Poverty in California – Public Policy Institute of California

Overcrowded Housing and COVID-19 Risk among Essential Workers

[vc_row][vc_column][vc_column_text]Some Californians face substantial risk of illness within their own households under the state’s shelter-in-place order. Physical distancing and self-isolation can be virtually impossible in crowded homes, threatening the health of entire households. In crowded living conditions, individuals are at higher risk of transmitting infectious diseases, a factor that may challenge the state’s efforts to manage the pandemic while reopening the economy.

As the high cost of housing is a stark reality for nearly two-thirds of Californians, finding affordable housing can mean cohabiting with several other people. California’s overcrowding rate is well above the national average; the share of housing units with more than one occupant per room is 8.3% compared with 3.4% across the nation. Furthermore, overcrowding is much more common among renters than homeowners (13.4% vs. 4.0%), and in Latino households (18.4% vs. 2.4% of white households).

While most Californians have been staying home to reduce coronavirus transmission, essential workers do not have the option to shelter in place. Over one-third of California’s labor force works in essential occupations that require being physically present. Compared to nonessential workers, they are at higher risk of infection because they continue to circulate among others despite the shutdown.

Essential workers are more likely than nonessential workers to live in overcrowded housing—16 percent versus 12 percent. That share is almost double for workers in farming (31%), and food preparation/serving (29%).

A recent study confirms that essential workers and those in larger households do face a higher risk of contracting coronavirus. It would be ideal to explore the relationship between COVID-19 cases and workers living in crowded conditions. However, inconsistent testing availability across regions makes cases an unreliable measure of the virus’s geographic spread; deaths, which are better measured, are a valuable proxy.

There is a clear link between COVID-19 deaths and essential workers who live in overcrowded homes, though the relationship is muddied by regional differences in terms of the age structure of the population, underlying health conditions, and other factors. Santa Barbara (25%), Madera (23%), Los Angeles (21%), Orange (20%), and Tulare (19%) counties have the highest shares of essential workers in overcrowded homes. Los Angeles and Tulare are experiencing large numbers of deaths per capita, at 14 and 9 deaths per 100,000 people, but the other counties are not.[/vc_column_text][/vc_column][/vc_row][vc_row max_width=”80″ visibility=”visible-desktop”][vc_column][vc_column_text][infogram id=”1p375951mzw3k9c0mex60d30kdidymqxjlx?live”][/vc_column_text][/vc_column][/vc_row][vc_row max_width=”80″ visibility=”visible-tablet-landscape”][vc_column][vc_column_text]

[infogram id=”1p375951mzw3k9c0mex60d30kdidymqxjlx?live”]

[/vc_column_text][/vc_column][/vc_row][vc_row visibility=”visible-tablet-portrait”][vc_column][vc_column_text]

[infogram id=”1p375951mzw3k9c0mex60d30kdidymqxjlx?live”]

[/vc_column_text][/vc_column][/vc_row][vc_row visibility=”visible-phone”][vc_column][vc_column_text]

[infogram id=”1p375951mzw3k9c0mex60d30kdidymqxjlx?live”]

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]California will lift some shelter-in-place restrictions in the coming days, and more people will leave their homes to work. Examining work and living conditions together can identify areas where people are least able to take effective actions against the spread of the coronavirus. Designing policies to protect the health of workers and their households will be critical to managing COVID-19 while restarting the state’s economy.[/vc_column_text][/vc_column][/vc_row]

Many Low-Income Families Left Out of Federal Stimulus Benefits

As part of the federal response to COVID-19, the IRS has started issuing stimulus checks—to boost consumer confidence—directly to millions of families. For the record number of Californians who have lost jobs, hours, and certainty around their incomes, these payments could come just in time.

We estimate that about 81% of Californians live in a family that will receive an “economic impact payment,” with the typical family receiving around $2,200. In total, Californians could receive about $26 billion through the program.

However, nearly 20% of families are unlikely to receive a stimulus check. Because the payments phase out as incomes rise, most of these families are above the income cutoff ($99,000 for single tax filers and $198,000 for joint filers without children). But nearly a third are among the state’s lowest income families. In part, this reflects the fact that only people who have filed taxes recently, or who receive either supplemental security income (SSI) or social security, will receive a check.

