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object(Timber\Post)#3711 (44) { ["ImageClass"]=> string(12) "Timber\Image" ["PostClass"]=> string(11) "Timber\Post" ["TermClass"]=> string(11) "Timber\Term" ["object_type"]=> string(4) "post" ["custom"]=> array(5) { ["_wp_attached_file"]=> string(13) "R_1013SBR.pdf" ["wpmf_size"]=> string(6) "399557" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(70918) "The California Poverty Measure: A New Look at the Social Safety Net October 2013 Sarah Bohn, Caroline Danielson, Matt Levin, Maryb eth Mattingly, Christopher Wimer with research support from Bonnie Bui, Shannon McConville , Lucas Manfield, and Tina Tran In collaboration with the Stanford Center on Poverty and Inequality Supported with funding from The Walter S. Johnson Foundation http://www.ppic.org /main/home.asp The California Poverty Measure 2 Summary California is slowly pulling out of a long recession and years of budget turmoil. Social services have been cut and many families have been struggling. In this context, an accurate assessment of the depth, breadth, and location of economic hardship in the state is especially important. To help policymakers and stakeholders determine whether programs aimed at reducing poverty are reaching those in need, we introduce the California Poverty Measure (CPM). A joint project of the Public Policy Institute of California and the Stanford University Center on Poverty and Inequality, the CPM is part of a national effort to measure poverty in a more comprehensive way. It incorporates the changes in costs and standards of living since the official poverty measure was devised in the early 1960s —and accounts for geographic differences in the cost of living across the state. It also factor s in tax credits and in -kind assistance that can augment family resources and subtracts medical, comm uting, and child care expenses . The CPM illuminates the important role of the social safety net—specifically , CalFresh, CalWORKs, the Earned Income Tax Credit (EITC), and other means -tested programs —in moderating poverty. Our findings indicate that the programs included in the CPM —which comprise the bulk of California’s social safety net — cut the state’s poverty rate substantial ly. But our findings also suggest that the additional resources counted in the CPM are more than offset by necessary expenses (pa rticularly for older adults, who may face high medical bills) and the higher cost of living in the most populous areas of the state. In particular:  According to the CPM , about 8.1 million Californians —or 22 percent of the population —lived in poor families in 2011, over 2 million more than estimated by the official poverty measure. Across age groups, c hildren had the highest poverty rate (25%) and adults over 65 had the lowest (19%).  Refundable tax credits (including the EITC) played the largest role for children, cutting the ir poverty rate by 6 percentage points .  CalFresh and CalWORKs each trimmed the child poverty rate by between 2 and 4 percentage points.  Need- based social safety net programs dramatically lowered the number in deep poverty, defined as living at less than half of the poverty threshold. Together, programs like the EITC, CalFresh, and CalWORKs helped keep nearly 2.8 million Californians—or nearly 8 percent of the population —out of deep poverty. Our estimates show that al though many find it difficult to make ends meet , Californians —particularly children —would look strikingly more impoverished without the assistance provided by safety net programs funded at the federal, state, and local level . A companion publication , A Portrait of Poverty within California Counties and Demographic Groups , summarizes demographic and regional differences in California poverty. T ogether, t hese reports provide a richer framework for understanding the social safety net and introduce a valuable resource for policymakers seeking to address material deprivation with constrained public resources . Contents Summary 2 Figures 4 Tables 4 Abbreviations and Definitions 5 Introduction 6 Poverty in California 8 How Many Californians Are Poor? 9 Breaking Down the Poverty Numbers by Age 10 Californians in Deep Poverty 10 How Does the Safety Net Reduce Poverty in California? 12 Cash-Based Programs 13 In-Kind and Tax -Based Programs 14 The Social Safety Net in Total 17 How Do Major Expenses Affect Family Resources? 20 Conclusion 22 References 23 About the Authors 24 Acknowledgments 25 Companion publication released by the Stanford Center on Poverty and Inequality is available on the CPI website: http://inequality.com/poverty/cpm T echnical appendi ces to this paper are available on the PPIC website: www.ppic.org/content/pubs/other/1013SBR_appendix.pdf Interactive features of this paper are available on the PPIC website: California Poverty Rates by County www.ppic.org/main/mapdetail.asp?i=1396 Poverty and Social Programs in California www.ppic.org/main/page.asp?i=1398 http://www.ppic.org /main/home.asp The California Poverty Measure 4 Figures 1. CPM estimates are higher than official poverty rates 10 2. Relatively few of those in poverty ex perience deep poverty 11 3. Cash -based social safety net programs are especially helpful to children and older adults 14 4. In-kind and tax -based social safety net programs boost resources, particularly for children 15 5. California poverty would be much greater in the absence of major need -based safety net resources 17 6. Social Security plays a major role for older adults 18 7. Medical and work expenses are notable factors in CPM rates 20 8. High housing costs in the populous areas of the state drive up poverty rates 21 Tables 1. Poverty thresholds in low -cost, mid -range, and high- cost counties 9 2. Need -based social safety net programs in the CPM 12 http://www.ppic.org /main/home.asp The California Poverty Measure 5 Abbreviations and Definitions CPM California Poverty Measure CalFresh California name for the Supplemental Nutrition Assistance Program (SNAP), the largest federally supported nutrition assistance program . CalFresh provides a monthly benefit that participating low -income families can use to buy groceries. CalWORKs California Work Opportunity and Responsibility to Kids, a federal cash assistance program for low -income families with dependent children (the federal name for the program is Temporary Assistance for Needy Families, or TANF). The program provides a monthly benefit to eligible applica nts and services to help parents move their families toward self -sufficiency. CTC Child Tax Credit. This federal tax credit is available to families with dependent children who file a tax return. The credit is partially refundable, meaning that tax filers with no net tax liability receive a portion, but not all, of the credit. For filers with a tax liability, the CTC offsets the amount they owe. EITC Earned Income Tax Credit. This federal tax credit is available to families with dependent children who file a tax return. A small credit is available to low - income workers with no dependents. All family members must file with a social security number to be eligible for this credit. The credit is fully refundable, meaning that tax filers with no net tax liability receive the full amount for which they are eligible. GA/GR General Assistance/General Relief. This county-funded, county-option program provides a monthly cash benefit to low -income ad ults who do not have dependent children. LIHEAP Low Income Home Energy Assistance Program. This federally supported program provides assistance to low -income families to help with home heating and cooling costs. SNAP Supplemental Nutrition Assistance Program (formerly the Food Stamp program ). See description above under CalFresh. SPM U.S. Census Bureau’s Research Supplemental Poverty Measure. SSI Supplemental Security Income. This program is available to eligible low-income applicants who are blind, disabled, or elderly. The federal government determines eligibility, but California provides a supplemental payment. TANF Temporary Assistance for Needy Families See description above under CalWORKs. WIC Special Supplemental Nutrition Program for Women, Infants, and Children. This federally supported program provides a specified set of foods (v ia a monthly voucher redeemable at approved stores), nutrition educati on, and information about other means -tested programs to low -income women and their children who are under age 5. http://www.ppic.org /main/home.asp The California Poverty Measure 6 Introduction To help policymakers and stakeholders judge the extent to which programs aimed at reducing poverty are reaching those in need , this report introduces the California Poverty Measure (CPM). The CPM provides a multi faceted picture of how California families are faring by taking into account variation in the cost of living across California and the impact of social programs designed to alleviate hardship. In collaboration with the Stanford Center on Poverty and Inequality, we have generated the first set of CPM estimates , using data from 2011. 1 The U.S. Census Bureau has computed official poverty statistics annually since the early 1960s (see the textbox for a brief description ). These statistics are invaluable for tracking poverty trends and for other purposes , but they shed no light on regional differences in the cost of living or the role played by programs like nutrition assistance, housing subsidies, and tax credit s in helping families make ends meet. With the CPM , we adapt the general methodology of the Census Bureau’s Research Supplemental Poverty Measure (SPM) , building on a two -decade effort to design useful alternative poverty measures . 2 Like official poverty statistic s, the SPM compares family incomes to poverty thresholds. But it bases these thresholds on more recent estimates of national household expenditures on food, clothing, utilities , and housing —and factors in regional differences in housing costs. It also includes the main tax and government - provided in-kind benefits in its accounting of family resources. Finally, the SPM subtracts necessary work- related and medical expenses from family resources. 3 We created the CPM to account for realities in California that are not a focus of the SPM . One of our major modifications is an upward adjustment —based on actual enrollment statistics from California — of the number of people making use of the state’s main cash and nutrition assistance programs (CalWORKs and CalFresh) to correct for survey underreporting of these family resources . A second major change is a county -level geographic adjustment of poverty thr esholds to reflect the cost of owning or renting a home across the state, which varies widely. The technical appendices describe these and other modifications . In this report we outline key statewide results: overall numbers of Californians we estimate to be in poverty and in dee p poverty (under 50 percent of the poverty threshold ). Because many social programs target families with children, and because medical expenses tend to loom large for California’s older adults, we examine poverty among children, working -age adults, and adults age 65 and older . 4 We then 1 Please also see A Portrait of Poverty within California Counties and Demographic Groups. The technical appendices to this report provide details of our methodological approach and data sources. Our main survey data source is the American Community Survey, IPUMS version (Ruggles, et al., 2010). 2 In the early 1990s, a National Academy of Sciences panel studied the limitations of official poverty measurement and recommen ded an alternative measure (Citro and Michael, 1995). These recommendations and further study culminated in the Census Research Supplemental Poverty Measure release for the United States, first in 2011. At the same time, a number of research organizations have been creating similar measures for state and sub -state areas. These include a Wisconsin measure by the Institute for Research on Poverty at University of Wisconsin - Madison (see Smeeding et al, 2013), a New York City measure by the NYC Center for Economic Opportunity (2012), and a number o f state measures created by the Urban Institute (see Wheaton et al, 2011). 3 The three major differences between the SPM and the official measure of poverty are: 1) the augmentation of family resources with supports from safety net programs (the official poverty measure includes only pre-tax cash income); 2) the inclusion of medical and work -related expenses (for example, commuting costs and child care); and 3) the restructuring of thresholds to reflect both recent U.S. consumer spending on food, clothing, utilities, and housing and California regional differences in housing costs. For more on the SPM’s methodology, see the technical appendices to this report and Betson, Giannerelli, and Ze dlewski. (2011). 4 Naturally most people live in larger households, and we calculate poverty at the level of the family assumed to share resourc es—so the more apt phrasing is children, or adults, or elderly living in families in poverty. http://www.ppic.org /main/home.asp The California Poverty Measure 7 turn to an assessment of the role of need-based social safety n et programs , both those built in to official poverty statistics, like CalWORKs , and programs (such as CalFresh) that are included in our augmented approach . Finally, w e look at the impact of the cost of living on poverty across the state. Measuring poverty Measuring poverty is typically a two -step process. First, researchers create a poverty threshold — a representation of the amount of resources necessary to achieve a minimum level of material well -being. Second, they estimate families’ resources and compare them to the poverty threshold to determine whether a family is below it (and therefore defined as “poor”). The U.S. official poverty measure—the statistic produced by the Census Bureau to determine the number of individuals deemed “poor” in the United States in a given year —was developed in the e arly 1960s by Molly Orshansky, an economist in the Social Security Administration. The measure compares a family’s pre- tax cash resources (salary, social security, “welfare” income, etc.) to a poverty threshold meant to reflect the minimum level of income needed to meet basic needs. The official threshold is essentially the cost of a subsistence diet in the 1960s multiplied by three (because food constituted about a third of a family’s budget at that time).The threshold is updated annually for inflation and adjusted for family size, but the underlying formula has not changed, despite considerable changes in a typical family’s spending on food relative to other expenditures . The official poverty measure serves a number of purposes. First, because it has been calculated in the same way for roughly 50 years, it is well suited to tracking trends in poverty. Second, means - tested, publicly provided programs use income cut -offs that are pegged to the official poverty threshold. Third, the allocation of federal funds to states and localities is sometimes based on the number or share of residents living under the official poverty threshold. In 2011, the Census Bureau began publishing a “Research Supplemental Poverty Measure,” or SPM, for the entire U.S. In 2012, the Ce nsus Bureau introduced SPM estimates for states; these estimates are averaged over three years due to small sample sizes in the survey data source— the Current Population Survey —used (see Short, 2012). The 2009 –2011 SPM for California was 23.5 percent, higher than any other state and much higher than the state’s official poverty rate of 16.3 percent for the same period. There are other methods of measuring poverty. A number of European countries use purely relative measures —for example, a comparison of incom es across a population. Self-sufficiency indices build up family budgets from typical needs, and then compare actual incomes—excluding government resources —to these family budgets. The CPM and SPM share some features of both of these approaches. http://www.ppic.org /main/home.asp The California Poverty Measure 8 Poverty in California A fam ily is considered to be poor if its resources fall short of the poverty threshold. The CPM combines a family’s annual cash income (including earnings and government -provided cash benefits like CalWORKs) , its tax obligation —a net income boost to low -income families that qualify fo r tax credits —and in-kind benefits like CalFresh . (The official poverty calculus includes only the first category of resources, cash income.) It then subtracts major nondiscretionary expenses . 5 Finally, th e CPM compare s these resources to a family -specific poverty threshold —the monetary resources needed to maintain a basic standard of living . Unlike official poverty thresholds, CPM thresholds are pegged to recent nationwide spending levels on food, shel ter, clothing, and utilities and are further adjusted to account for differences in housing cost s across counties and to differentiate among those who are renting, paying a mortgage, or living in a paid- off home. 6 We give a sense of the wide range of thresholds in Table 1. For a family of two adults and two children, the 2011 poverty threshold was as low as $19,500 or as high as $37,400, depending on where the family lived and whether the family residence was rented or owned. 7 Since most of the state’s resident s live in high-cost counties and 89 percent of Californians live in rented or mortgaged housing, poverty thresholds for a family of four for the majority of state residents ranged between $29,500 and $37,400. 