Federal Statistics Don’t Reflect Poverty in State, Study Says

Times Staff Writer

California’s poverty rate leaps from 15th highest in the nation to third highest when the cost of living is factored in, and the state may be missing out on federal funding for programs such as food stamps and Head Start, a new study concludes.

The nonpartisan Public Policy Institute of California on Wednesday released its new report, which shows only Washington, D.C., and New York City having higher poverty rates when housing and utilities -- which can vary widely by region -- are computed with income and other expenses.

The federal government uses a poverty rate that does not factor in radically different housing costs to determine how much money to give the states, which then distribute the funding to local programs for the poor. The federal poverty threshold determines eligibility for several federal programs, including the food stamp program, the Children’s Health Insurance Program and Head Start.

Because that threshold does not calculate substantially higher housing costs in California, a Los Angeles family of four that earns $19,200 would be ineligible for Head Start based on their income -- but might spend half of it on rent, resulting in unfairly disqualifying them from crucial aid, said the study’s author, Deborah Reed.

In counties with some of California’s highest rents, such as Los Angeles, San Francisco and Monterey, one in five residents live in poverty when housing costs are added to other factors the federal government uses to calculate poverty rates, Reed said. Transportation costs were not included.


“People have been talking about the federal measure and what is wrong with it pretty much since it was created in the 1960s ... and raising the point, can’t we do this better?” Reed said. Averaging the 50 states’ cost of living without regional factors such as utility or housing costs was found to be less than ideal even by a federally funded 1995 report by the National Institutes of Science.

“So when we went to do our update on poverty ... what was clear was that what mattered the most for California was the housing cost,” Reed said. Researchers are looking at other factors that might in the future be computed so “this is just one piece of the picture,” said Reed, “but it’s what is most significant in California.”

Under the federal measure, California has a slightly higher poverty rate than the rest of the nation (13.3% to 12.7%), but when the rate is adjusted for the regional cost of living, that difference increases substantially (16.1% to 12%), Reed said.

Other conditions “particular to California, such as very high housing costs, rising income inequality, and the largest immigrant population in the country, have made poverty a larger social phenomenon here,” said Reed, also the institute’s program director.

Madeleine Stoner, faculty chair of the USC Urban Initiative, whose specialties include public assistance and the family, said the findings are valuable in offering a more accurate picture of the poverty problem in California.

“If anything, it’s more dramatic because of this very polarizing situation our economy is in,” Stoner said. “The larger divide between the rich and the poor. It’s important to show that we’re one of the highest areas for poverty because then it means ... we should be eligible for more funding,” Stoner said.