People with very low incomes are not required to file taxes, and they will not receive stimulus checks unless they actively share their banking details with the IRS. Partly for this reason, our estimates indicate that just 65% of people in families with the lowest 10% of incomes—less than about $22,000 a year for a family of four—are likely to receive a check.

By comparison, 90% to 97% of those in middle-income families—with annual incomes of $52,000 to $176,000—are likely to receive a check.

Yet even if all Californians who do not file taxes submit their information to the IRS, people in low-income families will still receive checks at lower rates than middle-income families. Because many low-income families include undocumented residents, the entire family is ineligible for these federal payments. If families with undocumented members were eligible, all families from the 11^th to 80^th percentiles of the income distribution could potentially receive a check.

To help Californians during this crisis, the state’s safety net will need to reach those most affected economically. The temporary expansion of unemployment insurance will provide much more aid to certain low-income families than the federal stimulus payments. And California’s recently announced Disaster Relief Fund, which will use public and private funds to provide up to $1,000 per household to families of some undocumented immigrants, will help to fill in certain gaps. But while replacing wages is important, a response focused only on wages would skip many people in need.

Food assistance programs like CalFresh and school meals are also critical safety net supports because of their wide reach, and expansions are also underway. Along with the federal stimulus payments, these are important steps, but—depending on the length and the depth of the crisis—more remains to be done.

Race, Health, and the Risk of COVID-19 Complications

For adults younger than 65, many underlying health conditions are emerging as risk factors that can lead to severe complications of COVID-19. Within this larger population, certain minority groups are under particular threat due to disproportionate rates of such conditions. While California’s overall share of nonelderly adults at risk is relatively low, disparities in health endanger some more than others during this health crisis.

Governor Newsom cited protecting individuals most at risk of COVID-19 complications as a necessary criterion for restarting California’s economy. Though we cannot yet draw conclusions from incomplete data—about one-third of cases and over a tenth of deaths do not have complete data on race and ethnicity—certain risk factors are more prevalent along racial and ethnic lines.

According to the Center for Disease Control, potential risk factors include heart disease, diabetes, severe obesity (BMI greater than 40), and uncontrolled asthma; smoking is also likely to increase risk. In California, over 60% of Native Americans and about 46% of African Americans have at least one of those health concerns. By comparison, roughly one-third of whites, Latinos, and Asian Americans have one or more of these health issues.

Native Americans are diagnosed with heart disease at rates almost four times that of whites (19% to 5%), have higher rates of smoking (51% to 14%), and double the uncontrolled asthma (12% to 6%). African Americans have much higher rates of diabetes (24% to 14%) and severe obesity (12% to 4%) than whites. Asian Americans and Latinos also have higher rates of diabetes (about 19%) compared to whites (14%).

Due to higher poverty and uninsured rates, minority groups also face more difficulty accessing health care. At the same time, individuals in these populations may frequently hold jobs with a higher risk of exposure to coronavirus.

The California Department of Public Health has begun to publish data on cases and deaths by race/ethnicity. Some counties, such as San Francisco, are doing the same at the local level. While limited testing capacity and incomplete data prevent a true understanding of who is most impacted by the coronavirus, better knowledge of existing health disparities can help California protect and heal its most at-risk members as the state plans its next steps in responding to the public health crisis.

Essential Workers and COVID-19

California is grappling with the dual threats of a public health crisis caused by the coronavirus and the additional economic fallout of necessary social distancing measures. In the past week, we have seen unemployment claims skyrocket and policymakers forge supports for workers and businesses.

Meanwhile, there is a workforce that is tackling the public health crisis, keeping the economy going, and supporting Californians who are sheltering in place. While this essential workforce supports the state’s health and basic economic needs, many of these workers are not well equipped to weather the economic challenges of the COVID-19 crisis.

We estimate that in a typical year, roughly one-third to one-half of California’s labor force is employed in essential occupations. Essential workers fulfill a wide variety of roles in our economy, including in health care services, energy provision, food service, agriculture, and transportation. Some workers in these areas may be seeing layoffs and hours reductions depending on their industry, firm, or region.