8 5 Note that the n et resource calculation assumes individuals who reside together share resources and expenses, whether or not they themselves are formally receiving a particular category of resource or have a particular type of expense. An example here is school meals, whi ch add to the resources of the family in which a child lives, not just to the child’s resources. In other words, all members of the same fa mily have an identical poverty rate. The CPM recognizes living situations beyond that of a nuclear family, including cohabiting unmarried partners and foster children. See Technical Appendix A for further detail. 6 See Technical Appendix B for additional detail. 7 The CPM threshold for renters and homeowners with a mortgage was higher than the official poverty threshold—$22,811 for a family of four in 2011 —in every California county . 8 Calculated in the ACS, a higher fraction of Californians rent or pay a mortgage (89%) than in other states (81%). http://www.ppic.org /main/home.asp The California Poverty Measure 9 TABLE 1 Poverty thresholds in low -cost, mid-range, and high -cost counties Counties Share of state residents CPM threshold range Average CPM threshold Owners with a mortgage and renters Owners without a mortgage Low-cost Colusa, Del Norte, Fresno, Glenn, Humboldt, Imperial, Kern, Kings, Lassen, Madera, Merced, Modoc, Siskiyou, Sutter, Tehama, Trinity, Tulare, Yuba 9.2% $23,200– $25,400 $19,500– $20,600 $23,900 Mid-range Alpine, Amador, Butte, Calaveras, El Dorado, Inyo, Lake, Mariposa, Mendocino, Mono, Nevada, Plumas, Riverside, Sacramento, San Bernardino, San Joaquin, Shasta, Sierra, Stanislaus, Tuolumne, Yolo 21.8% $25,500– $29,500 $20,500– $23,200 $27,200 High-cost Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, Placer, San Benito, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Ventura 69.0% $29,500– $37,400 $20,700– $25,600 $31,300 SOURCE : Authors’ calculations. Population share calculated from Census SAIPE population estimates. See Technical Appendix B for a description of the methodology used to calculate county -level poverty thresholds. NOTE : Thresholds measured for family of four (two adults and two children). In the table thresholds shown are rounded to the nearest $100. Average thresholds are weighted by population in each county and by shares renting, owning with a mortgage, and owning without a mortgage. C ounties are ranked by CPM threshold s for renters and owners with a mortgage and divided into three roughly equal groups. While all 58 California counties are listed in the table, only 38 can be separately identified in the American Community Survey. Twenty counties are grouped into 3 county groups. See Technical Appendix A for a list of individually identified and grouped counties. How Many Californians Are Poor? In 2011 California’s official poverty rate was 16. 2 percent . The statewide picture from the 2011 CPM —that combines augmented resources and updated thresholds —indicates that 22. 0 percent of Californians lived in poverty (Figure 1 ). 9 This translates into about 8. 1 million Californians in poverty, 2.2 million more than considered poor under the official measure. 10 CPM poverty rates are above 22 percent in the three most populous counties : 26.9 percent in Los Angeles C ounty, 22.7 percent in San Diego County , and 24.3 percent in Orange County . 11 Our companion publication, A Portrait of Poverty within California Counties and Demographic Groups, and an interactive online map, “ California Poverty Rates by County ” provide additional county estimates. 9 Computed in the Current Population Survey, the survey source for the official poverty statistics published each fall, Califor nia’s 2011 official poverty rate was a slightly higher at 16.9 percent, and fell to 15.9 percent in 2012. For all estimates and comparisons presented in this report we use the American Community Survey rather than the Current Population Survey. Differences in data sources, reference period, a nd methodology mean that official poverty statistics differ slightly from these published statistics. For a number of the same reasons our C PM estimates are not strictly comparable to the Census 3 -year SPM estimates for California. 10 Note that the CPM excludes those living in group quarters (including prisons, nursing homes, and dormitories and a small number of college students living on their own). The total population of California in 2011 according to the ACS was 37.69 million. These exclu sions amount to about 850,000 (or 2.2%) of this total. The ACS is a sample of housing units, so those who are homeless are also necessarily exclude d. See the technical appendices for additional details. 11 Note that all point estimates presented in this report are subject to error stemming from sampling variability and imputation methods. We caution against over -interpreting 1 or 2 percentage point differences. See Technical Appendix F for additional discussion of the margin of error of the estimates . http://www.ppic.org /main/home.asp The California Poverty Measure 10 Breaking Down the Poverty Numbers by Age Within age groups, CPM poverty rates were highest for children (25.1 %), lower for working-age adults (21. 4%), and lowest for adults a ge 65 and older (18.9%). This is the same r elative ranking across age groups as the official poverty measure. In numbers, the CPM indicates that about 2. 3 million of California’s 9.2 million children were in poverty in 2 011. Approximately 5 million of California’s 23.2 million working - age adults were in poverty, while about 810,000 of 4.3 million older adults were in poverty. For additional demographic subgroup estimates, see A Portrait of Poverty within California Counties and Demographic Groups . FIGURE 1 CPM estimates are higher than official poverty rates SOURCE: CPM estimates for 2011 (see technical appendices for data and methodology). Official poverty estimates from the California sample of the ACS (2011), excluding those not in the poverty universe for both measures. NOTE: Age categories are mutually exclusive and collectively exhaustive. More Californians are in poverty under the CPM compared with official poverty estimates —and this is largely because more adults and elderly are in poverty. The CPM child poverty rate is higher than the rate calculated using the official approach, but the di fference is relatively small. (As we show below, without the resources provided by safety net programs, many more children would be in poverty.) The difference is most striking for older adults, who face high out -of -pocket medical costs ( also discussed below ). Californians in Deep Poverty The rate of “deep” poverty —living under half of the poverty threshold— is lower under the CPM than in the official poverty estimate . This is particularly true for children, while older adults are an exception. We estimate that roughly a quarter of California ns under the poverty threshold had resources less than half of the poverty thresholds (Figure 2). (In dollar terms, those living in deep poverty under the CPM had resources under roughly $16,500 for a family of four in a high-cost county and under $12,500 in a low -cost county. ) 12 This translates into ab out 530,000 children, 1.5 million working -age adults, and 210,000 older adults living in deep poverty. 12 Threshold amounts included in this paragraph are for families that rent or have a mortgage, and are the population -weighted average of the highest third of counties and the population- weighted average of the lowest third of counties. Table 1 provides additional thresholds, and Technical Appendix B lists thresholds for each county for families of four by whether they rent, owns with a mortgage, or own without a mortgage. 22.0 25.1 21.4 18.9 16.2 23.1 14.6 9.6 0 5 10 15 20 25 30 All persons ChildrenAdults 18-64 Adults 65+ Percent CPM Official http://www.ppic.org /main/home.asp The California Poverty Measure 11 FIGURE 2 Relatively few of those in poverty experience deep poverty SOURCE: CPM estimates for 2011 (see technical appendices for data and methodology ). NOTE S: The poverty rate for non -elderly adults is similar to the overall poverty rate and is not shown in the figure. Technical Appendix E provides additional estimates. In contrast, more than 40 percent of those classified as poor using the official poverty methodology are in deep poverty . 13 T his may seem surprising, given the CPM’s generally higher thresholds. But it makes sense when we consider that the CPM factors in safety net programs that are excluded from the official poverty measure. These programs contribute si gnificantly to the resources of people at the very bottom of the income sp ectrum . To gain further insight into the impact of the social safety net on poverty in California , we turn to a discussion of the state and federal programs. 13 In particular, 6.8 percent of all residents (excluding the homeless and those living in group quarter s), 9,6 percent of children, 6.5 percent of adults age 18– 64 and 2.4 percent of adults age 65 and older lived in deep poverty according to the official poverty calculus. Official pove rty statistics calculated in the 2011 ACS (Bishaw 2012). 6.1 5.7 4.9 15.9 19.4 14.0 0 5 10 15 20 25 30 All persons ChildrenAdults 65+ Percent 50% to under 100% Under 50% http://www.ppic.org /main/home.asp The California Poverty Measure 12 How Does the Safety Net Reduce Poverty in California? In California, there are a number of need- based programs funded by local, state, and federal governments to help families make ends meet. Table 2 lists the largest programs for low -income families . As we have alread y noted, the official poverty statistics incorporate safety net programs that provide cash -based assistance — CalWORKs for families with children , General Assistance (GA) for adults without dependent children , and Supplemental Security Income ( SSI) for the disabled, blind, and elderly. We have also noted that in addition to cash -based assistance, the CPM incorporates large -scale in -kind and tax -based programs like CalFresh, school meals, housing subsidies, and the EITC that are excluded from the official poverty calculation . These are the largest social safety net programs that augment the resources of low- income Californians. Social S ecurity also augments incomes, especially those of older adults. Because it has a wider scope than the other programs lis ted in Table 2 —it covers all retired workers and eligible family members —we discuss S ocial S ecurity separately below . TABLE 2 Need -based s ocial safety net programs in the CPM California 2011 Recipients (millions) State/local expenditures on benefits (billions) Federal expenditures on benefits (billions) Cash-based programs CalWORKs 1.47 $1.74 $1.70 General Assistance 0.15 $0.40 – Supplemental Security Income 1.27 $0.91 $8.23 In-kind and tax -based programs CalFresh 3.64 $0.20 $6.53 Child Tax Credit* 2.91 (tax filers) – $4.14 Earned Income Tax Credit 3.27 (tax filers) – $7.25 Federal housing subsidies 0.48 (housing units) –** $3.60 School lunch and breakfast 2.18 $0.16 $1.88 SOURCES : California Department of Education; California Department of Social Services; Center on Budget and Policy Priorities (CBPP) ; Food and Nutrition Service; Internal Revenue Service; Office of Management and Budget. NOTES : In most cases, “Recipients ” = average monthly benefi ciaries, but there are some exceptions. For CPM estimates, a different measure of program participation that aligns with the questions asked in the ACS (see Technical Appendix C). For s chool lunch and breakfast, we show average daily participation in free and reduced price meals. For tax programs we show the annual number of filers —mostly families with dependent children —instead of the number of beneficiaries . For housing subsidies, we sho w the number of units. Expenditure s by level of government include only benefits paid and exclude costs of administering programs (with the exception of housing subsidies). CalWORKs and CalFresh expenditures include state and local funds for California Ass istance Program for Immigrants (CAPI) and the California Food Assistance Program (CFAP). Other cash assistance families may receive, including adoptions assistance, foster care, unemployment insurance, child support , are included in the ACS “other income” category and therefore are not individually distinguished in the CPM . The federal expenditure statistic for housing subsidies i ncludes operating and capital funds for public housing and federal funds for the Section 8 Housi ng Choice Voucher program. * Refu ndable portion. ** State and local government expenditures on means -tested, housing -related programs are channeled into multiple, disparate programs across California. We lack a statewide figure for total state and local spending on housing subsidies. Certain need-based programs are not included in families’ resources in the CPM . A large -scale example is means -tested health insurance programs such as Medi -Cal and Healthy Families , which provide in -kind http://www.ppic.org /main/home.asp The California Poverty Measure 13 benefits that are difficult to monetize. Families enrolled in these programs do tend to have relatively lower out- of-pocket medical expenses in the CPM . For other resources not counted in CPM family resources , see the text box. Cash -Based Programs We begin with the means -tested cash -based programs that are included in official poverty statistics: General Assistance, CalWORKs, and SSI. In 2011, the average monthly benefit for a CalWORKs family was $459. For SSI r ecipients, the average was $640. For individuals receiving GA, it was $218. 14 The leftmost bar in Figure 3 shows the comparison for all Californians and indicates that CalWORKs and GA together reduced the CPM rate statewide by a bout 1.3 percentage point s, and SSI by 1.4 percentage point s. 15 In other words, without counting CalWORK s and GA benefits, an additional 470,000 Californians would have been below the poverty line ; and without SSI income , an additional 510 ,000 state residents would have been in poverty . 16 14 Figures calcu lated from California Department of Social Services, “Public Assistance Facts and Figures” ( www.cdss.ca.gov/research/PG370.htm). Average taken of 12 months of reports for SSI and GA, for individuals . July 2011 average taken for CalWORKs, at the level of the assistance unit, or case. 15 CalWORKs aids many more individuals than does GA, and the bulk of the reduction in the poverty rate shown in Figure 3 is due to CalWORKs. 16 It is important to note tha t these calculations are intended to show how resources from various safety net programs move the CPM rate rather than the improvements in well -being that safety net programs may produce . Potential safety net resources excluded from the CPM While the CPM incorporates an augmented set of the resources available to California families and the costs they face, we do exclude several important resources widely utilized by California families. We notably omit the effect of the Special Supplemental Nutrition Program for Wo men, Infants, and Children (WIC) and the Low -Income Heating and Energy Assistance Program (LIHEAP). We also omit all county and local -level programs, with the exception of General Assistance. The CPM also excludes in -kind donations from food banks and other charitable organizations. The state’s In -Home Supportive Services (IHSS) program that provides services to the elderly and disabled is a distinctive case: individuals providing care report the services as their own earnings on the survey, although those on the receiving end of the assistance are not asked about their receipt of this type of benefit. The survey data used to estimate the CPM (the U.S. Census Bureau’s American Community Survey) also precludes a more detailed accounting of certain income sources, including unemployment insurance payments, foster care payments, adoption assistance payments, and child support payments. These sources are included in family resources as “other income,” and so cannot be considered separately . http://www.ppic.org /main/home.asp The California Poverty Measure 14 FIGURE 3 Cash- based social safety net programs are especially helpful to children and older adults SOURCE: Authors’ calculations for 2011 (see technical appendices for data and methodology). NOTE S: Adult poverty rate not shown in figure. Technical Appendix E provides additional estimates. Percentage point difference between CPM and CPM rate absent program shown above each bar. Not surprisingly, CalWORKs benefits play the biggest role for children, cutting the child poverty rate by 2.5 percentage points. 17 Of the 47 0,000 residents above the poverty line because of CalWORKs, about half were children. We cannot draw on comparable estimates for other states, but it is reasonable to suppose that the poverty reduction role of CalWORKs is much larger in California , which has about a third of the nation’s recipients of TANF (the federal name for the program), but only 12 percent of the U.S. population —and roughly the same share of the nation’s poor , according to official poverty statistics . 18 Although California did substantially reshape its cash assistance program in the 1990s , the state has nonetheless directed more resources toward cash assistance for low -income families with dependent children in recent years than most other states have . SSI played the biggest role for older adults: t he poverty rate among those 65 and older was nearly 3 pe rcentage points lower due to the SSI program . 