The census figures from 2017 showed that when the cost of living, specifically housing, was factored in, California has the highest poverty rate in the nation with more than 20 percent of its residents, 8 million people, meeting the “supplemental poverty measure.”
When the Public Policy Institute of California (PPIC) developed its own California-specific alternative poverty measure, they attempted to see what poverty would like with rents at the nation’s average.
They found that the overall poverty rate drops from 21 to 14 percent, with nearly 2.4 million residents lifted above poverty. The different was more dramatic for child poverty which fell by 8 percentage points and 717,000 children once the cost of living is lowered.
The bad news is that the 2018 report is just as bad – although the numbers are slightly better with *only* 19 percent in poverty this year as compared to 20.4 percent last year.
The supplemental poverty measure not only looks at income but also takes into account the costs of housing, healthcare, and child care in the areas where people live. That pushes the rate from 13.3 Californians, slight better than the national rate of 13.4 to 19 percent.
As Dan Walters, the longtime Sacramento-based columnist now working for CalMatters, put it last week, “The most obvious and most important victims of California’s chronic and still-growing housing shortage are the countless thousands of families that struggle to put affordable roofs over their heads.
“The shortage has driven prices skyward in a classic example of a supply-demand mismatch, and housing costs are the largest single factor in California’s shameful status of having the nation’s highest level of poverty.“
But he argued there is another dimension to the housing crisis, he believes the housing shortage will ultimately “bite California’s economy.”
He writes: “It’s hurting the state’s overall economy as employers face increasing shortages of skilled workers, especially in coastal areas where the housing squeeze is the tightest and local resistance to housing construction is the most implacable.”
Mr. Walters uses Ventura County as his example. Ventura is largely a suburb just north of Los Angeles and it contains some very prosperous areas. It is also surrounded with agricultural fields and orchards.
This month, Ventura County got some bad news.
“The dominant economic story in Ventura County is a continued decline in total economic activity,” Matthew Fienup, who heads Cal Lutheran’s economic forecasting operation, told a gathering of local officials and business leaders. “We hesitate to the use the word recession, but we don’t know what else to call two consecutive years of economic contraction.”
“Average economic growth over the past four years rounds to 0.0 percent, the worst four-year period for which we have data. While job growth remains positive in Ventura County, sectoral data give little support for optimism. Whether you look to jobs or GDP, the state of the Ventura County economy is weak.”
Here is the kicker, Mr. Fineup believes that the downturn can be directly traced to the growing housing affordability crisis and namely, “the inability of businesses to attract and retain talent.”
This next part should be quite familiar to Davis residents.
Mr. Fineup told the group: “Ventura County’s chronic lack of new construction is driven by a set of urban growth policies … which rank as the most stringent growth restrictions of any county in the United States.”
While Ventura is obviously a lot bigger than Davis or Yolo County – this should sound rather familiar.
Mr. Walters notes, “Ventura is one of several California counties and cities that have adopted Save Open Space and Agricultural Resources (SOAR) restrictions that make it virtually impossible to build housing on agricultural land.
“SOAR is the most virulent form of local not-in-my-backyard (NIMBY) policies that are the major impediments to expanding housing construction needed to keep up with population growth, replace housing lost to fires and begin closing a shortage that now is several million units.”
The problem of businesses attempting to attract and retain talent has become a problem in Davis as well. We have repeatedly cited the statement from the developers of the University Research Park mixed-use development proposal who believe that a barrier to economic development in Davis, to recruiting and retaining business here is that we lack workforce housing.
Once again we are seeing that this is not just a Davis-problem, it is a problem for California as a whole. And it is a problem that resonates or can resonate with both the left and the right. The left in the form of increased poverty rates as the result of lack of housing. The right in the form of a potential economic downturn.
As Mr. Walters notes: “State officials say California needs to be building 180,000 new units of housing a year – a level it achieved prior to the Great Recession, which drove new construction down to as low as 30,000 units.”
Some have recently argued that the slow down in housing is a sign of the next housing market downturn, the end to the bubble, but this evidence suggests that the lack of housing may also end up being a cause of the next downturn here in California.
Writes Mr. Walters, “As the new report on Ventura’s stagnant economy indicates, California will pay a steep economic price if it fails to resolve its housing crisis. Job-creating investment will decline and California will become even more economically polarized with a vanishing middle class.
“Incoming Gov. Gavin Newsom talks of ramping up housing construction. But talk is cheap. The real question is whether he and the Legislature will confront NIMBYism by intervening in local land use policy and compelling Ventura and other localities that resist new construction to meet the state’s housing quotas,” he writes.
He also argues: “It would require courage because NIMBYism is most evident in coastal communities that strongly support Newsom and other Democrats at the polls.”
—David M. Greenwald reporting