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Data Hit

California’s Top 1% Grew Richer During the Pandemic

Middle-Income Californians Experienced Stagnating Earnings During the Same Period

November 2023 | By Alissa Anderson

Los Angeles California - Beverly Hills landscape and mansions aerial view late afternoon

key takeaway

Income inequality in California widened during the COVID-19 pandemic, with the richest 1% taking home a record share of statewide income. Policymakers can address this by closing tax loopholes for the wealthy and profitable corporations.

California’s rich got richer during the pandemic. Recent data show that in 2021, when many Californians were struggling amid the COVID-19 recession, the share of statewide income going to the richest 1% spiked to a new high. The top 1% held nearly one-third (30.5%) of all income reported for state tax purposes that year — up from 23% in 2019 and their highest share on record (data before 1970 were not available). In fact, the top 1% held more income in 2021 than they did in 2000, at the peak of the dot-com boom.

Income inequality worsened in the pandemic. The average income of Californians in the top 1% rose from $2.3 million to $3.6 million between 2019 and 2021, while it declined for middle-income Californians, from $46,600 to $46,400. As a result, the top 1% had 78 times the income of middle-income Californians, on average, in 2021, up from 49 times the income just two years earlier. In fact, the average Californian in the top 1% earned in just five days what the average middle-income Californian earned in a year.

Californians want state policymakers to reduce inequality. Strong majorities of Californians know that income inequality has worsened and they want state policymakers to do more to address this problem, according to polling by PPIC. State leaders can do this by closing tax loopholes that favor the wealthy and profitable corporations in order to prioritize the significant investments needed to make housing, health care, child care, and other basic needs affordable for all Californians.

related content

Learn how California tax breaks are distributed in our Data Hit: Less Than 2% of State Tax Breaks Go to Californians with Low Incomes.

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key takeaway

The end of the pandemic-era investments in the Child Tax Credit and other federal policies that help families make ends meet led to a huge increase in poverty in 2022 in California.

Nationally, 2022 marked the biggest increase in poverty in over 50 years, and California showed a similarly distressing trend. This increase marks a huge step backwards given the historic drop in child poverty in 2021 spurred by pandemic-era public investments in the Child Tax Credit (CTC) and other policies that help families make ends meet. The facts highlighted in the proceeding narrative draw on an analysis of the US Census Bureau’s Supplemental Poverty Measure to compare poverty rates from 2021 to 2022 and show how federal policy decisions have pushed more families into poverty.

Poverty Rose Dramatically, Exacerbating Racial Inequities

From 2021 to 2022, the poverty rate across all Californians increased from 11.0% to 16.4%. Among age groups, child poverty (under age 18) rose the most, with the 2022 rate over twice the rate of 2021. This increase comes after two years of declines in child poverty, illustrating a step backward in policies that support child economic well-being. 

The increase in poverty was especially striking for Black and Latinx Californians whose poverty rates nearly doubled from 2021 to 2022. Since the expiration of key pandemic-era policies, recent analyses highlighted that Black and Latinx Californians have been more likely to struggle with paying basic expenses, underscoring that the end of pandemic supports have furthered racial inequities. Specifically, in 2022, nearly one in five Black Californians and more than one in five Latinx Californians are back in poverty. 

Rise in Poverty Reflects End of Anti-Poverty Investments 

Major pandemic-era federal policies that lifted many Californians out of poverty in 2021 — including the expanded CTC — ended in 2022. This severely weakened our system of public supports that helps families and individuals meet basic needs, pushing more Californians — particularly children as well as Black and Latinx Californians — into poverty. 

Specifically, public supports cut California’s child poverty rate by more than two-thirds in 2021 when major pandemic-era policies like the expanded CTC were in place. This helped push the child poverty rate down to 7.5%. But in 2022, when those policies ended, public supports reduced the child poverty rate by only one-third, contributing to a more than doubling of the child poverty rate to 16.8% that year.

Similarly, the end of major pandemic-era federal policies also helped drive up the poverty rate for Black and Latinx Californians. While public supports cut the poverty rate for Black Californians by three-quarters to 9.5% in 2021, they only reduced poverty for Black Californians by well under half the following year, contributing to a near doubling of the poverty rate to 18.6%. For Latinx Californians, public supports cut the poverty rate by about 60% in 2021 when major pandemic-era policies were in place, but by only about 30% in 2022 after those policies ended, contributing to a substantial rise in the poverty rate from 12.6% to 21.6%.

Policymakers Can Reverse the Rise in Poverty

The dramatic rise in poverty following the end of major pandemic-era investments shows that policymakers play a significant role in determining the economic well-being of Californians. This means they can reverse the spike in poverty by investing in policies that help families and individuals meet basic needs and thrive in their communities. At the federal level, these include: 

  • Restoring the enhanced federal CTC and allowing all children, regardless of immigration status, to benefit;
  • Strengthening SNAP nutrition assistance (CalFresh in California), including by ending harsh and arbitrary time limits that prevent certain individuals from accessing the nutrition and health benefits of the program, and ensuring equitable college student access;
  • Continuing pandemic-era child care relief funds that supported providers with keeping their doors open and families with accessing affordable care. 

California policymakers can also do more to cut poverty across the state, including by:

  • Expanding refundable tax credits, such as California’s Earned Income Tax Credit (CalEITC) and Young Child Tax Credit; 
  • Ensuring that all Californians, regardless of immigration status, can benefit from supports that help families and individuals meet basic needs, such as nutrition assistance and unemployment benefits; and
  • Strengthening vital supports that improve families’ economic well-being, such as by increasing the minimum CalFresh nutrition benefit and reimaging CalWORKs as a family-first, anti-racist program.
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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.

“More than 6 in 10 California households earning less than $35,000 had trouble paying for basic expenses in 2023.”

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.

“Policymakers can improve Californians’ economic security by strengthening the state’s refundable income tax credits. ”

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.4“Snapshot: 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.5“LGBTQ+,” 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’s inadequate sick leave laws leave workers with the impossible choice between going to work 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.

“CalWORKs provides an opportunity to support thousands of children and parents in addressing the challenges of poverty and the barriers put before them.”

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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