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Accounting for housing costs, California has nation’s highest poverty rate

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A new report suggests 19 percent of Californians are impoverished

The supplemental poverty measure takes into account the costs of housing, healthcare, and child care.
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When factoring in housing costs and other basic necessities, nearly one in five Californians lives in poverty, according to data released this week by the U.S. Census Bureau.

Under these measurements, California’s poverty rate is higher than any other U.S. state—though it has improved since last year, when the Census Bureau reported that 20.4 percent of residents were living below the poverty line.

Those calculations are based on a statistic that the bureau introduced in 2011 called the “supplemental poverty measure.”

Unlike the traditional definition of poverty, which has been in use since the 1960s, the supplemental poverty measure takes into account the costs of housing, healthcare, and child care in the areas where people live.

By traditional measurements, 13.3 percent of Californians are impoverished, slightly under the national rate of 13.4 percent. But using the supplemental poverty measure, that share of residents rises to 19 percent.

The supplemental poverty measure also factors in forms of government assistance like housing subsidies and food stamps, as well as income. So pinpointing exactly why those numbers are so far apart is tricky. But the state’s pricy rents and soaring real estate values aren’t helping.

According to the report, housing costs were likely a key factor in boosting the supplemental poverty measure rate in the 16 states where this number was higher than the traditional poverty measure.

California renters pay around $1,447 per month in rents and utilities, according to the bureau’s latest estimates. That’s more than $300 above what renters can expect to pay nationwide ($1,012 per month).

Home prices in California are also far above those nationwide. For homeowners with a mortgage (as opposed to those who own their homes outright), median home values sit at $529,000. That’s more than twice the nationwide median of $239,800.

In Los Angeles County, real estate prices are even higher, with a median value of $595,400. Renter costs, on the other hand, are actually a bit lower than the statewide median. Renters here pay about $1,402 per month, according to the bureau’s estimates.

That doesn’t mean renters in LA don’t struggle to make ends meet. A recent report from Zillow found that the cost of housing eats up more monthly income in the LA area than in any other major U.S. city.