California's Poverty Rate Soars to Alarmingly High Levels in 2023

key takeaway

California’s poverty rate has increased significantly, with disproportionate impacts on Black and Latinx residents. This alarming trend highlights the urgent need for federal and state policymakers to implement robust anti-poverty measures, such as strengthening the Child Tax Credit, Earned Income Tax Credit, and SNAP program.

California’s poverty rate increased to 18.9% in 2023, up from 16.4% in 2022 and 11.0% in 2021, according to new Census data. The state’s poverty rate was particularly high among Black and Latinx Californians and California continued to have the highest poverty rate of the 50 states.

California’s high poverty rate means that 7.3 million state residents lacked the resources to meet basic needs last year — more than the populations of California’s four largest cities: Los Angeles, San Diego, San Jose, and San Francisco. In sharp contrast, the incomes of the richest 1% of state residents continued to substantially exceed the incomes of most Californians. The average income of the top 1% of California households was $1.2 million in 2023 — 67 times the average income of households in the bottom 20% and 14 times the median household income.

These figures point to the need for federal and state leaders to take urgent action to ensure that all Californians have the resources to thrive, and recent experience proves that policymakers can achieve this vision. Bold investments in the federal Child Tax Credit (CTC) and other economic security-promoting policies during the pandemic brought about a historic drop in poverty in 2021. When Congress allowed these effective policies to expire, that progress was reversed the following year, causing the largest increase in the national poverty rate in 50 years.

With Congress poised to pass a substantial tax package in 2025, federal policymakers should prioritize strengthening and expanding two of the most effective anti-poverty policies: the federal CTC and Earned Income Tax Credit (EITC). Additionally, federal leaders should strengthen SNAP nutrition assistance (CalFresh in California), which plays a critical role in reducing poverty and poverty-related hunger. California policymakers can also cut poverty by strengthening state tax credits and the safety net, and ensuring that all Californians — regardless of immigration status — have access to affordable housing, nutrition assistance, health coverage, and good jobs.

Poverty Rates in California Are at the Highest in Years

California’s poverty rate, as measured by the Census Bureau’s Supplemental Poverty Measure — a more comprehensive reflection of economic well-being than the Census’ Official Poverty Measure — increased two and one-half percentage points to 18.9% between 2022 and 2023.¹ The 2023 poverty rate is also higher than the pre-pandemic rate of 16.6% in 2019.

This is the second year the poverty rate has significantly increased, after the expiration of many pandemic-era policies put in place to reduce economic hardships many Americans experienced as a result of COVID-19. These include federal supports such as the expanded Child Tax Credit, the expanded Earned Income Tax Credit for childless workers, and enhanced unemployment benefits — all of which ended in 2021. Additionally, Supplemental Nutrition Assistance Program (CalFresh in California) emergency allotments, which temporarily increased nutrition benefits, ended in early 2023.

California’s labor market also fared worse in 2023 than nationally, with the state’s unemployment rate increasing and inflation-adjusted hourly wages for low-wage workers decreasing in California.

Poverty Rose Across Children, Adults, and Older Adults

While poverty rose across all age groups, rates vary among children, adults, and older adults, notably:

Poverty remains high for older adults in California.

Child poverty remains high at 19.2%, reflecting the sunset of the expanded federal child tax credit.

Child poverty has risen since 2022 and is even higher than the 2019 rate.² In general, the poverty rate is higher for children than for adults given the costs associated with raising children (such as child care) and the low wages for parents and caregivers, particularly women and women of color. Additionally, at the national level, the expanded federal CTC kept 2.9 million children out of poverty in 2021. With its expiration in 2022, we know that more children in California have fallen into poverty.

Poverty rates for adults are significantly higher in 2023, as compared with 2022.

Poverty Increased for All, Californians of Color Face Greater Hardship

Poverty increased for all racial and ethnic groups in California in 2023. However, poverty rates are more pronounced among Californians of color, highlighting deep-rooted inequities that are a direct consequence of historic and ongoing racism.

Most notably, the rise in poverty was sharpest for American Indian, Alaska Native, Native Hawaiian, Pacific Islander, and multiracial Californians (noted as “Other Californians of Color” in the chart above). Specifically, the poverty rate for this group collectively surged from 8.4% in 2022 to 13.6% in 2023. This significant and alarming increase underscores the unique challenges that these communities face, such as historic marginalization, systematic displacement, and limited access to targeted resources.

Poverty also remains disproportionately high for Latinx and Black Californians at 25% and 22.3%, respectively. Both groups saw an increase of about 4 percentage points from 2022 to 2023. These higher poverty rates reflect how centuries of discriminatory policies and systemic racism — such as redlining, wage discrimination, and chronic underinvestment in communities of color — continue to prevent Black and brown Californians from accessing the same economic opportunities as white people.

