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Press Release · November 28, 2001

Good News: Poverty Down In California

Bad News: Numbers Do Not Reflect State's Higher Cost of Living

SAN FRANCISCO, California, November 28, 2001 -California’s poverty rate dropped considerably during the economic expansion of the mid and late 1990s, according to a study just released by the Public Policy Institute of California (PPIC). But the decline was not enough to offset the decades-long trend of growing poverty in the state – and California still has a higher poverty rate than the rest of the nation.

Using the most recent U.S. Census data (March 2001 CPS), Poverty in California: Levels, Trends, and Demographic Dimensions finds that the number of Californians living at or below the federal poverty threshold fell from a peak of 18 percent in 1993 to 12.9 percent in 2000. By comparison, the national poverty rate was 11 percent in 2000.

While the recent decline is good news, California still presents a somewhat troubling picture in the national context, according to authors Deborah Reed and Richard Van Swearingen. “Over the past three decades, poverty has grown much faster in California than in the rest of the U.S.,” says Reed. “Even though it’s clear from these numbers that the strong economy of the past few years has reached the poorest Californians, the longer-term trend in the state is still one of rising poverty.” This is particularly important now, because California is no longer enjoying prosperous times, and the state’s poverty level could rise again during an economic slowdown, says Reed.

An even more troubling picture emerges when poverty measures take into account California’s relatively high cost of living and high income needs. Using the official federal threshold, California’s poverty rate was just under 13 percent in 2000, the twelfth highest in the nation. When measured relative to the state’s median income, the number rises to 24.3 percent – almost one-quarter of California’s population – and bumps California’s ranking to second highest in the U.S., just below Washington D.C. (26.6%).

Other key findings:

  • California children have higher poverty levels (19%) than those in the rest of the U.S. (16%).

  • The San Joaquin Valley region has the highest poverty rate in the state (22%), while the San Francisco Bay Area has the lowest (7%).

  • In the past two decades, poverty among married couples with children has increased from 7 percent to 12 percent.

  • In 2000, 41 percent of families in poverty had one member who was employed more than 1,500 hours per year.

The Public Policy Institute of California is a private, nonprofit organization dedicated to objective, nonpartisan research on economic, social, and political issues that affect the lives of Californians. The Institute was established in 1994 with an endowment from William R. Hewlett.