Black and Latinx Californians has been persistent for decades, and this pattern holds for both women and men. Over the past 20 years, for both female and male workers, Black and Latinx Californians have consistently been most likely to be blocked from access to job security and pushed into unemployment, whether employers overall are hiring many workers or are laying off workers.

For California women, differences in unemployment rates by race and ethnicity have become somewhat smaller in more recent years, but Black and Latinx women have been hit hardest by unemployment in every period.

A line graph showing a 24-month average unemployment rate ending December 2004 through September 2022 where the unemployment rate for Black and Latinx women in California is persistently high over the decades.

For men, inequitable disparities in unemployment by race-ethnicity are even more pronounced. Black men, in particular, have borne a dramatically greater burden of unemployment than other California men (and women) in every year going back decades. Latinx men have also been hit harder by unemployment over the past 20 years, though their rate has been lower than the rate for Black men.

A line graph showing the 24-month average unemployment rate ending December 2004 through September 2022 where the unemployment rate for Black and Latinx men in California is persistently high over the decades.

Comparable long-term unemployment data for Californians with other gender identities besides women and men are not available, pointing to the need for policymakers to invest in more equitable and inclusive data collection. National data during the pandemic show that LGBT individuals overall, and transgender individuals especially, were more likely to report that they or someone in their household had lost employment income — with especially high rates of lost income among LGBT individuals of color.15Caroline Medina, Lindsay Mahowald, Rose Khattar, and Aurelia Glass, Fact Sheet: LGBT Workers in the Labor Market (Center for American Progress, June 1, 2022).

The long-standing inequities apparent in experiences of unemployment, with Black and Latinx California workers — particularly Black men — persistently blocked from access to job security demonstrate the pervasive and devastating effects of structural racism and discrimination. No person’s race, gender, or other individual characteristic should affect their opportunity to secure stable work. Addressing these inequities is imperative, and policymakers have many opportunities to make a difference. 

Policymakers Can Reduce Racial Inequities in Access to Employment

For too long, Black and Latinx Californians have borne an inequitable burden of unemployment. All Californians — of all races, genders, and ages — deserve to have access to stable jobs that provide enough income to meet basic needs. State and federal leaders can help to achieve this vision through policies that tackle the drivers and effects of racial inequities in unemployment and access to jobs.

Both state and federal policymakers have options to tackle the drivers of inequitable racial and gender disparities in unemployment. Some of these policy options include:

Black and Latinx workers also particularly benefit when policymakers support a strong labor market by incentivizing businesses to create more jobs. As the “last hired” workers because of racial discrimination and other barriers, they often see the greatest relative gains in employment when the job market is especially strong. Policymakers at the Federal Reserve hold the primary tools to influence the overall rate of unemployment nationwide. Their goal is to keep unemployment low while also preventing inflation from getting too high. They have traditionally set employment goals based on the overall unemployment rate, without taking into account racial inequities.

Federal Reserve policymakers could instead adopt policies that specifically aim to achieve a low Black unemployment rate, by proactively working to reduce racial disparities in unemployment rates, rather than simply targeting a low overall unemployment rate. This approach would achieve low unemployment for all workers while also reducing racial disparities, as some economists have recommended.19Jared Bernstein and Janelle Jones, The Impact of the COVID19 Recession on the Jobs and Incomes of Persons of Color (Center on Budget & Policy Priorities, 2020).

State and federal policymakers also can reduce the negative impact of unemployment on workers who lose jobs or struggle to secure work — which is especially important for Black and Latinx workers, because they bear the greatest burden in dealing with the devastating impact of unemployment. Some of these policy options include:

Lawmakers can also invest in better publicly accessible data because equity in access to economic security cannot be achieved if information on inequities is not collected. Federal unemployment data do not allow for sufficient disaggregation for racialized communities, and only allow for limited analysis by gender and no analysis by sexual orientation. Information about the experiences of LGBTQ+ people has recently been incorporated into some Census Bureau data collection, but needs to be extended to other federal data, including unemployment data. Without adequate data, the experiences of many communities become invisible, making it difficult to identify where policy change is needed or can be targeted to better serve Californians.

Every Worker Needs Equitable Access to Employment — in Good Times and Bad

All California workers deserve respect and support to ensure access to opportunities for secure employment. Long-standing inequitable racial disparities in unemployment in California — with Black and Latinx workers persistently most likely to be blocked from job security — call for urgent action by policymakers. This urgency is heightened given federal policymakers’ ongoing actions to slow down inflation, which are expected to lead employers to slow down hiring and push more workers out of jobs. As in the past, Black and Latinx workers are likely to be hit the hardest by the damaging effects of layoffs and loss of job opportunities. Young workers may face especially harsh consequences.

State and federal policymakers have many opportunities to fight back against these inequities and address their effects, through policies that target the drivers of racial disparities in unemployment rates, promote lower overall unemployment with attention to race, and strengthen supports for workers who experience unemployment. Tackling these challenges now can help disrupt the long-standing inequitable burden of high unemployment for Black and Latinx Californians, in the process building an economy and system of support that creates more prosperity for all Californians.


Support for this report was provided by the Conrad N. Hilton Foundation.

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