19 The program cut the poverty rate for children by 1 percentage point. In-Kind and Tax -Based Programs Relative to other parts of the need- based safety net, t he resources from the federal Earned Income Tax Credit ( EITC ) and refundable portion of the Child Tax Credit (CTC) play the largest role in lowering the CPM poverty 17 We correct for underreporting of CalWORKs receipt and benefit amo unt in the ACS. In particular, we adjust CalWORKs receipt upward to match administrative totals by race/ethnicity, case size, and county of residence. We also adjust CalWORKs benefits to match administrative survey data on actual recipients in 2011. If we instead rely on self -reported CalWORKs receipt, the overall poverty rate is 22.6 percent and the child poverty rate is 26.2 percent. When we impute CalWORKs receipt to those who did not report it themselves, we exclude likely unauthorized immigrants. For more details, see Technical Append ices A and C . 18 The Census Bureau estimates for the U.S. as a whole that TANF reduced poverty by 0.3 percentage points in 2011 (Short, 2012). However, their methodology relies on self -reported TANF. As described in Technical Appendix C, we adjust self-reports of CalWORKs to more closely match administrative case counts and benefits. 19 Social Security (discussed below) is also critical for older adults. http://www.ppic.org /main/home.asp The California Poverty Measure 15 rate (Figure 4).20 Both programs are aimed at low - and moderate- income families with dependent children that file tax returns . The EITC is fully r efundable, meaning that a family with earnings but no net tax obligation can receive the full amount in the form of a refund. The CTC is part ially refundabl e, but we examine only the refundable portion of this credit, which primarily benefits families with low and moderate earnings . Together , the EITC and the refundable portion of the CTC trimmed the poverty rate by 3.2 percentage points. 21 The c hild poverty rate improved even more, falling from 3 1.1 percent to 25. 1 percent —or 6 percentage points — as a result of factoring in the EITC and CTC. Since many adults live in households with children, the ir poverty rate also dropped, although to a smaller extent (the ir poverty rate was 2.6 percentage points lower) . This translates into 560 ,000 fewer chil dren and 600,000 fewer working-age adults in poverty af ter including the EITC and CTC in family resources . 22 Not surprisingly, the programs had a negligible effect on poverty among adults age 65 and older , lowering their poverty rate by well under 1 percentage point . FIGURE 4 In-kind and tax -based social safety net programs boost resources, particularly for children SOURCE: Authors’ calculations for 2011 (see technical appendices for d ata and methodology). NOTE S: Adult poverty rate not shown in figure. Technical Appendix E provides additional estimates. School meals include the National School Lunch Program and the School Breakfast Program, but exclude summer meal programs and nutrition programs in after care and day care settings. Percentage point difference between CPM and CPM rate absent program shown above each bar. 20 Both the CPS - and ACS -based supplemental poverty measures include simulated tax liabilities and credits and must make a number of assumptions. We compared the results against aggregate administrative data from the IRS (e.g., total filers, total filers wit h social security numbers, total amount of EITC paid). For the EITC in particular, various reasonable assumptions result in estimates that are roughly 75 percent to 85 percent of the actual amount paid to Californians for the 2011 tax year. See Technical Appendix C for details. The estimates reported in the text reflect the set of assumptions that produces the higher total. 21 A substantial body of research finds that families with children on the whole responded to incentives embedded in the EITC by working more (Eissa and Hoynes, 2006). The change in the poverty rate discussed in the text abstracts from this behavioral response to the EITC. Instead, it assesses the simply mechanical effect on the poverty rate of zeroing ou t the EITC (and the CTC) in the CPM resources calculation. 22 In the U.S. as a whole, the Census SPM estimates indicate that the EITC and the refundable portion of the CTC together reduce d poverty by 2.7 percentage points (Short, 2012). The EITC is the onl y tax credit that requires all family members to file with a social security number to claim the credit. This implies that in cases where citizen children live with unauthorized immigrant parents, the entire fami ly is ineligible for the EITC. (The CTC does not require a social security number for tax filers.) If families with citizen children could receive the EITC regardless of parent status our estimates of the poverty rate would drop by about 1 percentage point for children, and under 1 percentage point overall. This represents about a 250,000 additional persons above poverty. For example, if unauthorized parents gained citizenship or provisional immigrant status and could apply for a social security number —both plausible change s the U.S. Congress could i mplement as part of immigration reform legislation —then these families could conceivably receive the EITC. http://www.ppic.org /main/home.asp The California Poverty Measure 16 Benefits from CalFresh, California’s name for SNAP, averaged $147 a month per person in 2011. Our estimates imply th at CalFresh benefits reduced the poverty rate by just over 2 percentage points , or by close to 800 ,000 people . 23 We find this large effect in spite of two limiting characteristics of California’s CalFresh caseload . First, compared with other states, California has long had low participation in SNAP —many eligible families do not participate in the program ( although this state of affairs may now have begun to change ). Second, California has a disproportionate share of u nauthorized immigrants, who are not eligible for CalFresh . 24 CalFresh benefits cut the child poverty rate by about 4 percentage points (or 380,000 children). CalFresh lowered the poverty rate among adults age 65 and older by a small amount (well under a percentage point) . It is likely that California’s policy of replacing CalFresh eligibility for SSI recipients with an automatic monthly $10 payment reduces CalFresh participation among those 65 and older relative to other states. 25 Households that are ineligible for CalFresh because all members receive SSI tend to consist of one or two elderly adults. ( In households that include both SSI and non- SSI recipients, the non -SSI members can apply for CalFresh.) Using the CPM, we can estimate the extent to which increased participation in CalFresh would reduce poverty under different scenarios . For example, we find that if all Californians in families with incomes below the official poverty line participated in CalFresh —by no means all of those who are eligible—250,000 additional Californians would receive this assistance. As a result, the poverty rate would be 0.7 percentage points lower . 26 Federal h ousing subsidies reduced the poverty rate by over 1 percentage point, or about half a million Californians . The reduction in the poverty rate was largest for older adults (2.5 percentage points) and was just nearly 2 percentage point s for children . 27 Finally, s chool meals played a small role in reducing poverty, reducing the overall poverty rate by about 0.5 percentage points . Again, this program’s biggest role is for child ren—it trimmed the child poverty rate by just over 1 percentage point ( or about 11 0,000 children ). It is important to remember that the maximum boost to resources from school meals is smaller than that of other programs : In our calculations, school -age children participating in fr ee breakfast and free lunch receive the equivalent of about $80 a month during the school year. 28 23 We adjust self -reported CalFresh receipt in the ACS upwards to match administrative totals by race/ethnicity, case size, participation in CalWORKs , and county of residence. For both self -reported SNAP and assigned recipients, we impute benefit amounts based on administrative survey data (see Technical Appendix C for details). If we rely solely on self -reported receipt of CalFresh, the overall poverty rate is 22.7 percent instead of 22.0 percent, and the child poverty rate is 26.3 percent instead of 25.1 percent. When we impute CalFresh receipt to likely eligible survey respon dents who did not report it themselves, we exclude likely unauthorized immigrants. For more details, see Technical Appendix C. 24 Citizens and legal residents who live in household s with unauthorized immigrants may be eligible for CalFresh. 25 California is currently the only state with this policy, known as “SSI cash out.” This payment has not risen since the 1970s, and some households containing SSI recipients would receive more th an $10 if this policy were rescinded. However, some households would entirely lose eligibility for CalFresh if the policy were eliminated (Cunnyngham, 2010) 26This hypothetical scenario assumes that families who would newly receive CalFresh otherwise mainta in the same level of income and net resources. If we make the broader assumption that everyone below 125 percent of the official poverty threshold enrolls in SNA P, the overall reduction in the poverty rate rise to 1.1 percentage points. 27 Note that federa l housing subsidy programs, unlike the other programs discussed in this section, are capped and do not serve all eligible applicants. To estimate the value of housing subsidies families receive, we impute receipt of the two main government -supported housing programs (public housing and Section 8 housing subsidies) based on reported participation in the Current Population Survey. We then assign benefit amounts based on household income and Fair Market Rent data. See Technical Appendix C for further detail. 28 If we assume instead that all children we determine to be eligible for school meals received them, we estimate that the pover ty rate for children would be an additional 0.6 percentage points lower. We determine eligibility for school meals using cash income as self -reported in the ACS. We then assign eligibility based on administrative counts of students participating in free and reduced price school breakfast and school lunch by http://www.ppic.org /main/home.asp The California Poverty Measure 17 The Social Safety Net in Total Californians can be eligible for multiple , need-based safety net programs at once (although they do not always make use of the benefi ts for which they are eligible). To estimate how much social safety net resources lower the CPM rate , we cannot simply add up our individual program estimates. This is because some who make use of the safety net may need a combination of program resources to help them move above the CPM poverty threshold, while others —closer to the poverty threshold —might have total net resources above the poverty line if they utilize any one of several programs. In Figure 5 we show the combined effect of the need-based programs discussed in the previous two sections on the CPM rate and on the number of Californians in poverty and in deep poverty . With these safety net resources, 22.0 percent of Californians were in poverty in 2011; w ithout these resources , the share jumps to over 30 percent. For children, the effect is much larger: in the absence of need- based safety net resources, a startling 39.0 percent of California’s children would have been in poverty according to the CPM . The role of the safety net is smaller for older adults , but it is still substantial. 29 FIGURE 5 California poverty would be much greater in the absence of major need -based safety net resources SOURCE: Authors’ calculations for 2011 (see the technical appendices for descriptions of the data and methodology). NOTE S: Figure shows the CPM rate absent the combined effect of CalWORKs, GA, SSI, CalFresh, the EITC, the CTC, housing subsidies, and school meals . Technical Appendix E provides additional estimates. county. We determine the value of the meals received using the reimbursement amount per meal of each type in California for t he average of the 2010– 11 and 2011– 12 school years. See Technical Appendix C for further detail. 29 As a point of reference, simply summing the poverty reduction effects of each program individually without accounting for the interaction across programs gives a somewhat larger—but inaccurate —9.9 percentage point reduction in poverty for all persons (as compared to the 8.4 percentage point reduction shown in Figure 5). http://www.ppic.org /main/home.asp The California Poverty Measure 18 In addition, w e find that these safety net programs play an even larger role in moderating the rate of deep poverty statewide : M ore than twice as many Californians —and more than three times as many children — cross into the group in deep poverty in the absence of resources from safety net program s. In numbers, an additional 2.8 million Californians— and over 1.2 million children—would be considered in deep poverty if safety net benefits were not counted. The social safety net can be broadly defined to include all programs that reduce poverty, not just programs with income -based eligibility criteria. Social Security is a key component of this more -broadly -defined safety net. 30 Figure 6 illustrates the enormous role of this program —intended to increase economic security for retired workers —in lowering the poverty rate for older adults. FIGURE 6 Social Security p lays a major role for older adults SOURCE: Authors’ calculations for 2011 (see the technical appendices for descriptions of the data and methodology). NOTE S: The center bar in each grouping shows the CPM rate absent the combined effect of CalWORKs, GA, SSI, CalFresh, the EITC, the CTC, housing subsidies, and school meals. The rightmost bar in each grouping shows the CPM rate absent the combined effect of all these programs and also Social Security . Technical Appendix E provides additional estimates. California’s social safety net is complex. Even the key need- based programs, which share the goal of shoring up family resources, do not share precise eligibility criteria or target identical populations. Moreover, not all who obtain resources from need- based safety net programs are lifted out of poverty . For example, they may not participate in all programs for which they may qualify. 31 And s ome may not need the safety net assistance for which they qualify to be above the CPM poverty line . For one thing , CPM thresholds are sometimes lower than the official poverty thresholds that determine eligibility for safety net programs. More importantly , eligibility for tax-based programs —which provide the most substantial boost to family resources overall— extends higher on the income scale than eligibility for CalFresh, housing subsidies, a nd CalWORKs. 32 30 A core criterion for all segments of Social Security program eligibility is a work history. Of the thre e broad types of benefits, the majority is paid to retired workers. Californians received $66.7 billion in Social Security benefits in 2011. Of this total, 70 percent was paid as retiree benefits, 14 percent was paid as survivor benefits, and 16 percent wa s paid as disability benefits. See www.ssa.gov/policy/docs/statcomps/supplement/2012/5j.html . 31 The overall impact of increased income from safety net programs on family resources depends partly on individual decisions ab out work. For example, with resources from a safety net program single parents may choose to spend more time caring for children rather than working longer hours. 32 Recall that the tax credits under discussion are the EITC and the refundable portion of the CTC. http://www.ppic.org /main/home.asp The California Poverty Measure 19 We estimate that about 17 million Californians lived in families that gained resources from one or more of the need- based social safety net programs included in the CPM. 33 This participation level reflects the fact that social safety net programs do not only target those in poverty. (If we include S ocial Security , beneficiaries rise to 21.4 million.) Of those who received resources from one or more need-based programs, about 18 percent —or 3.1 million Californians—were moved above the CPM poverty threshold by their participation. Thirty -eight percent remained in poverty des pite their participation (6.4 million) , and 44 percent (7.5 million) were not officially under the poverty threshold , even absent the resources from the social safety net (although they may have been close to the poverty line). Nonetheless, safety net program benefits not counted in official poverty statistics substantially alter the picture of poverty in the state . If the CPM did not factor in the assistance provided by the EITC CalFresh, and other programs, m any more Californians, and especially children, would be deemed poor—and deep poverty rates would be startlingly higher . 