Some essential jobs are obvious, as they are on the front lines of the public health crisis. For example, registered nurses (the largest occupation within the healthcare practitioner category) are essential, have two- or four-year degrees (68% have a college degree, according to our analysis of American Community Survey data), and earn relatively high wages ($52.32 an hour).

However, workers outside of the health care sector are also on the front lines. Personal care aides—those who assist the elderly and others in their homes or personal care facilities—are the single largest essential job category. These workers earn $13.50 an hour on average and 85% do not have a college degree.

Differences in skills and pay translate into notable differences in economic well-being for these workers and their families. A slightly higher share of essential workers than non-essential workers are poor or nearly poor, according to the California Poverty Measure: 14% of essential workers live in poor families compared to 11% of non-essential workers (the comparable estimates for near poverty are 19% and 14%, respectively).

Grocery store cashiers, store clerks, farmworkers, and delivery and truck drivers make up sizeable shares of the essential workforce. Given the low hourly wage rates for these workers, some may face hardships in caring for children or family members with schools and care facilities shuttered.

In addition, many essential workers experience the cost and risk of maintaining their own health while interacting with the public. In low wage essential jobs, access to health benefits and paid sick leave is limited, even in normal times. During the COVID-19 crisis, expanding access to personal protective gear could reduce the health risks among workers whose job requires some level of contact with the public.

Mandated lockdowns are now slated to continue through at least May 1 in some parts of the state and may last even longer. Ensuring the ability of essential workers to continue their jobs safely and effectively will be crucial over the coming months. As policymakers implement support for unemployed Californians, it is important that they also consider ways to assist and protect the many essential workers on the front lines. Paid sick leave, adequate health coverage, income support, access to child care, and sufficient personal protective gear should all be part of the policy discussion.

Feeding Children When Schools Are Closed for COVID-19

By state law, all public schools in California must provide at least one nutritionally adequate meal to students—however, many students eat more than one meal a day at school. Nearly four million students received meals from California’s public schools in the 2018–19 school year: close to 300 million breakfasts and well over 500 million lunches. With schools closed to reduce exposure to the new coronavirus, many students now lack ready access to these meals.

By federal law, low-income students (about $48,000 for a family of four in 2020) are eligible for free or low-cost school meals. Higher income students paid on average $0.98 for breakfast and $2.11 for lunch in 2017–18, according to the California Department of Education.

The vast majority of low-income students eat some or all breakfasts, lunches, or both at school. Free and reduced-price meals lower food insecurity, and according to the California Poverty Measure (CPM), meaningfully reduce poverty among families with public school students. Without school meals, the share of students living in deep poverty would be 17% higher; increases for students in less severe poverty would be 2% to 8%.

With school closures in place for several weeks, school districts have already designated sites where families can pick up meals for children. In higher poverty areas, all children can access meals regardless of enrollment in the local school or eligibility for meal programs because authorities have temporarily relaxed federal regulations.

During closures, Governor Newsom assured that schools will continue to receive state funds to operate and requested efforts focus on certain areas, including providing school meals. However, access remains a concern. For example, Los Angeles Unified School District lists 64 “grab-and-go” sites for its roughly 1,000 schools. San Diego Unified School District has 13 sites for 181 schools, as of March 16. Elk Grove, with 67 schools, has 34 sites for drive-through and grab-and-go meal services along with a mobile service for families with limited transportation.

With pandemic EBT (P-EBT), ATM-like cards pre-loaded with funds for groceries, the federal government is also helping low-income students replace missed school meals. The cards will cover the expected number of days that schools will be closed. For students whose families already receive monthly CalFresh benefits on EBT cards, funds can readily be added. For low-income students who do not already receive CalFresh (34% statewide), families must complete some paperwork—mainly electronically—to obtain an EBT card.

Because the reach of CalFresh varies across the state, barriers to getting P-EBT funds to students will also vary. Fortunately, the state already matches student data with their CalFresh, CalWORKs, and Medi-Cal data to automatically determine students eligible for free and reduced-price school meals. If the state can use all existing sources of family income to provide P-EBT to students, they will reach more low-income students.

