Why do poor people struggling to make ends meet leave job rich Bay Area to head east over the Altamont Pass?
It doesn’t make sense if you only look at the official federal poverty rate. The official poverty rate in San Joaquin County is 19.5 percent and 20.2 percent in Stanislaus County compared to 9.1 percent in Santa Clara County, 12.0 percent in Alameda County, and 10.8 percent in Contra Costa County.
But if you look at the CPM, or California Poverty Measure, a different picture emerges. The CPM rate in San Joaquin County is 18.3 percent and 19.6 percent in Stanislaus County compared to 16.9 percent in Santa Clara County, 17.6 percent in Alameda County, and 16.1 percent in Contra Costa County.
The CPM is the creation of a partnership between two highly respected institutions — the Public Policy Institute of California as well as Stanford University through its Center on Poverty and Inequality.
Unlike the federal poverty rate, it accounts for California’s higher cost of living among other things.
The Poverty in California study conducted by the two organizations that was published last month noted California Fresh and the federal earned income tax credit (EIC) each lowered the overall poverty rate by 2.2 percent each.
Why does any of this matter?
It’s because the way California lawmakers approach poverty such as ratcheting up the minimum wage toward $15 an hour and letting “wealthy” counties off the hook when it comes to addressing poverty within their jurisdictions does nothing to solve the problem, arguably makes it worse. It creates unfair burdens on counties on the outer edges of the wealth ripples centered in San Francisco-Oakland-San Jose.
Once the real costs of California living — primarily Golden State housing costs — are taken into account the job rich Bay Area counties with fatter paychecks see their poverty rates skyrocket by at least 50 percent. Meanwhile San Joaquin and Stanislaus counties see their poverty rates decrease by a modest 6 percent plus.
It is why most efforts at affordable housing — either for the working class, those at the poverty level or below, or even lower middle income efforts in Tracy, Lathrop, and Manteca that the Bay Area economy has a big magnet pull on — will ultimately make little or no difference.
Loan broker Andrew Sephos nailed it years ago when a consultant Manteca hired to meet a state requirement to cobble together an affordable housing plan was droning on about everything he said would work during a workshop at the Manteca Senior Center.
Sephos leaned over and commented that none of what the consultant was saying would ever work since “we (Manteca) are Brentwood’s de facto affordable housing solution.”
The state has let cities that are the home to incredibly wealthy tech companies that need workers far beyond their city borders to generate massive profits without addressing housing for those workers. The lower levels of workers needed to make that all possible can rarely afford to live in such cities.
So what they do is head east.
You could dismiss this as the way of the world except for one nastily little detail. The artificially pumped up minimum wage coming our way. As the University of the Pacific Forecasting Center astutely points out it will have a devastating impact on Northern San Joaquin Valley employers and most likely will led to a significant loss of jobs.
The number of current workers toiling in lower paying jobs in the Bay Area that will see higher paychecks will be minimal given those holding low skilled jobs are almost all paid close to $15 an hour and won’t have to wait until 2021 to see that amount of pay due to the Bay Area’s labor shortage.
And since there is between a $5,000 and $8,000 premium on being poor in the Bay Area compared to San Joaquin and Stanislaus counties based on housing cost and the fact essentially zilch lower priced housing units are being built west of the Altamont, the escalating minimum wage will help drive up housing prices in Manteca and other Northern San Joaquin Valley cities. That’s because the only option they will have is to flee the Bay Area to be able to afford to live.
What if the legislature instead had created an effective version of the federal earned income credit instead of jacking up the minimum wage? It still costs somebody (taxpayers in this case) something but it would not eliminate jobs when the minimum wage becomes so high it either makes automation cost effective or forces businesses to juggle staffing to stay afloat.
Such a move would have been balanced with reduced future burdensome government expenditures to help cover more people who have to rely on the safety net. As such it could actually be the more cost effective alternative to the $15 minimum wage hike that will be fully implemented in four years.
How Sacramento is tackling poverty is helping Bay Area counties at the expense of Northern San Joaquin Valley counties.
If the true poverty level for a family of four once California’s higher housing costs are factored into the equation is $34,825 in Santa Clara County, $31,704 in Alameda County, and $31,506 in Contra Costa County compared to $26,724 in San Joaquin County, and $26,425 in Stanislaus County it doesn’t take a consultant paid in the six figures to tell you what is happening.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or 209.249.3519.