California may be one of the richest states in the country, but it’s a difficult place to afford for many average families. Studies say the gap between high and low incomes is wider in California than in most other states.
New research drives that point home even more.
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Nonprofit United Ways of California recently released a report which says that a staggering 35% of California working households don’t earn enough money to meet their basic needs.
This means more than 3.8 million families in California are struggling financially. And if lawmakers don’t intervene, the state could soon have a poverty crisis on its hands.
A dire situation
There are different measures the government can use to define poverty, but it’s important to recognize that the amount of money needed to survive can vary greatly depending on location.
In its report, United Ways of California has created what it calls the Real Cost Measure (RCM) to show what the true cost of living in the state looks like using county and neighborhood data.
By this measure, the group found that 35% of California working households can’t meet their basic needs. That’s roughly three times the proportion considered to be living in poverty when using the federal standard.
And because so many families in California are stretched so thin, the group thinks lawmakers need to intervene.
"If families get hit with anything — a car repair, a medical emergency, a rent increase — it can tip them into homelessness," said Elise Buik, CEO of United Way of Greater Los Angeles, to KABC
It’s also worth noting that the report is based on cost data from 2023. This means that it may not fully reflect the impact of rising costs since then.
"Things are going to get worse for working families," said Pete Manzo, CEO of United Ways of California, told KABC. "Sources of public assistance are shrinking."
Californians need help
The report makes it clear that securing employment is not the problem, since about 97% of the households said to be struggling have at least one working adult. The issue, it says, is that jobs don’t provide fair and livable wages. The rising cost of living in California has outpaced income and income support.
RentCafe reports that the cost of living in California is 50% higher than the national average.
But wages don’t reflect this. The average weekly earnings of all private employees in the U.S. was $1234.80 in March, according to the U.S. Bureau of Labor Statistics. The same figure for California was only slightly higher at $1,375.25 the same month.
Simply put, having a job in California is not enough to guarantee a decent standard of living. U.S. News & World Report recently ranked California as the worst of the 50 states in the context of cost of living and affordability.
The Public Policy Institute of California says that seven in 10 workers in the state have full-time jobs. But the median full-time worker in California only earns about $29 an hour, or $60,000 a year.
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An estimated 35% of workers have low-wage jobs that pay less than $19 per hour, which is consistent with the United Ways finding that 35% of California households don’t earn enough to cover their basic expenses.
Compounding the problem is the high cost of raising children. Households with children are much more likely to be struggling, per the report. An estimated 54% of households with children under six years old earn below the Real Cost Measure. The same holds true for 81% of single mothers with children under age six.
In 2023, California ranked fourth in a Care.com study of the most expensive states for infant daycare. It also came in as the third most expensive state to hire a nanny with the weekly cost at $849.
Subsidizing these costs or offering cost-effective alternatives could be instrumental to helping more families boost their earning power, progress in their careers and hang onto more of their paychecks.
Improving the financial lives of Californians
All told, it’s clear that lawmakers need to take action to avoid having a growing number of Californians fall into poverty. And United Ways has some suggestions.
Some solutions they propose include mandating higher wages, implementing guaranteed or universal basic income programs, and providing workers with government-sponsored retirement and health benefits.
Subsidizing childcare costs could also be instrumental in helping California families make ends meet. Similarly, offering new tax credits, or expanding existing ones, for residents with young children who aren’t yet school-aged could help the situation.
The group would also like to see lawmakers expand access to health care, as well as expand access to free or low-cost higher education. This could be instrumental in helping lower-income workers boost their wages.
On workers’ end, California employees can try their best to improve their financial situations by seeking out jobs with benefits and focusing on employers that offer career advancement. But that’s often easier said than done, especially for families who have the constraint of young children to work around.
Of course, pursuing a degree is another step lower earners can take to boost their income. However, many can’t afford the cost of higher education or even additional training.
For those with children, juggling work and a degree simultaneously can be downright impossible. So all told, lawmakers need to dig deeper into the struggles of lower-income families – and step in with viable solutions.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