Ready access to meals influences student health, learning, and economic wellbeing. Robust access to free and reduced-price meals can decrease the stress low-income families are facing as efforts to limit the spread of COVID-19 dampen economic activity.

How Will the Coronavirus Affect California’s Economy?

As Californians limit their daily activities to slow the spread of the coronavirus, the state economy is poised to take a major hit. The pandemic is increasing the need for some goods and services (such as health care) and reducing demand for others (such as travel- and entertainment-related services), so the near-term economic consequences are more serious in some sectors than in others. Moreover, these consequences could exacerbate the unevenness of economic conditions and opportunities across regions.

Initially, the largest downturns are likely to occur in sectors that rely on the movement of people and nonessential goods. Recent forecasts have identified several “at risk” sectors: accommodations and food service; arts, entertainment, and recreation; administrative and support services, especially employment services; mining and oil/gas extraction; transportation and warehousing; and agriculture (UCLA Anderson and Moody’s Analytics). Shocks in these industries will be driven by reduced local demand, as well as slowing of trade in and out of California’s ports (especially relevant for the transportation and warehousing and agriculture sectors).

These sectors—excluding agriculture—comprise 10% of the state GDP and employ 3.9 million workers. Unemployment insurance claims data is starting to show the impact on workers, but it will be a while before we get detailed data for all California workers (including those who do not apply for unemployment insurance).

We can, however, learn a lot about the pandemic’s impact on workers, sectors, and regions from recent employment statistics. Employment in these sectors makes up more than a fifth of overall non-farm employment in both California (22%) and the nation as a whole (21%).

The workforce in these industries is not just large; it also comprises a wide range of occupations (for example, pilots as well as baggage handlers in the transportation industry; hotel managers as well as cleaning staff in the accommodation industry). At this point, we cannot predict exactly how the COVID-19 crisis will affect these workers. But reduced hours and layoffs are highly likely, and the workers least able to weather the storm are those who already struggle with poverty.

Overall, we estimate that 19% of Californians employed in these industries are working poor and another 22% are just above the poverty line (“near poor”). The poverty rate among workers in the accommodation and food service sector is 24%. This sector, which is being hit hard by reduced tourism and dining out, is the largest of those expected to experience the most immediate economic consequences.

Because California’s industries are not evenly distributed, the initial impact on economic activity and on workers will likely vary across the state. Among major metro areas, Los Angeles, Anaheim–Santa Ana–Irvine, Stockton, and Riverside–San Bernardino have larger shares of jobs (ranging from 22% to 28%) in at-risk sectors than the state as a whole.

As one might imagine, these areas differ from one another in many ways. While Stockton has a relatively large share of employment in transportation and warehousing, Anaheim–Santa Ana–Irvine has a large share in accommodation and food services. Not surprisingly, given its population, the Los Angeles metro area has by far the largest number of workers in at-risk sectors: 1,043,000. Riverside and Anaheim follow with 433,000 and 417,000, respectively.

The longer-term economic impact of the coronavirus on these and other sectors will depend on how long the crisis lasts. Policy responses can play a critical role in mitigating the economic damage. State and federal leaders face the challenge of helping businesses weather the crisis and rebound quickly, while also addressing the tangible needs of workers who may be losing income, especially those who are already in or near poverty.

A host of economic interventions—many of which aim to help dislocated workers—have already been announced, and more will be implemented as the economic consequences of this pandemic become clearer. As they develop these interventions, policymakers will want to take into account industries and workers across all of California’s regions.

Interactive: Many Californians Live in or Near Poverty

[vc_row][vc_column][vc_column_text]More than 7 million Californians are “near poor”: out of poverty, but within 1.5 times the poverty line, according to the California Poverty Measure. The near-poor population is slightly larger than the poor population, and many could be pushed into poverty by small expenses.

In California, a near-poor family of four who rents has annual resources that range between $32,500 and $48,800. Adults with less education and fewer work hours, renters, African Americans, and Latinos often have the highest poverty and near-poverty rates. Disparities that persist across poor and near-poor groups are reminders that the poverty threshold is not a hard line where economic hardship ends.