33 Note that family members are assumed to share resources, whether they themselves are formally the recipient of a particular safety net benefit or not. http://www.ppic.org /main/home.asp The California Poverty Measure 20 How Do Major Expenses Affect Family Resources ? As we have seen, the CPM shows 2.1 million more Californians —roughly 6 percent of state residents —to be in poverty than do official poverty statistics . Some of this difference has to do with the way expenses and thresholds are factored into the CPM. In- kind assistance and tax credits tend to add resources that particularly help children . At the same time, cost -adjusted thresholds and the subtraction of nondiscretionary expenses from family resources increase poverty rates. To better understand the role of medical and work -related expenses on overall resources, we examine the difference in poverty rates when they are left out of the CPM calculation. If we exclude out -of -pocket medical expenses from the CPM calculation, the poverty rate for older adults drops by 7 percentage points —an amount that is much larger than any of the in -kind safety net programs we discussed in the previous section (Figure 7). A similar exercise highlights the effect of work expenses on the poverty rate. If we exclude work expenses —which consist largely of out -of -pocket child care and commuting costs—from the CPM calculation, elderly poverty rates are about the same, but the poverty rate for children is a little more than 3 percentage points lower. In other words, work expenses increase the child poverty rate by about the same amount that CalWORKs or CalFresh lower the rate. FIGURE 7 Medical and work expenses are notable factors in CPM rates SOURCE: Authors’ calculations for 2011 (see technical appendices for descriptions of the data and methodology ). NOTES : Figure shows the effect of excluding medical out-of -pocket expenses and of work -related expenses (mainly out -of - pocket child care and commuting costs) on CPM poverty rates. Technical Appendix E provides additional estimates. Percentage point difference in CPM rate absent expense shown above each bar. http://www.ppic.org /main/home.asp The California Poverty Measure 21 A third major driver of expenses is the cost of living in California . Recall that the CPM thresholds are adjusted for housing costs across the state and vary substantially. A comparison of poverty rates in high - cost counties versus low -cost counties suggest s that variation in housing cost s is extremely important (see A Portrait of Poverty within California Counties and Demographic Groups and “California Poverty Rates by County”). 34 To illustrate the importance of this variation in housing costs for poverty rates , we conducted a thought experiment: What would poverty rates in California be if everyone in the state were to experience the housing costs of a low -cost county? 35 Figure 8 shows the results and indicates that the overall poverty rate in California would be 15.0 percent, 7 percentage points lower than the CPM estimate of 22.0 percent —or a bit lower than California’s official poverty rate . FIGURE 8 High housing costs in the populous areas of the state drive up poverty rates SOURCE: Authors’ calculations for 2011 (see technical appendices for descriptions of the data and methodology). NOTES . The thresholds for the hypothetical low -cost county are for Fresno County —the most populous of the low -cost tier of counties shown in Table 1 . Technical Appendix E provides additional estimates. Child poverty would be more than 9 percentage points lower ( 16.2%), and the poverty rate for older adults would drop to 13.3 percent. These differences are so large because m ost Californians live in high-cost areas and very few Californians own their homes outright. In sum, when we factor in major medical, work, and housing costs, we gain insight into factors driving poverty for older adults as well as the role of place in shaping poverty in California . We can begin to understand why so m any Californians are in poverty despite resources provided by the social safety net. 34 Of course, counties also vary in several other important dimensions of the CPM —income and earnings patterns, administration and take -up of key safety net programs, demographic makeup. It would be inaccurate to say that one “high -cost” county has a higher poverty rate than a “low -cost” county solely because of differences in cost of living. 35 The CPM treats the cost of housing as nondiscretionary or exogenous. We do not account for the bevy of factors that contribut e to a family’s choice of location and housing. While cost is a major factor, other factors may play an important role. For example, some loc ations might have amenities or opportunities that offset high housing costs. Similarly, in the thought experiment described in the text we do not model changes in family behavior if their housing costs were suddenly lowered (for example, a possible reduction in working among secondary ea rners). http://www.ppic.org /main/home.asp The California Poverty Measure 22 Conclusion We have described a new way of measuring poverty that substantially alters our understanding of how individuals and families in California are faring. In t he context of the emerging nationwide effort to address shortcomings of official poverty statistics, our aim is twofold: to reassess how much resources people in all parts of the state need to make ends meet and to measure the resources they have at hand m ore comprehensively . This produces a sobering picture for California as a whole. We find that 8.1 million Californians —22.0 percent of the populatio n—did not have sufficient resources to meet basic needs in 2011. The larger number of Californians in poverty , as compared to official statistics, is driven mainly by increases in the working -age and older adult poverty rates . While the child poverty rate under the CPM is only 2 percentage points higher than the official child poverty rate, children continue to have the highest poverty rate across age groups. The CPM account s for the fact that, for most Californians, high living costs —particular ly housing costs— offset the resources they have available to make ends meet. We also factor in exp enses that eat into resources and drive up poverty, particularly medical expenses borne by older adults. Work expenses such as commuting costs and child care also play a role in raising the poverty rate under the CPM. At the same time, we find that government programs play a substantial role in alleviating poverty. In the absence of cash -based, in -kind, and tax -based safety net programs, our estimate of child poverty would be 39.0 percent, 13.9 percentage p oints higher than the actual estimate of 25.1 percent. For working- age and older adults, the combined role of these programs was smaller, but still considerable. And we find that need- based safety net programs cut deep poverty sharply . We aim for the CPM to become a tool for policymakers and other stakeholders. Decisionmakers seeking ways to make efficient use of public resources can benefit from accurate information about regional differences that shape poverty and the major programs that augment family resources . F or example, t he CPM makes possible richer investigations of multiple social safety net programs across diverse groups of low -income families . This report and our companion publication, A Portrait of Poverty within California Counties and Demographic Groups , lay the groundwork for additional targeted examinations of poverty across the state. http://www.ppic.org /main/home.asp The California Poverty Measure 23 References Betson , David, Linda Giannerelli, and Sheila Zedlewski. 2011. “Workshop on State Poverty Measurement Using t he American Community Survey.” Urban Institute. Available at www.urban.org/publications/4123 96.html. Cable, Dustin. 2013. “The Virginia Poverty Measure: An Alternative Poverty Measure for the Commonwealth.” University of Virginia —Welden Cooper Center for Public Service, Demographics & Workforce Group. Available at www.coopercenter.org/demographics/VPM . Center on Budget and Policy Priorities. 2011. “Spreadsheet with State-by -State Rental Assistance Data.” Available at www.cbpp.org/files/2011-state -fact-sheets -public.xls . Center on Budget and Policy Priorities. 2012. “California: Federal Rental Assistance Facts.” Federal Rental Assist ance Fact Sheet. Available at www.cbpp.org/files/4- 13-11hous -CA.pdf . Chung, Yiyoon, Julia B. Isaacs, Timothy M. Smeeding, and Katherine A. Thornton. 2012. “Wisconsin Poverty Report: How the Safety Net Protected Families from Poverty in 2010.” University of Wisconsin -Madison Institute for Re search on Poverty. Available at www.irp.wisc.edu/r esearch/wipoverty.htm . Citro, Constance F. and Robert T. Michael (eds.). 1995. Measuring Poverty: A New Approach . Washington DC: National Academy Press. Cunnyngham, Karen. 2010. “Estimated Effects on the Supplemental Nutrition Assistance Program of Eliminating California’s SSI Cash -Out Policy.” Final Report to California Food Policy Advocates, February. Available at http://cfpa.net/CalFresh/CFPAPublicatio ns/CalFresh-MathematicaEffectofCashOut -2010.pdf. Eissa, Nadia and Hilary M. Hoynes. 2006. “Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply .” In Tax Policy and the Economy, Volume 20. James M. Poterba (ed.). Cambridge, MA: MIT Press. Falk, Gene. 2012. “Low- Income Assistance Programs: Trends in Federal Spending.” Congressio nal Research Service (CRS), House Ways and Means Committee, United States Congress. Available at greenbook.waysandmeans.house.gov/sites/greenbook.waysandmeans.house.gov/files/2012/documents/RL41823_gb.pdf. NYC Center for Economic Opportunity. 2012. “The CEO Poverty Measure, 2005 –2010. ” Working paper. Available at www.nyc.gov/html/ceo/html/reports/report.shtml . Renwick, Trudi, Kathleen Short, Ale Bishaw, and Charles Hokayem. 2012. “Using the American Community Survey (ACS) to Implement a Suppl emental Poverty Measure (SPM).” P resented at Population Association of America Annual Meeting , San Francisco, May. Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroeder, and Matthew Sobek. 2010. Integrated Public Use Microdata Series: Version 5.0 [Machine -readable database]. Minneapolis: University of Minnesota. Short, Kathleen. 2012 . “The Research Supplemental Poverty Measure: 2011 .” Current Population Reports P60 –244 . Washington DC: United States Census Bureau. Available at www.census.gov/hhes/povmeas/methodology/supplemental/research/Short_ResearchSPM2011.pdf . Smeeding, Timothy M., Julia B. Isaacs, and Katherine A. Thornton. 2013. “Wisconsin Poverty Report: Is the Safety Net Still Protecting Families from Poverty in 2011?” University of Wisconsin -Madison Institute for Research on Poverty, June. Available at www.irp.wisc.edu/research/WisconsinPoverty/pdfs/WI -PovertyReport2013.pdf. Wheaton, Laura, Linda Giannarelli, Michael Martinez -Schiferl and Sheila Zedlewski. 2011. “How Do States’ Safety Net Policies Affect Poverty?” Working Families Paper 19, Urban Institute. http://www.ppic.org /main/home.asp The California Poverty Measure 24 About the Author s Sarah Bohn is a research fellow at the Public Policy Institute of C alifornia. H er research addresses issues at the intersection of public policy and labor markets, with particular attention to low -income and vulnerable populations. At PPIC, her work focuses on poverty, the economy, immigration, and higher education. She has published research on California’s community colleges, underground labor markets, and the impact of immigration policy. She has also conducted research on income inequality, with a focus on the role of unemployment and educati onal attainment on family economic outcomes. She holds a Ph.D. in economics from the University of Maryland, College Park. Caroline Danielson is a research fellow at the Public Policy Institute of California. Her research focuses on social safety net progr ams, including nutrition assistance, cash assistance, and child welfare. Before coming to PPIC she was a principal analyst at the University of California's Welfare Policy Research Project, a RAND graduate fellow, and a faculty member in the Department of Politics at the State University of New York, Potsdam. She holds a Ph.D. in political science from the University of Michigan. Matt Levin is a research associate at the Public Policy Institute of California, where he focuses on poverty and social policy. H e holds a B.A. in history from the University of California, Berkeley, and an M.P.P from the Luskin School of Public Affairs at the University of California, Los Angeles . Marybeth Mattingly is a Research Consultant at Stanford Center on Poverty and Inequa lity and Director of Research on Vulnerable Families at The Carsey Institute at The University of New Hampshire. Her interests center on women, children, and family well -being, poverty, and child welfare. She has published research on couple's labor force participation in the Great Recession, measuring resiliency to child maltreatment, and a nexus of work -family balance issues. Current projects include analyses of trends in Hispanic income and poverty over time, how race and child poverty experiences influence health in early adulthood, the changing spatial distribution of child and senior poverty, and analyses of the ways poverty experiences have changed over time. She holds a Ph.D. in sociology from the Univer sity of Maryland, College Park. Christopher Wimer is a Research Scientist at Columbia University and a Research Consultant at the Stanford Center on Poverty and Inequality. His research focuses on poverty measurement, family economic well - being, and the role of the safety net and other social policies in the lives of disadvantaged populations. At Columbia, he is currently involved in a new study that will track income poverty, material hardship, and child and family well- being among New York City residents. He is also working with the Fragile Families a nd Child Wellbeing Study to understand the impact of the recession on urban families, as well as city -level variation in trajectories of family and child well -being. He holds a Ph.D. in sociology and social policy from Harvard University. http://www.ppic.org /main/home.asp The California Poverty Measure 25 Acknowledgments This report and our collaboration benefited greatly from input given by a wide range of researchers and policy experts, including Jessica Bartholow , Sc ott Graves, David Grusky, Laura Hill, Mark Levitan, Frank Mecca, Debbie Reed, Trudi Renwick, Tia Shimada, Kathy Short, Tim Smeeding, Paul Smilanick , Katherine Thornton, and Ryan Woolsey . Mary Severance provided expert editorial guidance. However, any errors are the authors’ responsibility alone . Partial funding for this research came from Grant Number AE00101 from the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, and awarded by Substance Abuse Mental Health Service Administration. Its contents are solely the responsibility of the autho rs and do not necessarily represent the official views of the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, or the Substance Abuse Mental Health Service Administration. The Stanford Center on Poverty and Inequality provided partial funding for an early phase of this research . http://www.ppic.org /main/home.asp The California Poverty Measure 26 PUBLIC POLICY INSTITUTE OF CALIFORNIA Board of Directors Donna Lucas, Chair Chief Executive Officer Lucas Public Affairs Mark Baldassare President and CEO Public Policy Institute of California Ruben Barrales President and CEO GROW Elect María Blanco Vice President, Civic Engagement California Community Foundation Brigitte Bren Attorney Walter B. Hewlett Chair, Board of Directors William and Flora Hewlett Foundation Phil Isenberg Chair Delta Stewardship Council Mas Masumoto Author and farmer Steven A. Merksamer Senior Partner Nielsen, Merksamer, Parrinello, Gross & Leoni, LLP Kim Polese Chairman ClearStreet, Inc. Thomas C. Sutton Retired Chairman and CEO Pacific Life Insurance Company The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute’s goal is to raise public awar eness and to give elected representatives and other decisionmakers a more informed basis for developing policies and programs. The institute’s research focuses on the underlying forces shaping California’s future, cutting across a wide range of public poli cy concerns, including economic development, education, environment and resources, governance, population, public finance, and social and health policy. PPIC is a private operating foundation. It does not take or support positions on any ballot measures or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. PPIC was established in 1994 with an endowment from William R. Hewlett. Mark Baldassare is President and Chief Executive Officer of PPIC. Donna Lucas is Chair of the Board of Directors. Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. Copyright © 2013 Public Policy Institute of California All rights reserved. San Francisco, CA PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 600 San Francisco, California 94111 phone: 415.291.4400 fax: 415.291.4401 www.ppic.org PPIC SACRAMENTO CENT ER Senator Office Building 1121 L Street, Suite 801 Sacramento, California 95814 phone: 916.440.1120 fax: 916.440.1121" } ["___content":protected]=> string(104) "

