Could California End Childhood Poverty?

 

AP Photo/Marcio Jose Sanchez

This toddler's family was forced to live in an RV when their landlord hiked the rent on their apartment beyond what they could afford. About a third of California's Hispanic children and about a quarter of black children live in poverty, compared to 12 percent of white children. 

This article appears in the Spring 2019 issue of The American Prospect magazine. Subscribe here

If there’s one state we can call the progressive homeland, it’s most likely California. The state is overwhelmingly Democratic and disproportionately liberal. Democrats hold more than three-quarters of the seats in the legislature, while Governor Gavin Newsom has already demonstrated he’s clearly to the left of his predecessor, Jerry Brown.

Sacramento is abuzz with progressive proposals from both Newsom and the legislators. The governor wants to have Medi-Cal (the state’s Medicaid program, which serves 14 million Californians) bargain directly with drug companies over prices. He also wants the state to fund universal pre-K for four-year-olds. Legislators are mulling over proposals to invest major sums in affordable housing.

Perhaps the most far-reaching set of proposals to come before legislators is that developed by a task force the legislature established two years ago. If enacted in their entirety, the proposals could do something that’s never before happened in the United States: eliminate childhood deep poverty. Many of those proposals have been included in the budget that Newsom has presented to the legislature.

 

FOR ALL THE STATE’S progressive bona fides, child poverty in California is deep and widespread. According to the supplemental poverty measure, which unlike the official census measure takes costs of living and social benefits into account, California has the highest rate of poverty in the country. Researchers from the Public Policy Institute of California and the Stanford Center on Poverty and Inequality (SCPI) took this measure one step further, creating the California Poverty Measure (CPM), which provides an even more complete picture of the state’s poverty. According to the CPM, more than one in five children in California—1.9 million—live in poverty, while 450,000 of those children live in deep poverty, or below half the federal poverty level ($12,875 for a family of four).

Housing costs in both large urban centers andrural areas help account for this—nearly half of California families spend more than 30 percent of their incomes on housing. The large immigrant population is also a factor, as immigrants are much more likely to live in poverty than the native-born, in part because many are ineligible for social safety net programs. Most Californians in poverty work, but one in three California workers is employed in low-wage work. All of these burdens are disproportionately felt by the state’s people of color: About one-third of Hispanic children and more than one-quarter of black children live in poverty, compared to 12 percent of white children.

Tens of thousands live in extreme poverty, which has grown considerably since 1996’s welfare reform. Nationally, about one million more people have been plunged into deep poverty since then—people who in effect live on $2.00 a Day, as researchers Kathryn Edin and Luke Shaefer documented in their book with that title.

California’s campaign to end child poverty began several years ago, spearheaded by the anti-poverty, faith-based organization Gather, Respect, Advocate, Change, Engage (GRACE), a project of the Daughters of Charity. GRACE tried different strategies to get the state to take on child poverty. They weren’t successful, says GRACE President and CEO Conway Collis, because the state itself had not been part of the conversation. So the campaign turned to the legislature, and crafted a bill to call on the California Department of Social Services (DSS) to convene a task force to develop a new plan.

The sponsor of the bill, Los Angeles Assemblymember Autumn Burke, says Collis, is a “moderate Democrat, concerned with cost-effectiveness of policy, [which] made her a good author for something that was going to be transformative.” Burke highlighted not only the moral reasoning to end child poverty, but also the economic reasons, given what poverty costs the state. Her bill passed with unanimous support, and last November, the DSS’s task force delivered its plan.

 

TO SYSTEMATICALLY ATTACK the roots of child poverty, the plan focuses on seven main areas of policy: health care, housing, workforce/education, early childhood, special populations (like foster children), the general public-assistance system, and coordinating anti-poverty services.

Perhaps most impactful of these policies—and most innovative—is a refundable, targeted child tax credit (TCTC) that would, each month, directly transfer cash into the pockets of families with children in deep poverty. (The design also takes costs of living in different areas of the state into account and supports parents’ working efforts by, for example, disregarding some earned income.) Essentially, the TCTC is a guaranteed income for extremely poor families with children.

