Home' Trinidad and Tobago Guardian : December 5th 2013 Contents DECEMBER 2013 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
THE ECONOMIST | BG27
As director of development at the Second Harvest
food bank in Riverside, California, Tracylyn
Sherrit is used to fielding tales of hardship.
These days, though, they sometimes come from
An elderly woman in Palm Springs, a reasonably prosperous
tourist town in eastern Riverside County, recently called, des-
perate for help. Her family were visiting for Thanksgiving, and
she could not afford to feed them.
Riverside County is part of the Inland Empire, a vast sprawl
east of Los Angeles that was whacked by the housing bust.
California s inland areas, such as the Inland Empire and, to
its north, the agricultural lands of the San Joaquin Valley, long
have lagged the coast on indicators such as employment,
income and education. At the California Economic Summit,
a recent gathering of state worthies, all the talk was of "two
Californias," the wealthy coastal part and the struggling inland
section. Cities such as San Bernardino and Fresno reek of
poverty and sadness.
Two recent reports suggest, however, that poverty in Cal-
ifornia s coastal areas may have been significantly understated,
thanks largely to high housing costs.
The United States Census Bureau s traditional measure,
which pegs the poverty line at US$23,492 for a family of four,
ignores geographic variations in the cost of living, as well as
non-cash benefits such as tax credits. Include these and the
poverty rate in Los Angeles County, by far America s largest
by population, climbs from 18 per cent to 27 per cent, according
to a recent report from the Stanford Center on Poverty and
Inequality and the Public Policy Institute of California, a think
tank. Most other cities also see big jumps, and San Francisco s
rate nearly doubles.
By this accounting California s poverty level rises to 22 per
cent. The Census Bureau s "supplemental poverty measure,"
which uses a similar methodology, has it at 23.8 per cent, the
highest in the country.
Even by the traditional measurement, however, California
is 14th. In America s biggest state more than eight million
people struggle to meet their everyday needs and more than
one-quarter of children live in poverty.
California has spent so long grappling with its fiscal woes,
however, that this problem has been neglected.
"Everyone knows that it s an issue," says John Husing, an
Inland Empire economist. "But no one is talking about it."
The unavoidable cuts to social services have been biting
hard. A recent rosy report from the state s fiscal analyst has
spurred calls from Democrats to repair the safety net, but Gov.
Jerry Brown seems determined to hold the line.
Nor does he seem too concerned by the high poverty rate,
which he recently described as "the flip side of California s
incredible attractiveness." Low-skilled immigrants flock to the
state, he argues, and take low-paid jobs.
At best this simplifies the issue. California is not the magnet
for foreign immigrants it once was, and educating and integrating
their children is now the state s main task. There is no hiding
the ethnic divide, though. Almost one-third of California s 15
million Latinos live in poverty. Two-thirds of Latino adults
have a high-school diploma at best, compared with 26 per
cent of whites and 36 per cent of blacks.
In fairness Brown has not been idle. He has adjusted school-
finance formulas to send more cash to poor areas and has
cautiously backed fracking in the vast Monterey oil shale,
which may one day generate serious wealth and jobs. More
immediately he has approved a hike in the state s minimum
wage to $10 an hour, beginning in 2016, although some business
groups fear that this will kill jobs.
He faces strong headwinds, however. The state may be piling
on jobs, but from a low base: At 8.7 per cent its unemployment
rate is still the fifth-worst in the country. Add the underem-
ployed and discouraged, and California is second only to
Nevada. One third of America s welfare recipients live in the
California also is hollowing out: Between 2007-2009 and
2010-2012 the number of people earning between US$50,000
and US$100,000 fell by almost 75,000, while every income
bracket above and below grew. Income inequality is higher
than in almost any other state, by one measure. The elites of
the Bay Area are thriving and growing in number, even as the
poor of the Inland Empire struggle to survive.
Without some sort of policy fix, and soon, California will
be the Golden State only for the few.
@2013 Economist Newspaper Ltd. (Distributed by the New York
The not-so-golden state
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