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" ["_permalink":protected]=> string(110) "https://www.ppic.org/publication/the-california-poverty-measure-a-new-look-at-the-social-safety-net/r_1013sbr/" ["_next":protected]=> array(0) { } ["_prev":protected]=> array(0) { } ["_css_class":protected]=> NULL ["id"]=> int(8884) ["ID"]=> int(8884) ["post_author"]=> string(1) "1" ["post_content"]=> string(0) "" ["post_date"]=> string(19) "2017-05-20 02:41:46" ["post_excerpt"]=> string(0) "" ["post_parent"]=> int(4308) ["post_status"]=> string(7) "inherit" ["post_title"]=> string(9) "R 1013SBR" ["post_type"]=> string(10) "attachment" ["slug"]=> string(9) "r_1013sbr" ["__type":protected]=> NULL ["_wp_attached_file"]=> string(13) "R_1013SBR.pdf" ["wpmf_size"]=> string(6) "399557" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(70918) "The California Poverty Measure: A New Look at the Social Safety Net October 2013 Sarah Bohn, Caroline Danielson, Matt Levin, Maryb eth Mattingly, Christopher Wimer with research support from Bonnie Bui, Shannon McConville , Lucas Manfield, and Tina Tran In collaboration with the Stanford Center on Poverty and Inequality Supported with funding from The Walter S. Johnson Foundation http://www.ppic.org /main/home.asp The California Poverty Measure 2 Summary California is slowly pulling out of a long recession and years of budget turmoil. Social services have been cut and many families have been struggling. In this context, an accurate assessment of the depth, breadth, and location of economic hardship in the state is especially important. To help policymakers and stakeholders determine whether programs aimed at reducing poverty are reaching those in need, we introduce the California Poverty Measure (CPM). A joint project of the Public Policy Institute of California and the Stanford University Center on Poverty and Inequality, the CPM is part of a national effort to measure poverty in a more comprehensive way. It incorporates the changes in costs and standards of living since the official poverty measure was devised in the early 1960s —and accounts for geographic differences in the cost of living across the state. It also factor s in tax credits and in -kind assistance that can augment family resources and subtracts medical, comm uting, and child care expenses . The CPM illuminates the important role of the social safety net—specifically , CalFresh, CalWORKs, the Earned Income Tax Credit (EITC), and other means -tested programs —in moderating poverty. Our findings indicate that the programs included in the CPM —which comprise the bulk of California’s social safety net — cut the state’s poverty rate substantial ly. But our findings also suggest that the additional resources counted in the CPM are more than offset by necessary expenses (pa rticularly for older adults, who may face high medical bills) and the higher cost of living in the most populous areas of the state. In particular:  According to the CPM , about 8.1 million Californians —or 22 percent of the population —lived in poor families in 2011, over 2 million more than estimated by the official poverty measure. Across age groups, c hildren had the highest poverty rate (25%) and adults over 65 had the lowest (19%).  Refundable tax credits (including the EITC) played the largest role for children, cutting the ir poverty rate by 6 percentage points .  CalFresh and CalWORKs each trimmed the child poverty rate by between 2 and 4 percentage points.  Need- based social safety net programs dramatically lowered the number in deep poverty, defined as living at less than half of the poverty threshold. Together, programs like the EITC, CalFresh, and CalWORKs helped keep nearly 2.8 million Californians—or nearly 8 percent of the population —out of deep poverty. Our estimates show that al though many find it difficult to make ends meet , Californians —particularly children —would look strikingly more impoverished without the assistance provided by safety net programs funded at the federal, state, and local level . A companion publication , A Portrait of Poverty within California Counties and Demographic Groups , summarizes demographic and regional differences in California poverty. T ogether, t hese reports provide a richer framework for understanding the social safety net and introduce a valuable resource for policymakers seeking to address material deprivation with constrained public resources . Contents Summary 2 Figures 4 Tables 4 Abbreviations and Definitions 5 Introduction 6 Poverty in California 8 How Many Californians Are Poor? 9 Breaking Down the Poverty Numbers by Age 10 Californians in Deep Poverty 10 How Does the Safety Net Reduce Poverty in California? 12 Cash-Based Programs 13 In-Kind and Tax -Based Programs 14 The Social Safety Net in Total 17 How Do Major Expenses Affect Family Resources? 20 Conclusion 22 References 23 About the Authors 24 Acknowledgments 25 Companion publication released by the Stanford Center on Poverty and Inequality is available on the CPI website: http://inequality.com/poverty/cpm T echnical appendi ces to this paper are available on the PPIC website: www.ppic.org/content/pubs/other/1013SBR_appendix.pdf Interactive features of this paper are available on the PPIC website: California Poverty Rates by County www.ppic.org/main/mapdetail.asp?i=1396 Poverty and Social Programs in California www.ppic.org/main/page.asp?i=1398 http://www.ppic.org /main/home.asp The California Poverty Measure 4 Figures 1. CPM estimates are higher than official poverty rates 10 2. Relatively few of those in poverty ex perience deep poverty 11 3. Cash -based social safety net programs are especially helpful to children and older adults 14 4. In-kind and tax -based social safety net programs boost resources, particularly for children 15 5. California poverty would be much greater in the absence of major need -based safety net resources 17 6. Social Security plays a major role for older adults 18 7. Medical and work expenses are notable factors in CPM rates 20 8. High housing costs in the populous areas of the state drive up poverty rates 21 Tables 1. Poverty thresholds in low -cost, mid -range, and high- cost counties 9 2. Need -based social safety net programs in the CPM 12 http://www.ppic.org /main/home.asp The California Poverty Measure 5 Abbreviations and Definitions CPM California Poverty Measure CalFresh California name for the Supplemental Nutrition Assistance Program (SNAP), the largest federally supported nutrition assistance program . CalFresh provides a monthly benefit that participating low -income families can use to buy groceries. CalWORKs California Work Opportunity and Responsibility to Kids, a federal cash assistance program for low -income families with dependent children (the federal name for the program is Temporary Assistance for Needy Families, or TANF). The program provides a monthly benefit to eligible applica nts and services to help parents move their families toward self -sufficiency. CTC Child Tax Credit. This federal tax credit is available to families with dependent children who file a tax return. The credit is partially refundable, meaning that tax filers with no net tax liability receive a portion, but not all, of the credit. For filers with a tax liability, the CTC offsets the amount they owe. EITC Earned Income Tax Credit. This federal tax credit is available to families with dependent children who file a tax return. A small credit is available to low - income workers with no dependents. All family members must file with a social security number to be eligible for this credit. The credit is fully refundable, meaning that tax filers with no net tax liability receive the full amount for which they are eligible. GA/GR General Assistance/General Relief. This county-funded, county-option program provides a monthly cash benefit to low -income ad ults who do not have dependent children. LIHEAP Low Income Home Energy Assistance Program. This federally supported program provides assistance to low -income families to help with home heating and cooling costs. SNAP Supplemental Nutrition Assistance Program (formerly the Food Stamp program ). See description above under CalFresh. SPM U.S. Census Bureau’s Research Supplemental Poverty Measure. SSI Supplemental Security Income. This program is available to eligible low-income applicants who are blind, disabled, or elderly. The federal government determines eligibility, but California provides a supplemental payment. TANF Temporary Assistance for Needy Families See description above under CalWORKs. WIC Special Supplemental Nutrition Program for Women, Infants, and Children. This federally supported program provides a specified set of foods (v ia a monthly voucher redeemable at approved stores), nutrition educati on, and information about other means -tested programs to low -income women and their children who are under age 5. http://www.ppic.org /main/home.asp The California Poverty Measure 6 Introduction To help policymakers and stakeholders judge the extent to which programs aimed at reducing poverty are reaching those in need , this report introduces the California Poverty Measure (CPM). The CPM provides a multi faceted picture of how California families are faring by taking into account variation in the cost of living across California and the impact of social programs designed to alleviate hardship. In collaboration with the Stanford Center on Poverty and Inequality, we have generated the first set of CPM estimates , using data from 2011. 1 The U.S. Census Bureau has computed official poverty statistics annually since the early 1960s (see the textbox for a brief description ). These statistics are invaluable for tracking poverty trends and for other purposes , but they shed no light on regional differences in the cost of living or the role played by programs like nutrition assistance, housing subsidies, and tax credit s in helping families make ends meet. With the CPM , we adapt the general methodology of the Census Bureau’s Research Supplemental Poverty Measure (SPM) , building on a two -decade effort to design useful alternative poverty measures . 2 Like official poverty statistic s, the SPM compares family incomes to poverty thresholds. But it bases these thresholds on more recent estimates of national household expenditures on food, clothing, utilities , and housing —and factors in regional differences in housing costs. It also includes the main tax and government - provided in-kind benefits in its accounting of family resources. Finally, the SPM subtracts necessary work- related and medical expenses from family resources. 3 We created the CPM to account for realities in California that are not a focus of the SPM . One of our major modifications is an upward adjustment —based on actual enrollment statistics from California — of the number of people making use of the state’s main cash and nutrition assistance programs (CalWORKs and CalFresh) to correct for survey underreporting of these family resources . A second major change is a county -level geographic adjustment of poverty thr esholds to reflect the cost of owning or renting a home across the state, which varies widely. The technical appendices describe these and other modifications . In this report we outline key statewide results: overall numbers of Californians we estimate to be in poverty and in dee p poverty (under 50 percent of the poverty threshold ). Because many social programs target families with children, and because medical expenses tend to loom large for California’s older adults, we examine poverty among children, working -age adults, and adults age 65 and older . 4 We then 1 Please also see A Portrait of Poverty within California Counties and Demographic Groups. The technical appendices to this report provide details of our methodological approach and data sources. Our main survey data source is the American Community Survey, IPUMS version (Ruggles, et al., 2010). 2 In the early 1990s, a National Academy of Sciences panel studied the limitations of official poverty measurement and recommen ded an alternative measure (Citro and Michael, 1995). These recommendations and further study culminated in the Census Research Supplemental Poverty Measure release for the United States, first in 2011. At the same time, a number of research organizations have been creating similar measures for state and sub -state areas. These include a Wisconsin measure by the Institute for Research on Poverty at University of Wisconsin - Madison (see Smeeding et al, 2013), a New York City measure by the NYC Center for Economic Opportunity (2012), and a number o f state measures created by the Urban Institute (see Wheaton et al, 2011). 3 The three major differences between the SPM and the official measure of poverty are: 1) the augmentation of family resources with supports from safety net programs (the official poverty measure includes only pre-tax cash income); 2) the inclusion of medical and work -related expenses (for example, commuting costs and child care); and 3) the restructuring of thresholds to reflect both recent U.S. consumer spending on food, clothing, utilities, and housing and California regional differences in housing costs. For more on the SPM’s methodology, see the technical appendices to this report and Betson, Giannerelli, and Ze dlewski. (2011). 4 Naturally most people live in larger households, and we calculate poverty at the level of the family assumed to share resourc es—so the more apt phrasing is children, or adults, or elderly living in families in poverty. http://www.ppic.org /main/home.asp The California Poverty Measure 7 turn to an assessment of the role of need-based social safety n et programs , both those built in to official poverty statistics, like CalWORKs , and programs (such as CalFresh) that are included in our augmented approach . Finally, w e look at the impact of the cost of living on poverty across the state. Measuring poverty Measuring poverty is typically a two -step process. First, researchers create a poverty threshold — a representation of the amount of resources necessary to achieve a minimum level of material well -being. Second, they estimate families’ resources and compare them to the poverty threshold to determine whether a family is below it (and therefore defined as “poor”). The U.S. official poverty measure—the statistic produced by the Census Bureau to determine the number of individuals deemed “poor” in the United States in a given year —was developed in the e arly 1960s by Molly Orshansky, an economist in the Social Security Administration. The measure compares a family’s pre- tax cash resources (salary, social security, “welfare” income, etc.) to a poverty threshold meant to reflect the minimum level of income needed to meet basic needs. The official threshold is essentially the cost of a subsistence diet in the 1960s multiplied by three (because food constituted about a third of a family’s budget at that time).The threshold is updated annually for inflation and adjusted for family size, but the underlying formula has not changed, despite considerable changes in a typical family’s spending on food relative to other expenditures . The official poverty measure serves a number of purposes. First, because it has been calculated in the same way for roughly 50 years, it is well suited to tracking trends in poverty. Second, means - tested, publicly provided programs use income cut -offs that are pegged to the official poverty threshold. Third, the allocation of federal funds to states and localities is sometimes based on the number or share of residents living under the official poverty threshold. In 2011, the Census Bureau began publishing a “Research Supplemental Poverty Measure,” or SPM, for the entire U.S. In 2012, the Ce nsus Bureau introduced SPM estimates for states; these estimates are averaged over three years due to small sample sizes in the survey data source— the Current Population Survey —used (see Short, 2012). The 2009 –2011 SPM for California was 23.5 percent, higher than any other state and much higher than the state’s official poverty rate of 16.3 percent for the same period. There are other methods of measuring poverty. A number of European countries use purely relative measures —for example, a comparison of incom es across a population. Self-sufficiency indices build up family budgets from typical needs, and then compare actual incomes—excluding government resources —to these family budgets. The CPM and SPM share some features of both of these approaches. http://www.ppic.org /main/home.asp The California Poverty Measure 8 Poverty in California A fam ily is considered to be poor if its resources fall short of the poverty threshold. The CPM combines a family’s annual cash income (including earnings and government -provided cash benefits like CalWORKs) , its tax obligation —a net income boost to low -income families that qualify fo r tax credits —and in-kind benefits like CalFresh . (The official poverty calculus includes only the first category of resources, cash income.) It then subtracts major nondiscretionary expenses . 5 Finally, th e CPM compare s these resources to a family -specific poverty threshold —the monetary resources needed to maintain a basic standard of living . Unlike official poverty thresholds, CPM thresholds are pegged to recent nationwide spending levels on food, shel ter, clothing, and utilities and are further adjusted to account for differences in housing cost s across counties and to differentiate among those who are renting, paying a mortgage, or living in a paid- off home. 6 We give a sense of the wide range of thresholds in Table 1. For a family of two adults and two children, the 2011 poverty threshold was as low as $19,500 or as high as $37,400, depending on where the family lived and whether the family residence was rented or owned. 7 Since most of the state’s resident s live in high-cost counties and 89 percent of Californians live in rented or mortgaged housing, poverty thresholds for a family of four for the majority of state residents ranged between $29,500 and $37,400. 