Why California is the 'poverty capital of America'

An excellent op-ed in the L.A. Times today by Kerry Jackson is on why California – with its liberal politics and generous welfare system – is the "poverty capital of America."

According to the Census Bureau, one out of five California residents is poor.  This despite the state's per capita GDP rising twice as fast in the last five years as the national average.  From 1992 to 2015, state and local governments spent nearly $1 trillion to help the poor.  The state, with 12% of the American population, is home today to about one in three of the nation's welfare recipients.

Jackson then reaches the not so astonishing conclusion: "The generous spending, then, has not only failed to decrease poverty; it actually seems to have made it worse."

One of the big reasons for this is the total lack of welfare reform that would require those receiving government assistance to work.

The state and local bureaucracies that implement California's antipoverty programs, however, resisted pro-work reforms.  In fact, California recipients of state aid receive a disproportionately large share of it in no-strings-attached cash disbursements.  It's as though welfare reform passed California by, leaving a dependency trap in place.  Immigrants are falling into it: 55% of immigrant families in the state get some kind of means-tested benefits, compared with just 30% of natives.

There is also the "self-interest in the social-services community":

As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort[,] and security.  To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its "customer" base.  With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy.  Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.

Finally, housing costs make it impossible for even the middle class to get ahead:

Further contributing to the poverty problem is California's housing crisis.  More than four in 10 households spent more than 30% of their income on housing in 2015.  A shortage of available units has driven prices ever higher, far above income increases.  And that shortage is a direct outgrowth of misguided policies.

"Counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings," explains analyst Wendell Cox.  "Middle-income households have been forced to accept lower standards of living while the less fortunate have been driven into poverty by the high cost of housing."  The California Environmental Quality Act, passed in 1971, is one example; it can add $1 million to the cost of completing a housing development, says Todd Williams, an Oakland attorney who chairs the Wendel Rosen Black & Dean land-use group.  CEQA costs have been known to shut down entire homebuilding projects.  CEQA reform would help increase housing supply, but there's no real movement to change the law.

It has become so expensive to live in California that the cost of living actually becomes a disincentive to work.  Poor people are better off accepting the generous benefits offered by state and local governments rather than going to work.  In effect, the reason California is the poverty capital of America is that the state subsidizes poverty.  When you subsidize something, you get more of it.

This simple formula eludes the dolts who run the state.  They believe they can continue to tax and tax and spend and spend with no consequences to the economy or citizens of the state.

Lawmakers in Sacramento should take a close look at Illinois.  This is their future – a nearly failed state, deeply in debt, with taxes so high that tens of thousands of residents are leaving the state every year.  With so many resources, as well as Hollywood and Silicon Valley to pay for the state's generosity toward the poor, California has been able to avoid judgment day.

But eventually, the state will run out of other people's money, and the piper will have to be paid.

An excellent op-ed in the L.A. Times today by Kerry Jackson is on why California – with its liberal politics and generous welfare system – is the "poverty capital of America."

According to the Census Bureau, one out of five California residents is poor.  This despite the state's per capita GDP rising twice as fast in the last five years as the national average.  From 1992 to 2015, state and local governments spent nearly $1 trillion to help the poor.  The state, with 12% of the American population, is home today to about one in three of the nation's welfare recipients.

Jackson then reaches the not so astonishing conclusion: "The generous spending, then, has not only failed to decrease poverty; it actually seems to have made it worse."

One of the big reasons for this is the total lack of welfare reform that would require those receiving government assistance to work.

The state and local bureaucracies that implement California's antipoverty programs, however, resisted pro-work reforms.  In fact, California recipients of state aid receive a disproportionately large share of it in no-strings-attached cash disbursements.  It's as though welfare reform passed California by, leaving a dependency trap in place.  Immigrants are falling into it: 55% of immigrant families in the state get some kind of means-tested benefits, compared with just 30% of natives.

There is also the "self-interest in the social-services community":

As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort[,] and security.  To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its "customer" base.  With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy.  Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.

Finally, housing costs make it impossible for even the middle class to get ahead:

Further contributing to the poverty problem is California's housing crisis.  More than four in 10 households spent more than 30% of their income on housing in 2015.  A shortage of available units has driven prices ever higher, far above income increases.  And that shortage is a direct outgrowth of misguided policies.

"Counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings," explains analyst Wendell Cox.  "Middle-income households have been forced to accept lower standards of living while the less fortunate have been driven into poverty by the high cost of housing."  The California Environmental Quality Act, passed in 1971, is one example; it can add $1 million to the cost of completing a housing development, says Todd Williams, an Oakland attorney who chairs the Wendel Rosen Black & Dean land-use group.  CEQA costs have been known to shut down entire homebuilding projects.  CEQA reform would help increase housing supply, but there's no real movement to change the law.

It has become so expensive to live in California that the cost of living actually becomes a disincentive to work.  Poor people are better off accepting the generous benefits offered by state and local governments rather than going to work.  In effect, the reason California is the poverty capital of America is that the state subsidizes poverty.  When you subsidize something, you get more of it.

This simple formula eludes the dolts who run the state.  They believe they can continue to tax and tax and spend and spend with no consequences to the economy or citizens of the state.

Lawmakers in Sacramento should take a close look at Illinois.  This is their future – a nearly failed state, deeply in debt, with taxes so high that tens of thousands of residents are leaving the state every year.  With so many resources, as well as Hollywood and Silicon Valley to pay for the state's generosity toward the poor, California has been able to avoid judgment day.

But eventually, the state will run out of other people's money, and the piper will have to be paid.