Among adults, full-time work does not remove the risk of poverty: 21% of people ages 25–64 working full-time, full-year jobs are in or near poverty. These full-time workers are more likely to live in near poverty (13.9%) than in poverty (7.1%). At the same time, adults in less than full-time jobs live in near poverty at about the same rate (19.7%) as those with no work (20.9%). But they are less likely to live in poverty (22.3%) than those with no work (32%).[/vc_column_text][/vc_column][/vc_row][vc_row max_width=”80″ visibility=”visible-desktop”][vc_column][vc_column_text]

[infogram id=”1p9yd5nm9kxnddf7zryd5dqnp1b3xnwkjnq?live”]

[/vc_column_text][/vc_column][/vc_row][vc_row max_width=”80″ visibility=”visible-tablet-landscape”][vc_column][vc_column_text]

[infogram id=”1p9yd5nm9kxnddf7zryd5dqnp1b3xnwkjnq?live”]

[/vc_column_text][/vc_column][/vc_row][vc_row visibility=”visible-tablet-portrait”][vc_column][vc_column_text]

[infogram id=”1p9yd5nm9kxnddf7zryd5dqnp1b3xnwkjnq?live”]

[/vc_column_text][/vc_column][/vc_row][vc_row visibility=”visible-phone”][vc_column][vc_column_text]

[infogram id=”1p9yd5nm9kxnddf7zryd5dqnp1b3xnwkjnq?live”]

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Resources from social safety net programs play a substantial role in moving people out of poverty—2.7 million more Californians would be poor if not for the social safety net. However, many of those moved out of poverty nonetheless live in near poverty, as broader factors like the cost of housing and available jobs play key roles in the resources they have on hand.

As California policymakers address poverty through tax credits, safety net programs, and housing policies, near-poverty rates provide another view into the state’s lowest-income populations. Reducing poverty in California will require attention to how families can be lifted out of poverty and also positioned for long-term economic security.[/vc_column_text][/vc_column][/vc_row]

For Many Californians, Poverty Is One Minor Expense Away

Add one extra expense and families living just above the poverty line could fall into poverty. Data from the California Poverty Measure (CPM) show that 7.2 million Californians live near poverty, that is, with just enough resources to meet their basic needs. All told, in 2017 as many Californians lived just above the poverty line as below it, or about 18% in each case. Even a small change, a monthly expense of $250 or less, could push 1.6 million people under the line.

We define “near poverty” to mean having resources worth 1 to 1.5 times the poverty threshold after taxes and necessary expenses. Since the CPM accounts for California’s varied living costs, the range for near poverty differs across regions. In Fresno County, a family of four who rents their home and has $25,900 to $38,900 in resources is near poverty, while in Santa Clara County, the same is true of a family of four with $40,000 to $60,000.

Because the poverty line is a blunt standard, “near poverty” includes families earning just a few dollars above the poverty threshold—even though a few dollars are unlikely to make it easier to make ends meet. This makes it especially important to understand how many Californians are near poverty, and how close those near poverty are to falling into it.

Californians can be pushed into poverty by the smallest expenses. Overall, people near poverty are more likely to be pushed into poverty by a small expense than a large expense. As expenses grow, the total number of people threatened climbs. Three out of four people near poverty, or 5.4 million, are pushed into poverty by an extra $1,000.

Near poverty affects young people more than it does older Californians, and children under 18 are more likely to be near poverty (23.6%) than in poverty (19.3%). Young adults and seniors, however, are more likely to be in poverty. Regional differences in living costs, opportunity levels, and the impact of existing policies and programs are key factors driving this variation.

Without safety net programs, more people, and in particular, more families with children, would face poverty instead of near poverty: resources from programs including CalFresh and the federal and state Earned Income Tax Credits (EITCs) keep 7.1% of Californians out of poverty. Yet almost all people (93%) who move out of poverty via the safety net move into near poverty. This fact has implications for policymakers’ ongoing efforts to help ensure all Californians can meet their basic needs. As the state works to reduce poverty, strategies that promote economic mobility complement investments in programs like the CalEITC and the new Young Child Tax Credit.