8 5 Note that the n et resource calculation assumes individuals who reside together share resources and expenses, whether or not they themselves are formally receiving a particular category of resource or have a particular type of expense. An example here is school meals, whi ch add to the resources of the family in which a child lives, not just to the child’s resources. In other words, all members of the same fa mily have an identical poverty rate. The CPM recognizes living situations beyond that of a nuclear family, including cohabiting unmarried partners and foster children. See Technical Appendix A for further detail. 6 See Technical Appendix B for additional detail. 7 The CPM threshold for renters and homeowners with a mortgage was higher than the official poverty threshold—$22,811 for a family of four in 2011 —in every California county . 8 Calculated in the ACS, a higher fraction of Californians rent or pay a mortgage (89%) than in other states (81%). http://www.ppic.org /main/home.asp The California Poverty Measure 9 TABLE 1 Poverty thresholds in low -cost, mid-range, and high -cost counties Counties Share of state residents CPM threshold range Average CPM threshold Owners with a mortgage and renters Owners without a mortgage Low-cost Colusa, Del Norte, Fresno, Glenn, Humboldt, Imperial, Kern, Kings, Lassen, Madera, Merced, Modoc, Siskiyou, Sutter, Tehama, Trinity, Tulare, Yuba 9.2% $23,200– $25,400 $19,500– $20,600 $23,900 Mid-range Alpine, Amador, Butte, Calaveras, El Dorado, Inyo, Lake, Mariposa, Mendocino, Mono, Nevada, Plumas, Riverside, Sacramento, San Bernardino, San Joaquin, Shasta, Sierra, Stanislaus, Tuolumne, Yolo 21.8% $25,500– $29,500 $20,500– $23,200 $27,200 High-cost Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, Placer, San Benito, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Ventura 69.0% $29,500– $37,400 $20,700– $25,600 $31,300 SOURCE : Authors’ calculations. Population share calculated from Census SAIPE population estimates. See Technical Appendix B for a description of the methodology used to calculate county -level poverty thresholds. NOTE : Thresholds measured for family of four (two adults and two children). In the table thresholds shown are rounded to the nearest $100. Average thresholds are weighted by population in each county and by shares renting, owning with a mortgage, and owning without a mortgage. C ounties are ranked by CPM threshold s for renters and owners with a mortgage and divided into three roughly equal groups. While all 58 California counties are listed in the table, only 38 can be separately identified in the American Community Survey. Twenty counties are grouped into 3 county groups. See Technical Appendix A for a list of individually identified and grouped counties. How Many Californians Are Poor? In 2011 California’s official poverty rate was 16. 2 percent . The statewide picture from the 2011 CPM —that combines augmented resources and updated thresholds —indicates that 22. 0 percent of Californians lived in poverty (Figure 1 ). 9 This translates into about 8. 1 million Californians in poverty, 2.2 million more than considered poor under the official measure. 10 CPM poverty rates are above 22 percent in the three most populous counties : 26.9 percent in Los Angeles C ounty, 22.7 percent in San Diego County , and 24.3 percent in Orange County . 11 Our companion publication, A Portrait of Poverty within California Counties and Demographic Groups, and an interactive online map, “ California Poverty Rates by County ” provide additional county estimates. 9 Computed in the Current Population Survey, the survey source for the official poverty statistics published each fall, Califor nia’s 2011 official poverty rate was a slightly higher at 16.9 percent, and fell to 15.9 percent in 2012. For all estimates and comparisons presented in this report we use the American Community Survey rather than the Current Population Survey. Differences in data sources, reference period, a nd methodology mean that official poverty statistics differ slightly from these published statistics. For a number of the same reasons our C PM estimates are not strictly comparable to the Census 3 -year SPM estimates for California. 10 Note that the CPM excludes those living in group quarters (including prisons, nursing homes, and dormitories and a small number of college students living on their own). The total population of California in 2011 according to the ACS was 37.69 million. These exclu sions amount to about 850,000 (or 2.2%) of this total. The ACS is a sample of housing units, so those who are homeless are also necessarily exclude d. See the technical appendices for additional details. 11 Note that all point estimates presented in this report are subject to error stemming from sampling variability and imputation methods. We caution against over -interpreting 1 or 2 percentage point differences. See Technical Appendix F for additional discussion of the margin of error of the estimates . http://www.ppic.org /main/home.asp The California Poverty Measure 10 Breaking Down the Poverty Numbers by Age Within age groups, CPM poverty rates were highest for children (25.1 %), lower for working-age adults (21. 4%), and lowest for adults a ge 65 and older (18.9%). This is the same r elative ranking across age groups as the official poverty measure. In numbers, the CPM indicates that about 2. 3 million of California’s 9.2 million children were in poverty in 2 011. Approximately 5 million of California’s 23.2 million working - age adults were in poverty, while about 810,000 of 4.3 million older adults were in poverty. For additional demographic subgroup estimates, see A Portrait of Poverty within California Counties and Demographic Groups . FIGURE 1 CPM estimates are higher than official poverty rates SOURCE: CPM estimates for 2011 (see technical appendices for data and methodology). Official poverty estimates from the California sample of the ACS (2011), excluding those not in the poverty universe for both measures. NOTE: Age categories are mutually exclusive and collectively exhaustive. More Californians are in poverty under the CPM compared with official poverty estimates —and this is largely because more adults and elderly are in poverty. The CPM child poverty rate is higher than the rate calculated using the official approach, but the di fference is relatively small. (As we show below, without the resources provided by safety net programs, many more children would be in poverty.) The difference is most striking for older adults, who face high out -of -pocket medical costs ( also discussed below ). Californians in Deep Poverty The rate of “deep” poverty —living under half of the poverty threshold— is lower under the CPM than in the official poverty estimate . This is particularly true for children, while older adults are an exception. We estimate that roughly a quarter of California ns under the poverty threshold had resources less than half of the poverty thresholds (Figure 2). (In dollar terms, those living in deep poverty under the CPM had resources under roughly $16,500 for a family of four in a high-cost county and under $12,500 in a low -cost county. ) 12 This translates into ab out 530,000 children, 1.5 million working -age adults, and 210,000 older adults living in deep poverty. 12 Threshold amounts included in this paragraph are for families that rent or have a mortgage, and are the population -weighted average of the highest third of counties and the population- weighted average of the lowest third of counties. Table 1 provides additional thresholds, and Technical Appendix B lists thresholds for each county for families of four by whether they rent, owns with a mortgage, or own without a mortgage. 22.0 25.1 21.4 18.9 16.2 23.1 14.6 9.6 0 5 10 15 20 25 30 All persons ChildrenAdults 18-64 Adults 65+ Percent CPM Official http://www.ppic.org /main/home.asp The California Poverty Measure 11 FIGURE 2 Relatively few of those in poverty experience deep poverty SOURCE: CPM estimates for 2011 (see technical appendices for data and methodology ). NOTE S: The poverty rate for non -elderly adults is similar to the overall poverty rate and is not shown in the figure. Technical Appendix E provides additional estimates. In contrast, more than 40 percent of those classified as poor using the official poverty methodology are in deep poverty . 13 T his may seem surprising, given the CPM’s generally higher thresholds. But it makes sense when we consider that the CPM factors in safety net programs that are excluded from the official poverty measure. These programs contribute si gnificantly to the resources of people at the very bottom of the income sp ectrum . To gain further insight into the impact of the social safety net on poverty in California , we turn to a discussion of the state and federal programs. 13 In particular, 6.8 percent of all residents (excluding the homeless and those living in group quarter s), 9,6 percent of children, 6.5 percent of adults age 18– 64 and 2.4 percent of adults age 65 and older lived in deep poverty according to the official poverty calculus. Official pove rty statistics calculated in the 2011 ACS (Bishaw 2012). 6.1 5.7 4.9 15.9 19.4 14.0 0 5 10 15 20 25 30 All persons ChildrenAdults 65+ Percent 50% to under 100% Under 50% http://www.ppic.org /main/home.asp The California Poverty Measure 12 How Does the Safety Net Reduce Poverty in California? In California, there are a number of need- based programs funded by local, state, and federal governments to help families make ends meet. Table 2 lists the largest programs for low -income families . As we have alread y noted, the official poverty statistics incorporate safety net programs that provide cash -based assistance — CalWORKs for families with children , General Assistance (GA) for adults without dependent children , and Supplemental Security Income ( SSI) for the disabled, blind, and elderly. We have also noted that in addition to cash -based assistance, the CPM incorporates large -scale in -kind and tax -based programs like CalFresh, school meals, housing subsidies, and the EITC that are excluded from the official poverty calculation . These are the largest social safety net programs that augment the resources of low- income Californians. Social S ecurity also augments incomes, especially those of older adults. Because it has a wider scope than the other programs lis ted in Table 2 —it covers all retired workers and eligible family members —we discuss S ocial S ecurity separately below . TABLE 2 Need -based s ocial safety net programs in the CPM California 2011 Recipients (millions) State/local expenditures on benefits (billions) Federal expenditures on benefits (billions) Cash-based programs CalWORKs 1.47 $1.74 $1.70 General Assistance 0.15 $0.40 – Supplemental Security Income 1.27 $0.91 $8.23 In-kind and tax -based programs CalFresh 3.64 $0.20 $6.53 Child Tax Credit* 2.91 (tax filers) – $4.14 Earned Income Tax Credit 3.27 (tax filers) – $7.25 Federal housing subsidies 0.48 (housing units) –** $3.60 School lunch and breakfast 2.18 $0.16 $1.88 SOURCES : California Department of Education; California Department of Social Services; Center on Budget and Policy Priorities (CBPP) ; Food and Nutrition Service; Internal Revenue Service; Office of Management and Budget. NOTES : In most cases, “Recipients ” = average monthly benefi ciaries, but there are some exceptions. For CPM estimates, a different measure of program participation that aligns with the questions asked in the ACS (see Technical Appendix C). For s chool lunch and breakfast, we show average daily participation in free and reduced price meals. For tax programs we show the annual number of filers —mostly families with dependent children —instead of the number of beneficiaries . For housing subsidies, we sho w the number of units. Expenditure s by level of government include only benefits paid and exclude costs of administering programs (with the exception of housing subsidies). CalWORKs and CalFresh expenditures include state and local funds for California Ass istance Program for Immigrants (CAPI) and the California Food Assistance Program (CFAP). Other cash assistance families may receive, including adoptions assistance, foster care, unemployment insurance, child support , are included in the ACS “other income” category and therefore are not individually distinguished in the CPM . The federal expenditure statistic for housing subsidies i ncludes operating and capital funds for public housing and federal funds for the Section 8 Housi ng Choice Voucher program. * Refu ndable portion. ** State and local government expenditures on means -tested, housing -related programs are channeled into multiple, disparate programs across California. We lack a statewide figure for total state and local spending on housing subsidies. Certain need-based programs are not included in families’ resources in the CPM . A large -scale example is means -tested health insurance programs such as Medi -Cal and Healthy Families , which provide in -kind http://www.ppic.org /main/home.asp The California Poverty Measure 13 benefits that are difficult to monetize. Families enrolled in these programs do tend to have relatively lower out- of-pocket medical expenses in the CPM . For other resources not counted in CPM family resources , see the text box. Cash -Based Programs We begin with the means -tested cash -based programs that are included in official poverty statistics: General Assistance, CalWORKs, and SSI. In 2011, the average monthly benefit for a CalWORKs family was $459. For SSI r ecipients, the average was $640. For individuals receiving GA, it was $218. 14 The leftmost bar in Figure 3 shows the comparison for all Californians and indicates that CalWORKs and GA together reduced the CPM rate statewide by a bout 1.3 percentage point s, and SSI by 1.4 percentage point s. 15 In other words, without counting CalWORK s and GA benefits, an additional 470,000 Californians would have been below the poverty line ; and without SSI income , an additional 510 ,000 state residents would have been in poverty . 16 14 Figures calcu lated from California Department of Social Services, “Public Assistance Facts and Figures” ( www.cdss.ca.gov/research/PG370.htm). Average taken of 12 months of reports for SSI and GA, for individuals . July 2011 average taken for CalWORKs, at the level of the assistance unit, or case. 15 CalWORKs aids many more individuals than does GA, and the bulk of the reduction in the poverty rate shown in Figure 3 is due to CalWORKs. 16 It is important to note tha t these calculations are intended to show how resources from various safety net programs move the CPM rate rather than the improvements in well -being that safety net programs may produce . Potential safety net resources excluded from the CPM While the CPM incorporates an augmented set of the resources available to California families and the costs they face, we do exclude several important resources widely utilized by California families. We notably omit the effect of the Special Supplemental Nutrition Program for Wo men, Infants, and Children (WIC) and the Low -Income Heating and Energy Assistance Program (LIHEAP). We also omit all county and local -level programs, with the exception of General Assistance. The CPM also excludes in -kind donations from food banks and other charitable organizations. The state’s In -Home Supportive Services (IHSS) program that provides services to the elderly and disabled is a distinctive case: individuals providing care report the services as their own earnings on the survey, although those on the receiving end of the assistance are not asked about their receipt of this type of benefit. The survey data used to estimate the CPM (the U.S. Census Bureau’s American Community Survey) also precludes a more detailed accounting of certain income sources, including unemployment insurance payments, foster care payments, adoption assistance payments, and child support payments. These sources are included in family resources as “other income,” and so cannot be considered separately . http://www.ppic.org /main/home.asp The California Poverty Measure 14 FIGURE 3 Cash- based social safety net programs are especially helpful to children and older adults SOURCE: Authors’ calculations for 2011 (see technical appendices for data and methodology). NOTE S: Adult poverty rate not shown in figure. Technical Appendix E provides additional estimates. Percentage point difference between CPM and CPM rate absent program shown above each bar. Not surprisingly, CalWORKs benefits play the biggest role for children, cutting the child poverty rate by 2.5 percentage points. 17 Of the 47 0,000 residents above the poverty line because of CalWORKs, about half were children. We cannot draw on comparable estimates for other states, but it is reasonable to suppose that the poverty reduction role of CalWORKs is much larger in California , which has about a third of the nation’s recipients of TANF (the federal name for the program), but only 12 percent of the U.S. population —and roughly the same share of the nation’s poor , according to official poverty statistics . 18 Although California did substantially reshape its cash assistance program in the 1990s , the state has nonetheless directed more resources toward cash assistance for low -income families with dependent children in recent years than most other states have . SSI played the biggest role for older adults: t he poverty rate among those 65 and older was nearly 3 pe rcentage points lower due to the SSI program . 