Sunday Commentary: Is NIMBYISM to Blame for California Income Disparities?

The Economic this week asks the provocative question: why is one of America’s richest states also its poorest?  The article attributes some of this to NIMBYISM.

One of the more interesting factoids is that, while California has the largest number of poor people at 7.4 million, it also has one of the largest shares of people in poverty.

The article notes that, while most people would think the poorest state in the nation might be Alabama or Mississippi, or perhaps West Virginia in the heart of Appalachia, California, depending on how you interpret the data, could be there as well.

California ranks about in the middle in terms of the “official poverty line” but “the official poverty line” is the same in every state and takes no account of different living costs or of public assistance. So in 2011 the Census Bureau came up with a Supplemental Poverty Measure (SPM), which most social scientists think is a better way of comparing levels of poverty across the country.

“By this yardstick, 19% of Californians were poor in the three years 2015, 2016 and 2017, the highest rate in the country excluding the special case of Washington, DC. The national average was 14.1%.”

While California could be considered the poorest, it “is also among the richest.  According to the Census Bureau, its median household income in 2016 was $11,500 above the national average.”

Part of the problem here is that the problem is misunderstood.  “Poverty is not a result of economic decline or lack of jobs. California’s GDP rose 78% in real terms in the two decades to 2017, overtaking Britain to become the world’s fifth-largest economy. The number of people with jobs has grown almost without interruption since 2011. In September unemployment stood at just 4.1%.”

But the gains from that growth “have been distributed unequally.”

The Economists opine: “The big problem in California, though, is not the stagnation of low incomes per se. It is stagnation relative to costs—in particular the cost of housing.”

So here’s the problem – the general rule of thumb is that budgets for households become strained when the cost of housing accounts for more than a third of their income.

And, according to data from the California Budget and Policy Center, 56% of those living below the official poverty line are spending over half their income on just housing.

The same group notes, “Whereas the poor would once spend their last dime on food for the children, now they spend it on housing—and depend on charities for food.”

The article argues: “High rents reflect the success of California’s businesses—but also decades of low investment and over-regulation.”

Here they fault CEQA, the California Environmental Quality Act.  They call the act in “practice” a “NIMBY’s charter.”  They write: “Four-fifths of all suits filed under it have sought to stop infill development in cities (ie, on land already zoned for building) even though this usually has a smaller environmental impact than building on green fields. California’s development and impact fees are about three times higher than the national average. Zoning laws and parking requirements are onerous, too.”

Paul Tepper of the Western Center on Law and Poverty told the Economist that “it is almost impossible to build affordable houses without subsidies. But California scrapped the largest source of state funding for new affordable housing in 2011. Estimates for the number of such houses California needs to build range from 500,000 to 1m units.”

The Economist: “Soaring rents and stagnant wages are the main contributors to poverty, but not the only ones. Though more generous than in some states, California’s safety-net is still ragged.”

Poverty in California “is made worse by mass incarceration.”  They write: “The problem is not that the state locks up an unusually large number of people. By American standards, its incarceration rate is below average and falling. But California has been more enthusiastic than most states in passing laws restricting what ex-convicts can do. A staggering 4,800 laws prevent former felons getting public housing, or licenses to work as anything from a car mechanic to a nurse.”

Moreover, they note that California politicians “are not ignoring the problem.”  They write: “They are gradually repairing the safety net and rolling back some of the felons’ laws. But these are largely second-order causes of poverty. Politicians are seeking to deal with the primary causes—low, stagnant incomes and housing—by regulation. They have voted to raise the minimum wage to $15 an hour and are asking voters to make it easier to impose rent controls at a referendum next month. These address the symptoms of poverty, not the causes—and rent controls, if imposed, would stymie housing investment.”

I found this an interesting piece in that it really goes across ideological lines.  On the one hand it focuses on income inequality.  Furthermore, it notes and criticizes things like mass incarceration and the safety net.

On the other hand, it criticizes housing regulations and CEQA.

Overall. the thrust shows the emerging overlap of the issue of housing that cuts across ideology and cannot simply be pigeonholed as left or right politics – per se.

Thoughts on how this applies to Davis?

—David M. Greenwald reporting