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By discounting families’ real expenses, the country’s official poverty measure massively underestimates its poverty rate.
Nearly one in four San Diego County families is functionally poor, even though the federal government’s official source on the topic — the U.S. Census Bureau — says only 14.9 percent of households live below the poverty line.
A recent study by Public Policy Institute of California reconsidered the definition of poverty by accounting for two factors not included in the official measure: regional cost-of-living variations and the benefits of government-subsidy programs.
The study demonstrating a higher real-world poverty rate than federal government data suggests comes amid an increasingly loud conversation about the regional economy’s mix of employment opportunities, and whether they present a real opportunity for families to support themselves.
So when you take into account how much it costs to live in San Diego, and how much support the government provides to low-income households, it turns out 22.7 percent of county households come in below the adjusted poverty threshold of $31,307.
That trend holds true throughout California’s populous, coastal counties. The high cost of living provides more strain than the social safety net provides relief, with more residents,living in poverty than official numbers suggest if you account for both their benefits and expenses.
In Los Angeles, PPIC’s measure says 26.9 percent of households are in poverty, compared with 18.2 percent officially. Orange County’s poverty level increases from 12.8 percent officially to 24.3 percent by PPIC’s count. San Francisco County goes from 12.8 percent to 23.4 percent.
Here’s a heat map of counties across the state, reflecting PPIC’s adjustments to the standard poverty calculation, with darker areas representing those with higher “real” poverty rates.
The study’s authors say the report shows the importance of the existing government safety net.
The study says 30 percent of Californians would be living in poverty if not for safety-net programs — namely, California’s food stamp and cash assistance programs, and the federal earned income tax credit program — but that the benefits of those programs are more than offset by high costs of living, especially in populous, coastal areas like San Diego, Los Angeles, Orange County and the Bay Area.
For families living on the brink in those counties, one of the Onion’s all-time best headlines — “Cost of Living Now Outweighs Benefits” — might hit a little too close to home.
But there’s no obvious policy takeaway from the study. The conclusion — it’s very expensive to live here, which results in a lot of people living in sub-optimal conditions — doesn’t come with an easy policy fix.
Sarah Bone, an economist with PPIC and one of the study’s authors, said the organization would like to track the new poverty measure over time, to give a full picture of poverty in California that acknowledges that the official number doesn’t provide the full picture.
“What we’d like to do going forward is, show what would happen if some of these programs in a substantial way,” she said. “For instance, what if California had its own earned income tax credit, which some other states already have?”
She also said the study gives a full picture of how various support programs work together, whereas they tend to normally be discussed in isolation.
“Our estimates show that although many find it difficult to make ends meet, Californians — particularly children — would look strikingly more impoverished without the assistance provided by safety net programs funded at the federal, state and local level,” the report reads.
But the fact that the number of San Diegans and Californians living in poverty increases when both subsidies and a more complete picture of a household budget are included leaves politicians without easy solutions — short of raising the level of public subsidy until it accounts for everyone below the adjusted poverty line, a political nonstarter.
“This is the simple, basic challenge we face: How do you deal with poverty?” said Erik Bruvold, a local economist and president of the National University System Institute for Policy Research. “How do you deal with what is a result of large economic factors, and the flipside of that is, how do you deal with growing inequality? That just is what it is, and there aren’t easy answers.”
So what’s going on with all those expenses — unaccounted for in the official poverty definition — that overwhelms all the cash and in-kind subsidies governments provide, that are substantial enough to actually raise the number of citizens who can’t make ends meet?
Here’s a chart from PPIC’s study breaking down two major categories of those necessary expenses that the country’s official poverty measure doesn’t include.
The graph shows how much accounting for those two categories of expenses increases the poverty rate throughout California. The dark portion shows the rate without those expenses, and the lighter area shows the change in poverty rate if they’re included.
On the left are out-of-pocket medical expenses. Accounting for money those over 65 need to spend out for health reasons drags an additional 7 percent of that age cohort into poverty. That’s a larger effect than any non-cash government program has on decreasing the poverty rate, according to the study.
The work-related expenses are primarily made up of the costs of childcare and commuting.
But another huge component of the added expenses that make Californians poorer than the official numbers suggest is, unsurprisingly, the high cost of housing, especially in the region’s most populace counties.
The study portrayed this effect by showing what would happen to its poverty rates if all of the highest-populous counties had housing costs comparable to the state’s lower-cost counties.
Here’s what that looked like.
Basically, 7 percent of the population ends up in poverty in the state’s more expensive counties — like San Diego — due to housing costs.
Bruvold said the clearest conclusion one can draw from this is obvious: There are a lot of people in San Diego County living in poverty.
But he said the amount of mobility in San Diego’s population and the fact that the economy is continuing to add jobs suggests it doesn’t suffer from the same type of poverty that faces other parts of the country. That’s something the PPIC study doesn’t speak to, he said.
“It’s not clear to me that San Diego has deep, structural, inter-generational poverty the way other places do,” Bruvold said. “Something like the deep rural intergenerational poverty of the Mississippi Delta, that’s so hard to change, or urban places where employment is shrinking, like Detroit and other Rust Belt cities, where people either don’t or can’t leave.”
He also pointed out that southwest Riverside County and Tijuana are realistically part of the city’s housing supply, since low-wage employees can live there for cheaper than they can live in San Diego, even factoring in the costs of commuting.