19 The program cut the poverty rate for children by 1 percentage point. In-Kind and Tax -Based Programs Relative to other parts of the need- based safety net, t he resources from the federal Earned Income Tax Credit ( EITC ) and refundable portion of the Child Tax Credit (CTC) play the largest role in lowering the CPM poverty 17 We correct for underreporting of CalWORKs receipt and benefit amo unt in the ACS. In particular, we adjust CalWORKs receipt upward to match administrative totals by race/ethnicity, case size, and county of residence. We also adjust CalWORKs benefits to match administrative survey data on actual recipients in 2011. If we instead rely on self -reported CalWORKs receipt, the overall poverty rate is 22.6 percent and the child poverty rate is 26.2 percent. When we impute CalWORKs receipt to those who did not report it themselves, we exclude likely unauthorized immigrants. For more details, see Technical Append ices A and C . 18 The Census Bureau estimates for the U.S. as a whole that TANF reduced poverty by 0.3 percentage points in 2011 (Short, 2012). However, their methodology relies on self -reported TANF. As described in Technical Appendix C, we adjust self-reports of CalWORKs to more closely match administrative case counts and benefits. 19 Social Security (discussed below) is also critical for older adults. http://www.ppic.org /main/home.asp The California Poverty Measure 15 rate (Figure 4).20 Both programs are aimed at low - and moderate- income families with dependent children that file tax returns . The EITC is fully r efundable, meaning that a family with earnings but no net tax obligation can receive the full amount in the form of a refund. The CTC is part ially refundabl e, but we examine only the refundable portion of this credit, which primarily benefits families with low and moderate earnings . Together , the EITC and the refundable portion of the CTC trimmed the poverty rate by 3.2 percentage points. 21 The c hild poverty rate improved even more, falling from 3 1.1 percent to 25. 1 percent —or 6 percentage points — as a result of factoring in the EITC and CTC. Since many adults live in households with children, the ir poverty rate also dropped, although to a smaller extent (the ir poverty rate was 2.6 percentage points lower) . This translates into 560 ,000 fewer chil dren and 600,000 fewer working-age adults in poverty af ter including the EITC and CTC in family resources . 22 Not surprisingly, the programs had a negligible effect on poverty among adults age 65 and older , lowering their poverty rate by well under 1 percentage point . FIGURE 4 In-kind and tax -based social safety net programs boost resources, particularly for children SOURCE: Authors’ calculations for 2011 (see technical appendices for d ata and methodology). NOTE S: Adult poverty rate not shown in figure. Technical Appendix E provides additional estimates. School meals include the National School Lunch Program and the School Breakfast Program, but exclude summer meal programs and nutrition programs in after care and day care settings. Percentage point difference between CPM and CPM rate absent program shown above each bar. 20 Both the CPS - and ACS -based supplemental poverty measures include simulated tax liabilities and credits and must make a number of assumptions. We compared the results against aggregate administrative data from the IRS (e.g., total filers, total filers wit h social security numbers, total amount of EITC paid). For the EITC in particular, various reasonable assumptions result in estimates that are roughly 75 percent to 85 percent of the actual amount paid to Californians for the 2011 tax year. See Technical Appendix C for details. The estimates reported in the text reflect the set of assumptions that produces the higher total. 21 A substantial body of research finds that families with children on the whole responded to incentives embedded in the EITC by working more (Eissa and Hoynes, 2006). The change in the poverty rate discussed in the text abstracts from this behavioral response to the EITC. Instead, it assesses the simply mechanical effect on the poverty rate of zeroing ou t the EITC (and the CTC) in the CPM resources calculation. 22 In the U.S. as a whole, the Census SPM estimates indicate that the EITC and the refundable portion of the CTC together reduce d poverty by 2.7 percentage points (Short, 2012). The EITC is the onl y tax credit that requires all family members to file with a social security number to claim the credit. This implies that in cases where citizen children live with unauthorized immigrant parents, the entire fami ly is ineligible for the EITC. (The CTC does not require a social security number for tax filers.) If families with citizen children could receive the EITC regardless of parent status our estimates of the poverty rate would drop by about 1 percentage point for children, and under 1 percentage point overall. This represents about a 250,000 additional persons above poverty. For example, if unauthorized parents gained citizenship or provisional immigrant status and could apply for a social security number —both plausible change s the U.S. Congress could i mplement as part of immigration reform legislation —then these families could conceivably receive the EITC. http://www.ppic.org /main/home.asp The California Poverty Measure 16 Benefits from CalFresh, California’s name for SNAP, averaged $147 a month per person in 2011. Our estimates imply th at CalFresh benefits reduced the poverty rate by just over 2 percentage points , or by close to 800 ,000 people . 23 We find this large effect in spite of two limiting characteristics of California’s CalFresh caseload . First, compared with other states, California has long had low participation in SNAP —many eligible families do not participate in the program ( although this state of affairs may now have begun to change ). Second, California has a disproportionate share of u nauthorized immigrants, who are not eligible for CalFresh . 24 CalFresh benefits cut the child poverty rate by about 4 percentage points (or 380,000 children). CalFresh lowered the poverty rate among adults age 65 and older by a small amount (well under a percentage point) . It is likely that California’s policy of replacing CalFresh eligibility for SSI recipients with an automatic monthly $10 payment reduces CalFresh participation among those 65 and older relative to other states. 25 Households that are ineligible for CalFresh because all members receive SSI tend to consist of one or two elderly adults. ( In households that include both SSI and non- SSI recipients, the non -SSI members can apply for CalFresh.) Using the CPM, we can estimate the extent to which increased participation in CalFresh would reduce poverty under different scenarios . For example, we find that if all Californians in families with incomes below the official poverty line participated in CalFresh —by no means all of those who are eligible—250,000 additional Californians would receive this assistance. As a result, the poverty rate would be 0.7 percentage points lower . 26 Federal h ousing subsidies reduced the poverty rate by over 1 percentage point, or about half a million Californians . The reduction in the poverty rate was largest for older adults (2.5 percentage points) and was just nearly 2 percentage point s for children . 27 Finally, s chool meals played a small role in reducing poverty, reducing the overall poverty rate by about 0.5 percentage points . Again, this program’s biggest role is for child ren—it trimmed the child poverty rate by just over 1 percentage point ( or about 11 0,000 children ). It is important to remember that the maximum boost to resources from school meals is smaller than that of other programs : In our calculations, school -age children participating in fr ee breakfast and free lunch receive the equivalent of about $80 a month during the school year. 28 23 We adjust self -reported CalFresh receipt in the ACS upwards to match administrative totals by race/ethnicity, case size, participation in CalWORKs , and county of residence. For both self -reported SNAP and assigned recipients, we impute benefit amounts based on administrative survey data (see Technical Appendix C for details). If we rely solely on self -reported receipt of CalFresh, the overall poverty rate is 22.7 percent instead of 22.0 percent, and the child poverty rate is 26.3 percent instead of 25.1 percent. When we impute CalFresh receipt to likely eligible survey respon dents who did not report it themselves, we exclude likely unauthorized immigrants. For more details, see Technical Appendix C. 24 Citizens and legal residents who live in household s with unauthorized immigrants may be eligible for CalFresh. 25 California is currently the only state with this policy, known as “SSI cash out.” This payment has not risen since the 1970s, and some households containing SSI recipients would receive more th an $10 if this policy were rescinded. However, some households would entirely lose eligibility for CalFresh if the policy were eliminated (Cunnyngham, 2010) 26This hypothetical scenario assumes that families who would newly receive CalFresh otherwise mainta in the same level of income and net resources. If we make the broader assumption that everyone below 125 percent of the official poverty threshold enrolls in SNA P, the overall reduction in the poverty rate rise to 1.1 percentage points. 27 Note that federa l housing subsidy programs, unlike the other programs discussed in this section, are capped and do not serve all eligible applicants. To estimate the value of housing subsidies families receive, we impute receipt of the two main government -supported housing programs (public housing and Section 8 housing subsidies) based on reported participation in the Current Population Survey. We then assign benefit amounts based on household income and Fair Market Rent data. See Technical Appendix C for further detail. 28 If we assume instead that all children we determine to be eligible for school meals received them, we estimate that the pover ty rate for children would be an additional 0.6 percentage points lower. We determine eligibility for school meals using cash income as self -reported in the ACS. We then assign eligibility based on administrative counts of students participating in free and reduced price school breakfast and school lunch by http://www.ppic.org /main/home.asp The California Poverty Measure 17 The Social Safety Net in Total Californians can be eligible for multiple , need-based safety net programs at once (although they do not always make use of the benefi ts for which they are eligible). To estimate how much social safety net resources lower the CPM rate , we cannot simply add up our individual program estimates. This is because some who make use of the safety net may need a combination of program resources to help them move above the CPM poverty threshold, while others —closer to the poverty threshold —might have total net resources above the poverty line if they utilize any one of several programs. In Figure 5 we show the combined effect of the need-based programs discussed in the previous two sections on the CPM rate and on the number of Californians in poverty and in deep poverty . With these safety net resources, 22.0 percent of Californians were in poverty in 2011; w ithout these resources , the share jumps to over 30 percent. For children, the effect is much larger: in the absence of need- based safety net resources, a startling 39.0 percent of California’s children would have been in poverty according to the CPM . The role of the safety net is smaller for older adults , but it is still substantial. 29 FIGURE 5 California poverty would be much greater in the absence of major need -based safety net resources SOURCE: Authors’ calculations for 2011 (see the technical appendices for descriptions of the data and methodology). NOTE S: Figure shows the CPM rate absent the combined effect of CalWORKs, GA, SSI, CalFresh, the EITC, the CTC, housing subsidies, and school meals . Technical Appendix E provides additional estimates. county. We determine the value of the meals received using the reimbursement amount per meal of each type in California for t he average of the 2010– 11 and 2011– 12 school years. See Technical Appendix C for further detail. 29 As a point of reference, simply summing the poverty reduction effects of each program individually without accounting for the interaction across programs gives a somewhat larger—but inaccurate —9.9 percentage point reduction in poverty for all persons (as compared to the 8.4 percentage point reduction shown in Figure 5). http://www.ppic.org /main/home.asp The California Poverty Measure 18 In addition, w e find that these safety net programs play an even larger role in moderating the rate of deep poverty statewide : M ore than twice as many Californians —and more than three times as many children — cross into the group in deep poverty in the absence of resources from safety net program s. In numbers, an additional 2.8 million Californians— and over 1.2 million children—would be considered in deep poverty if safety net benefits were not counted. The social safety net can be broadly defined to include all programs that reduce poverty, not just programs with income -based eligibility criteria. Social Security is a key component of this more -broadly -defined safety net. 30 Figure 6 illustrates the enormous role of this program —intended to increase economic security for retired workers —in lowering the poverty rate for older adults. FIGURE 6 Social Security p lays a major role for older adults SOURCE: Authors’ calculations for 2011 (see the technical appendices for descriptions of the data and methodology). NOTE S: The center bar in each grouping shows the CPM rate absent the combined effect of CalWORKs, GA, SSI, CalFresh, the EITC, the CTC, housing subsidies, and school meals. The rightmost bar in each grouping shows the CPM rate absent the combined effect of all these programs and also Social Security . Technical Appendix E provides additional estimates. California’s social safety net is complex. Even the key need- based programs, which share the goal of shoring up family resources, do not share precise eligibility criteria or target identical populations. Moreover, not all who obtain resources from need- based safety net programs are lifted out of poverty . For example, they may not participate in all programs for which they may qualify. 31 And s ome may not need the safety net assistance for which they qualify to be above the CPM poverty line . For one thing , CPM thresholds are sometimes lower than the official poverty thresholds that determine eligibility for safety net programs. More importantly , eligibility for tax-based programs —which provide the most substantial boost to family resources overall— extends higher on the income scale than eligibility for CalFresh, housing subsidies, a nd CalWORKs. 32 30 A core criterion for all segments of Social Security program eligibility is a work history. Of the thre e broad types of benefits, the majority is paid to retired workers. Californians received $66.7 billion in Social Security benefits in 2011. Of this total, 70 percent was paid as retiree benefits, 14 percent was paid as survivor benefits, and 16 percent wa s paid as disability benefits. See www.ssa.gov/policy/docs/statcomps/supplement/2012/5j.html . 31 The overall impact of increased income from safety net programs on family resources depends partly on individual decisions ab out work. For example, with resources from a safety net program single parents may choose to spend more time caring for children rather than working longer hours. 32 Recall that the tax credits under discussion are the EITC and the refundable portion of the CTC. http://www.ppic.org /main/home.asp The California Poverty Measure 19 We estimate that about 17 million Californians lived in families that gained resources from one or more of the need- based social safety net programs included in the CPM. 33 This participation level reflects the fact that social safety net programs do not only target those in poverty. (If we include S ocial Security , beneficiaries rise to 21.4 million.) Of those who received resources from one or more need-based programs, about 18 percent —or 3.1 million Californians—were moved above the CPM poverty threshold by their participation. Thirty -eight percent remained in poverty des pite their participation (6.4 million) , and 44 percent (7.5 million) were not officially under the poverty threshold , even absent the resources from the social safety net (although they may have been close to the poverty line). Nonetheless, safety net program benefits not counted in official poverty statistics substantially alter the picture of poverty in the state . If the CPM did not factor in the assistance provided by the EITC CalFresh, and other programs, m any more Californians, and especially children, would be deemed poor—and deep poverty rates would be startlingly higher . 