Is California Really the Poorest State?

In an opinion piece in Forbes, Chuck Devore discussed the shocking fact that, in real terms, California is the poorest state in the union. According to Devore, the true poverty rate, considering cost of living and purchasing power, is nearly one-third, at around 30%, even though in absolute terms the state is ranked 17 on the list of most impoverished states. There are a number of factors influencing this reality and no real, coordinated solution to the problem has emerged.

 

The official poverty measures that the federal government uses do not account for cost of living disparities, so poverty tend to be overstated in the Midwest and South and overstated on the coasts. The Supplementary Poverty Measure, the official government poverty statistics that accounts for regional differences in cost, also places California at the top of the list, at 28%.

 

The issues have been hashed and re-hashed in the nation’s largest metro areas over and over again—gentrification, land-use regulations, lack of affordable housing, and wage stagnation are all at play. Both Northern and Southern California are among the most expensive areas in the country by any measure, and while Silicon Valley and the Internet Revolution transformed the Bay Area, outside of tech, wages have been sluggish and in many cases have declined substantially in real terms. The California “refugee” who flees to nearby states with a somewhat lower cost of living has become a cliché.

 

Many deride the supposed closed-mindedness of politicians who prioritize preserving a mythical California way-of-life against becoming “another Manhattan,” as if the problem is any better in New York City. Letting developers build luxury skyscrapers and other upscale housing is no way to solve this problem. On the other hand, many people are unwilling to face realities of urban population growth fueled by economic changes. People want to be able to afford luxury on their salary; nobody really wants to live in subsidized housing.

 

To be sure, poverty and social problems are not limited to California, and these effects are being felt across the country and all over the world. In the midst of rising income inequality, why would we by surprised by all of this?