One of the researchers on the task force was David Grusky, director of SCPI. The researchers’ job was to run statistical analyses to evaluate proposals based on their ability to end child poverty. What they found, he says, was “disturbing.”

“When we ramped up existing programs,” Grusky says, “we could not meet our charge in ending deep child poverty. We could make some headway, but we couldn’t end it.”

Enter the TCTC, which would be an aggressive supplement to the already existing federal child tax credit.

The TCTC, says Grusky, would be “a foundational intervention that positions children to participate in the economy when they grow up that perhaps no other intervention could do.” The evidence supporting the long-term benefits of such a cash transfer is relatively recent—but persuasive. Poverty has enduring health and future implications for children, and what works to rectify this can be very simple: more income. It may seem too obvious or even tautological in its simplicity, but just giving money to low-income people is a surefire way to reduce their poverty and its consequences by allowing them to make their own decisions about how to improve their lives. That translates into better educational, employment, and earnings outcomes for kids as they grow up. Grusky also notes that the credit is cost-effective—as proposed, the TCTC phases in over ten years, eventually costing $2.8 billion annually to eliminate deep child poverty, and its own immeasurable costs, in the state.

In February, another report came out on how to address child poverty, and this one was a behemoth. The National Academies of Sciences, Engineering, and Medicine published a $1.25 million, 600-page study detailing proposals to alleviate child poverty. While the evidence from both reports is similar in many ways—living with low income in childhood affects children long-term, and cash benefits significantly reduce poverty in the U.S.—Grusky does note one serious difference. The NAS report, he says, was “powerful and compelling,” but “if you compare how [the California] task force played out as against the NAStask force, the difference is that we came up with an approach that would actually allow us to enddeep child poverty. By contrast, the NAS panel limited themselves to existing, more conventional proposals.” Instead of a TCTC, the NAStask force recommends smaller child allowances than the TCTC’s, which would cut deep child poverty in half, but not eliminate it. “They fulfilled their charge,” says Grusky. “But we took the next step and said ‘OK, we can actually get this done if we’re willing to be a bit more aggressive.’”

Congressional Democrats are currently proposing income policies similar to the NAS recommendations that cover more families higher up the income scale than the California task force’s proposal. They’ve put forth an expanded child tax credit—basically, a child allowance on par with those of other wealthy countries. It would both cover a greater number of families (with the credit beginning to phase out at $130,000 annual income for a single parent in the current Senate version) and provide a smaller allowance than the TCTC—going broad instead of deep.

The California task force didn’t rely on the TCTC alone. It also called for changes to the existing public-assistance system in California—because these programs work. Without such programs, estimates suggest more than a third of all California kids would live in poverty, rather than the current level of one-fifth.

Specifically, the report calls for increasing California’s cash welfare, Temporary Assistance for Needy Families program (CalWORKs) grants, expanding the Earned Income Tax Credit, and expanding child care and early-childhood education for all children living in poverty until age eight. The list goes on: rental subsidies, voluntary home-visiting programs, expanded health care, implementing rent control, expanding Promise Neighborhoods (a federal initiative that provides extensive community services to children and their families), and many other smaller policy tweaks that would have substantial effects on children and families living in poverty—like expanding opportunities for children visiting parents at local jails, providing state funding for low-income tenant legal representation in housing court, and easing bureaucracy to streamline benefit application processes. Faye Wilson Kennedy of the Northern California Poor People’s Campaign notes that it is essential that people in poverty give their input on the policies that will ultimately affect them; some of the task force recommendations came from low-income people themselves—among them, investing in affordable housing, particularly for the homeless.

“This isn’t pie in the sky,” says Collis, who co-chaired the task force alongside the then-director of DSS. Indeed the report is housed on DSS’s website—with the .gov site address implicitly giving the report the imprimatur of state authority.

California is already far ahead of most states when it comes to the extent of its social safety net. While on average states spend less than a quarter of their TANF funds on cash assistance, California spends about 38 percent. Campaigns in the past several years have succeeded in removing the state’s family cap (which denies cash benefits to children born while a family is receiving assistance), repealing the maximum family grant, and increasing the amount of the CalWORKs grant.