33 Note that family members are assumed to share resources, whether they themselves are formally the recipient of a particular safety net benefit or not. http://www.ppic.org /main/home.asp The California Poverty Measure 20 How Do Major Expenses Affect Family Resources ? As we have seen, the CPM shows 2.1 million more Californians —roughly 6 percent of state residents —to be in poverty than do official poverty statistics . Some of this difference has to do with the way expenses and thresholds are factored into the CPM. In- kind assistance and tax credits tend to add resources that particularly help children . At the same time, cost -adjusted thresholds and the subtraction of nondiscretionary expenses from family resources increase poverty rates. To better understand the role of medical and work -related expenses on overall resources, we examine the difference in poverty rates when they are left out of the CPM calculation. If we exclude out -of -pocket medical expenses from the CPM calculation, the poverty rate for older adults drops by 7 percentage points —an amount that is much larger than any of the in -kind safety net programs we discussed in the previous section (Figure 7). A similar exercise highlights the effect of work expenses on the poverty rate. If we exclude work expenses —which consist largely of out -of -pocket child care and commuting costs—from the CPM calculation, elderly poverty rates are about the same, but the poverty rate for children is a little more than 3 percentage points lower. In other words, work expenses increase the child poverty rate by about the same amount that CalWORKs or CalFresh lower the rate. FIGURE 7 Medical and work expenses are notable factors in CPM rates SOURCE: Authors’ calculations for 2011 (see technical appendices for descriptions of the data and methodology ). NOTES : Figure shows the effect of excluding medical out-of -pocket expenses and of work -related expenses (mainly out -of - pocket child care and commuting costs) on CPM poverty rates. Technical Appendix E provides additional estimates. Percentage point difference in CPM rate absent expense shown above each bar. http://www.ppic.org /main/home.asp The California Poverty Measure 21 A third major driver of expenses is the cost of living in California . Recall that the CPM thresholds are adjusted for housing costs across the state and vary substantially. A comparison of poverty rates in high - cost counties versus low -cost counties suggest s that variation in housing cost s is extremely important (see A Portrait of Poverty within California Counties and Demographic Groups and “California Poverty Rates by County”). 34 To illustrate the importance of this variation in housing costs for poverty rates , we conducted a thought experiment: What would poverty rates in California be if everyone in the state were to experience the housing costs of a low -cost county? 35 Figure 8 shows the results and indicates that the overall poverty rate in California would be 15.0 percent, 7 percentage points lower than the CPM estimate of 22.0 percent —or a bit lower than California’s official poverty rate . FIGURE 8 High housing costs in the populous areas of the state drive up poverty rates SOURCE: Authors’ calculations for 2011 (see technical appendices for descriptions of the data and methodology). NOTES . The thresholds for the hypothetical low -cost county are for Fresno County —the most populous of the low -cost tier of counties shown in Table 1 . Technical Appendix E provides additional estimates. Child poverty would be more than 9 percentage points lower ( 16.2%), and the poverty rate for older adults would drop to 13.3 percent. These differences are so large because m ost Californians live in high-cost areas and very few Californians own their homes outright. In sum, when we factor in major medical, work, and housing costs, we gain insight into factors driving poverty for older adults as well as the role of place in shaping poverty in California . We can begin to understand why so m any Californians are in poverty despite resources provided by the social safety net. 34 Of course, counties also vary in several other important dimensions of the CPM —income and earnings patterns, administration and take -up of key safety net programs, demographic makeup. It would be inaccurate to say that one “high -cost” county has a higher poverty rate than a “low -cost” county solely because of differences in cost of living. 35 The CPM treats the cost of housing as nondiscretionary or exogenous. We do not account for the bevy of factors that contribut e to a family’s choice of location and housing. While cost is a major factor, other factors may play an important role. For example, some loc ations might have amenities or opportunities that offset high housing costs. Similarly, in the thought experiment described in the text we do not model changes in family behavior if their housing costs were suddenly lowered (for example, a possible reduction in working among secondary ea rners). http://www.ppic.org /main/home.asp The California Poverty Measure 22 Conclusion We have described a new way of measuring poverty that substantially alters our understanding of how individuals and families in California are faring. In t he context of the emerging nationwide effort to address shortcomings of official poverty statistics, our aim is twofold: to reassess how much resources people in all parts of the state need to make ends meet and to measure the resources they have at hand m ore comprehensively . This produces a sobering picture for California as a whole. We find that 8.1 million Californians —22.0 percent of the populatio n—did not have sufficient resources to meet basic needs in 2011. The larger number of Californians in poverty , as compared to official statistics, is driven mainly by increases in the working -age and older adult poverty rates . While the child poverty rate under the CPM is only 2 percentage points higher than the official child poverty rate, children continue to have the highest poverty rate across age groups. The CPM account s for the fact that, for most Californians, high living costs —particular ly housing costs— offset the resources they have available to make ends meet. We also factor in exp enses that eat into resources and drive up poverty, particularly medical expenses borne by older adults. Work expenses such as commuting costs and child care also play a role in raising the poverty rate under the CPM. At the same time, we find that government programs play a substantial role in alleviating poverty. In the absence of cash -based, in -kind, and tax -based safety net programs, our estimate of child poverty would be 39.0 percent, 13.9 percentage p oints higher than the actual estimate of 25.1 percent. For working- age and older adults, the combined role of these programs was smaller, but still considerable. And we find that need- based safety net programs cut deep poverty sharply . We aim for the CPM to become a tool for policymakers and other stakeholders. Decisionmakers seeking ways to make efficient use of public resources can benefit from accurate information about regional differences that shape poverty and the major programs that augment family resources . F or example, t he CPM makes possible richer investigations of multiple social safety net programs across diverse groups of low -income families . This report and our companion publication, A Portrait of Poverty within California Counties and Demographic Groups , lay the groundwork for additional targeted examinations of poverty across the state. http://www.ppic.org /main/home.asp The California Poverty Measure 23 References Betson , David, Linda Giannerelli, and Sheila Zedlewski. 2011. “Workshop on State Poverty Measurement Using t he American Community Survey.” Urban Institute. Available at www.urban.org/publications/4123 96.html. Cable, Dustin. 2013. “The Virginia Poverty Measure: An Alternative Poverty Measure for the Commonwealth.” University of Virginia —Welden Cooper Center for Public Service, Demographics & Workforce Group. Available at www.coopercenter.org/demographics/VPM . Center on Budget and Policy Priorities. 2011. “Spreadsheet with State-by -State Rental Assistance Data.” Available at www.cbpp.org/files/2011-state -fact-sheets -public.xls . Center on Budget and Policy Priorities. 2012. “California: Federal Rental Assistance Facts.” Federal Rental Assist ance Fact Sheet. Available at www.cbpp.org/files/4- 13-11hous -CA.pdf . Chung, Yiyoon, Julia B. Isaacs, Timothy M. Smeeding, and Katherine A. Thornton. 2012. “Wisconsin Poverty Report: How the Safety Net Protected Families from Poverty in 2010.” University of Wisconsin -Madison Institute for Re search on Poverty. Available at www.irp.wisc.edu/r esearch/wipoverty.htm . Citro, Constance F. and Robert T. Michael (eds.). 1995. Measuring Poverty: A New Approach . Washington DC: National Academy Press. Cunnyngham, Karen. 2010. “Estimated Effects on the Supplemental Nutrition Assistance Program of Eliminating California’s SSI Cash -Out Policy.” Final Report to California Food Policy Advocates, February. Available at http://cfpa.net/CalFresh/CFPAPublicatio ns/CalFresh-MathematicaEffectofCashOut -2010.pdf. Eissa, Nadia and Hilary M. Hoynes. 2006. “Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply .” In Tax Policy and the Economy, Volume 20. James M. Poterba (ed.). Cambridge, MA: MIT Press. Falk, Gene. 2012. “Low- Income Assistance Programs: Trends in Federal Spending.” Congressio nal Research Service (CRS), House Ways and Means Committee, United States Congress. Available at greenbook.waysandmeans.house.gov/sites/greenbook.waysandmeans.house.gov/files/2012/documents/RL41823_gb.pdf. NYC Center for Economic Opportunity. 2012. “The CEO Poverty Measure, 2005 –2010. ” Working paper. Available at www.nyc.gov/html/ceo/html/reports/report.shtml . Renwick, Trudi, Kathleen Short, Ale Bishaw, and Charles Hokayem. 2012. “Using the American Community Survey (ACS) to Implement a Suppl emental Poverty Measure (SPM).” P resented at Population Association of America Annual Meeting , San Francisco, May. Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroeder, and Matthew Sobek. 2010. Integrated Public Use Microdata Series: Version 5.0 [Machine -readable database]. Minneapolis: University of Minnesota. Short, Kathleen. 2012 . “The Research Supplemental Poverty Measure: 2011 .” Current Population Reports P60 –244 . Washington DC: United States Census Bureau. Available at www.census.gov/hhes/povmeas/methodology/supplemental/research/Short_ResearchSPM2011.pdf . Smeeding, Timothy M., Julia B. Isaacs, and Katherine A. Thornton. 2013. “Wisconsin Poverty Report: Is the Safety Net Still Protecting Families from Poverty in 2011?” University of Wisconsin -Madison Institute for Research on Poverty, June. Available at www.irp.wisc.edu/research/WisconsinPoverty/pdfs/WI -PovertyReport2013.pdf. Wheaton, Laura, Linda Giannarelli, Michael Martinez -Schiferl and Sheila Zedlewski. 2011. “How Do States’ Safety Net Policies Affect Poverty?” Working Families Paper 19, Urban Institute. http://www.ppic.org /main/home.asp The California Poverty Measure 24 About the Author s Sarah Bohn is a research fellow at the Public Policy Institute of C alifornia. H er research addresses issues at the intersection of public policy and labor markets, with particular attention to low -income and vulnerable populations. At PPIC, her work focuses on poverty, the economy, immigration, and higher education. She has published research on California’s community colleges, underground labor markets, and the impact of immigration policy. She has also conducted research on income inequality, with a focus on the role of unemployment and educati onal attainment on family economic outcomes. She holds a Ph.D. in economics from the University of Maryland, College Park. Caroline Danielson is a research fellow at the Public Policy Institute of California. Her research focuses on social safety net progr ams, including nutrition assistance, cash assistance, and child welfare. Before coming to PPIC she was a principal analyst at the University of California's Welfare Policy Research Project, a RAND graduate fellow, and a faculty member in the Department of Politics at the State University of New York, Potsdam. She holds a Ph.D. in political science from the University of Michigan. Matt Levin is a research associate at the Public Policy Institute of California, where he focuses on poverty and social policy. H e holds a B.A. in history from the University of California, Berkeley, and an M.P.P from the Luskin School of Public Affairs at the University of California, Los Angeles . Marybeth Mattingly is a Research Consultant at Stanford Center on Poverty and Inequa lity and Director of Research on Vulnerable Families at The Carsey Institute at The University of New Hampshire. Her interests center on women, children, and family well -being, poverty, and child welfare. She has published research on couple's labor force participation in the Great Recession, measuring resiliency to child maltreatment, and a nexus of work -family balance issues. Current projects include analyses of trends in Hispanic income and poverty over time, how race and child poverty experiences influence health in early adulthood, the changing spatial distribution of child and senior poverty, and analyses of the ways poverty experiences have changed over time. She holds a Ph.D. in sociology from the Univer sity of Maryland, College Park. Christopher Wimer is a Research Scientist at Columbia University and a Research Consultant at the Stanford Center on Poverty and Inequality. His research focuses on poverty measurement, family economic well - being, and the role of the safety net and other social policies in the lives of disadvantaged populations. At Columbia, he is currently involved in a new study that will track income poverty, material hardship, and child and family well- being among New York City residents. He is also working with the Fragile Families a nd Child Wellbeing Study to understand the impact of the recession on urban families, as well as city -level variation in trajectories of family and child well -being. He holds a Ph.D. in sociology and social policy from Harvard University. http://www.ppic.org /main/home.asp The California Poverty Measure 25 Acknowledgments This report and our collaboration benefited greatly from input given by a wide range of researchers and policy experts, including Jessica Bartholow , Sc ott Graves, David Grusky, Laura Hill, Mark Levitan, Frank Mecca, Debbie Reed, Trudi Renwick, Tia Shimada, Kathy Short, Tim Smeeding, Paul Smilanick , Katherine Thornton, and Ryan Woolsey . Mary Severance provided expert editorial guidance. However, any errors are the authors’ responsibility alone . Partial funding for this research came from Grant Number AE00101 from the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, and awarded by Substance Abuse Mental Health Service Administration. Its contents are solely the responsibility of the autho rs and do not necessarily represent the official views of the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, or the Substance Abuse Mental Health Service Administration. The Stanford Center on Poverty and Inequality provided partial funding for an early phase of this research . http://www.ppic.org /main/home.asp The California Poverty Measure 26 PUBLIC POLICY INSTITUTE OF CALIFORNIA Board of Directors Donna Lucas, Chair Chief Executive Officer Lucas Public Affairs Mark Baldassare President and CEO Public Policy Institute of California Ruben Barrales President and CEO GROW Elect María Blanco Vice President, Civic Engagement California Community Foundation Brigitte Bren Attorney Walter B. Hewlett Chair, Board of Directors William and Flora Hewlett Foundation Phil Isenberg Chair Delta Stewardship Council Mas Masumoto Author and farmer Steven A. Merksamer Senior Partner Nielsen, Merksamer, Parrinello, Gross & Leoni, LLP Kim Polese Chairman ClearStreet, Inc. Thomas C. Sutton Retired Chairman and CEO Pacific Life Insurance Company The Public Policy Institute of California is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute’s goal is to raise public awar eness and to give elected representatives and other decisionmakers a more informed basis for developing policies and programs. The institute’s research focuses on the underlying forces shaping California’s future, cutting across a wide range of public poli cy concerns, including economic development, education, environment and resources, governance, population, public finance, and social and health policy. PPIC is a private operating foundation. It does not take or support positions on any ballot measures or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. PPIC was established in 1994 with an endowment from William R. Hewlett. Mark Baldassare is President and Chief Executive Officer of PPIC. Donna Lucas is Chair of the Board of Directors. Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. Copyright © 2013 Public Policy Institute of California All rights reserved. San Francisco, CA PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 600 San Francisco, California 94111 phone: 415.291.4400 fax: 415.291.4401 www.ppic.org PPIC SACRAMENTO CENT ER Senator Office Building 1121 L Street, Suite 801 Sacramento, California 95814 phone: 916.440.1120 fax: 916.440.1121" ["post_date_gmt"]=> string(19) "2017-05-20 09:41:46" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(6) "closed" ["post_password"]=> string(0) "" ["post_name"]=> string(9) "r_1013sbr" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2017-05-20 02:41:46" ["post_modified_gmt"]=> string(19) "2017-05-20 09:41:46" ["post_content_filtered"]=> string(0) "" ["guid"]=> string(51) "http://148.62.4.17/wp-content/uploads/R_1013SBR.pdf" ["menu_order"]=> int(0) ["post_mime_type"]=> string(15) "application/pdf" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" ["status"]=> string(7) "inherit" ["attachment_authors"]=> bool(false) }