The persistence of higher poverty rates for Californians of color is not accidental. Structural racism is the result of policymakers and other individuals with power successfully implementing policies and actions that block people of color from opportunity, many of which are rooted in racism.

Income Inequality Remains Stark in California

In addition to information on poverty, the Census data also sheds light on the incredible magnitude of income inequality in California. In 2023, the richest 5% of California households had an average income of $662,792 and the richest 1% had $1,208,478 on average.³ The average income of the top 1% of Californians is 14 times the $89,300 median California household income and 67 times the average income for the bottom 20% of Californians, which stood at a woefully inadequate level of $18,170. For reference, a single adult needs an annual income of more than $56,000 to afford typical expenses in California, and a single parent with one child needs an income of nearly $100,000.

Notably, the Census income data does not include capital gains — income from the sale of assets like stock shares and real estate — which make up a significant portion of income for wealthy households. Therefore, the Census figures for the top 5% and top 1% of Californians understate their total income. Tax data, which do take into account capital gains income, demonstrate the high level of income concentration in the state, with the top 1% of Californians generally receiving around one-fifth to one-quarter of total income over the past several decades.

Policymakers Can Cut Poverty and Create a California for All

High poverty following the end of major pandemic-era investments proved that policymakers play a significant role in determining the economic well-being of all people. 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:

Significantly expanding the federal Child Tax Credit (CTC).

Federal tax policies enacted in 2017 are slated to expire in 2026, including the doubling of the federal CTC from $1,000 to $2,000 per child. This presents an opportunity for federal policymakers to strengthen the federal CTC to maximize its poverty-fighting power. The expanded federal CTC that was in place for one year during the pandemic cut child poverty by more than 40% in California, proving the effectiveness of this policy.

Improve the federal Earned Income Tax Credit (EITC).

This is particularly for low-paid adults who are not supporting children in their homes and who consequently get limited assistance from other public supports. The significant increase and expansion of the federal EITC to young childless workers for one year during the pandemic reduced material hardship among young adults and cut poverty, particularly among young Latinx workers ages 18 to 24. The credit was also expanded to childless adults age 65 or older for one year in recognition that a larger share are working today than did when the credit was established.

Strengthening SNAP nutrition assistance (CalFresh in California).

Approve federal emergency child care funding.

This is a request submitted to Congress by the Biden Administration. At the end of September 2023, federal pandemic-related funding for child care expired. This has led to a “child care cliff” across several states that has exacerbated challenges for families with finding affordable child care and for providers with making a living wage. If approved, this $16 billion request would equate to $1.5 billion additional dollars in California to support families and providers with making ends meet.

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

Increasing California’s Earned Income Tax Credit (CalEITC) and expanding the state’s Young Child Tax Credit (YCTC).

Raising the CalEITC to provide a more meaningful credit would help millions of low-paid workers in California, the majority of whom are excluded from the federal EITC and need a strong state credit to help make ends meet. Additionally, extending the YCTC to low-paid families supporting older children — not just those ages 0 to 5 — would help boost the incomes of families with very low incomes who are currently excluded from the full federal CTC.

Strengthening vital supports that improve families’ economic well-being.

Ensuring that all Californians, regardless of immigration status, can benefit from supports.

Investing in affordable housing and homelessness response services.

Ensuring good jobs for all.

Recent efforts to boost the pay of fast food workers and health care workers will go a long way toward helping Californians meet basic needs, but more is needed. State leaders can build on this progress by continuing to raise wages across industries to reflect living costs, bolstering workers’ collective bargaining power to determine their own pay and working conditions, and supporting policies that address persistent inequities in pay and benefits by race, ethnicity, immigration status, gender, and LGBTQ+ status.

Improving access to Medi-Cal.

Despite being eligible, many Californians lose vital Medi-Cal coverage due to complex paperwork and difficulty reaching county offices. Streamlining the renewal process and improving accessibility are crucial to prevent poverty and promote economic stability. Without health coverage, individuals may face high health care costs or medical debt, increasing their risk of falling into poverty. Ongoing health coverage helps lower out-of-pocket expenses and ensures access to preventive care, while supporting workforce participation and continued education, both of which are vital for long-term financial security.

California’s Poverty Rate Soars to Alarmingly High Levels in 2023

key takeaway

Poverty Rates in California Are at the Highest in Years

Poverty Rose Across Children, Adults, and Older Adults

Poverty Increased for All, Californians of Color Face Greater Hardship

Income Inequality Remains Stark in California

Policymakers Can Cut Poverty and Create a California for All

At the federal level, these include:

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

You may also be interested in the following resources:

Wage Disparities for Latinas in California: A Continuing Concern

Revitalizing Unemployment Insurance in California

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