 

WHILE ONE MAY IMAGINE that the roughly $14 billion annual price tag of reforms (phased in over ten years) would leave many legislators shuddering, that does not seem to be the case—at least, not yet. Advocates argue that that $14 billion would be a very cost-effective investment. The NAS study estimates that child poverty costs the U.S. between $800 billion and $1.1 trillion each year due to, for example, lost workforce potential and increased health services due to the consequences of poverty. A 2007 Urban Institute report found that poverty costs the U.S. 4 percent in economic output each year, which would translate to $100 billion each year for California. If the task force plan is fully implemented—which would perhaps mean challenging Proposition 13, which caps property tax increases in the state—the report concludes that California would, over the long term, benefit much more than $14 billion each year as poverty falls. That is a substantial return on investment, which could, Grusky hopes, persuade even “a wholly dispassionate observer.”

There’s no question that the state’s lawmakers are inclined to confront California’s high levels of poverty. Before his victory in November’s election, Newsom said in an interview that child poverty “is a matter of political will. We’ve allowed these conditions to persist. And child poverty is the ultimate manifestation of our failure.” He said he had “made child poverty my North Star.”

Newsom’s administration has given weight to his words through the policies proposed in his budget. Newsom’s chief of staff, Ann O’Leary, told advocates their plan “informed the work that we were doing,” during the transition, and that “You will see a lot of your work reflected in our budget.”

Among the many policies highlighted in the task force report that made it into Newsom’s budget are increases to CalWORKs grants to end deep poverty for families who receive those benefits, paid family leave, increases to the state EITC, investments in affordable housing, and expanded access to early-childhood education.

However, the targeted child tax credit is conspicuously absent from the governor’s budget. It may be that there’s so much on Newsom’s wish list now that the TCTC is still a bridge too far. It may also be that because the TCTC requires an entirely new design, there are still technical issues to work out regarding how exactly the credit will work and how California’s data infrastructure can be updated to, for example, calculate the cost of housing in different regions throughout the state. Until such matters are clarified and costed out, the governor, no matter his preferences, probably can’t take a position on the tax credit.

However, Collis tells the Prospect, the governor’s staff is working through the details of the tax credit and examining what would be needed to implement it, including how to incorporate its cost.

Even if the TCTC makes it into the governor’s final budget proposal (what is known in Sacramento as the “May Revise”), of course, the legislature still would have to decide whether to enact it. Burke, who is chair of the Assembly Committee on Revenue and Taxation, has sponsored legislation to pass the tax credit proposal. At least 17 other bills have so far been introduced that would implement most of the rest of the provisions.

While the goal is to pass the entire comprehensive plan, advocates are currently focusing their energy on the pieces of the report that might need the biggest pushes to pass, for example, implementing the TCTC and expanding paid family leave. But Collis says, “I don’t think it’s a situation where [these proposals] are facing opposition as much as [it’s that] we have to work through the details of implementation.”

There’s clear political logic in focusing anti-poverty programs on children—they are an extremely sympathetic population in the national consciousness. The tired, venerable individual responsibility narrative that’s so popular in the U.S. makes it easy for conservatives to blame adults in poverty, but it’s virtually impossible to blame the children (not that some haven’t tried).

If California does declare a real war on poverty, would other states follow? The Golden State enjoys a very different political climate than the rest of the country, with its Democratic supermajorities across the branches of government and its pools of great wealth. It already provides better social assistance—within the paltry U.S. system, of course—than many other states. But even if other states lack the resources and will to go where California may go, the state could yet provide a model for Democrats at the federal level should they win the White House and Senate in 2020.

Jessica Bartholow, a policy advocate at the Western Center on Law and Poverty and a key member of the state’s task force, has long argued that ending poverty is a political decision. But, she says, “I feel like any time I said that before [we created this plan] it was just political rhetoric. Because someone could have said to me, ‘OK, what’s the plan?’ and I wouldn’t have been prepared to answer that question.

“But now we have a plan.”

 

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