The census figures from 2017 showed that when the cost of living, specifically housing, was factored in, California has the highest poverty rate in the nation with more than 20 percent of its residents, 8 million people, meeting the “supplemental poverty measure.”
When the Public Policy Institute of California (PPIC) developed its own California-specific alternative poverty measure, they attempted to see what poverty would like with rents at the nation’s average.
They found that the overall poverty rate drops from 21 to 14 percent, with nearly 2.4 million residents lifted above poverty. The different was more dramatic for child poverty which fell by 8 percentage points and 717,000 children once the cost of living is lowered.
The bad news is that the 2018 report is just as bad – although the numbers are slightly better with *only* 19 percent in poverty this year as compared to 20.4 percent last year.
The supplemental poverty measure not only looks at income but also takes into account the costs of housing, healthcare, and child care in the areas where people live. That pushes the rate from 13.3 Californians, slight better than the national rate of 13.4 to 19 percent.
As Dan Walters, the longtime Sacramento-based columnist now working for CalMatters, put it last week, “The most obvious and most important victims of California’s chronic and still-growing housing shortage are the countless thousands of families that struggle to put affordable roofs over their heads.
“The shortage has driven prices skyward in a classic example of a supply-demand mismatch, and housing costs are the largest single factor in California’s shameful status of having the nation’s 
highest level of poverty.“
But he argued there is another dimension to the housing crisis, he believes the housing shortage will ultimately “bite California’s economy.”
He writes: “It’s hurting the state’s overall economy as employers face increasing shortages of skilled workers, especially in coastal areas where the housing squeeze is the tightest and local resistance to housing construction is the most implacable.”
Mr. Walters uses Ventura County as his example. Ventura is largely a suburb just north of Los Angeles and it contains some very prosperous areas. It is also surrounded with agricultural fields and orchards.
This month, Ventura County got some bad news.
“The dominant economic story in Ventura County is a continued decline in total economic activity,” Matthew Fienup, who heads Cal Lutheran’s economic forecasting operation, told a gathering of local officials and business leaders. “We hesitate to the use the word recession, but we don’t know what else to call two consecutive years of economic contraction.”
“Average economic growth over the past four years rounds to 0.0 percent, the worst four-year period for which we have data. While job growth remains positive in Ventura County, sectoral data give little support for optimism. Whether you look to jobs or GDP, the state of the Ventura County economy is weak.”
Here is the kicker, Mr. Fineup believes that the downturn can be directly traced to the growing housing affordability crisis and namely, “the inability of businesses to attract and retain talent.”
This next part should be quite familiar to Davis residents.
Mr. Fineup told the group: “Ventura County’s chronic lack of new construction is driven by a set of urban growth policies … which rank as the most stringent growth restrictions of any county in the 
United States.”
While Ventura is obviously a lot bigger than Davis or Yolo County – this should sound rather familiar.
Mr. Walters notes, “Ventura is one of several California counties and cities that have adopted Save Open Space and Agricultural Resources (SOAR) restrictions that make it virtually impossible to build housing on agricultural land.
“SOAR is the most virulent form of local not-in-my-backyard (NIMBY) policies that are the major impediments to expanding housing construction needed to keep up with population growth, replace housing lost to fires and begin closing a shortage that now is several million units.”
The problem of businesses attempting to attract and retain talent has become a problem in Davis as well. We have repeatedly cited the statement from the developers of the University Research Park mixed-use development proposal who believe that a barrier to economic development in Davis, to recruiting and retaining business here is that we lack workforce housing.
Once again we are seeing that this is not just a Davis-problem, it is a problem for California as a whole. And it is a problem that resonates or can resonate with both the left and the right. The left in the form of increased poverty rates as the result of lack of housing. The right in the form of a potential economic downturn.
As Mr. Walters notes: “State officials say California needs to be building 180,000 new units of housing a year – a level it achieved prior to the Great Recession, which drove new construction down to as low as 30,000 units.”
Some have recently argued that the slow down in housing is a sign of the next housing market downturn, the end to the bubble, but this evidence suggests that the lack of housing may also end up being a cause of the next downturn here in California.
Writes Mr. Walters, “As the new report on Ventura’s stagnant economy indicates, California will pay a steep economic price if it fails to resolve its housing crisis. Job-creating investment will decline and California will become even more economically polarized with a vanishing middle class.
“Incoming Gov. Gavin Newsom talks of ramping up housing construction. But talk is cheap. The real question is whether he and the Legislature will confront NIMBYism by intervening in local land use policy and compelling Ventura and other localities that resist new construction to meet the state’s housing quotas,” he writes.
He also argues: “It would require courage because NIMBYism is most evident in coastal communities that strongly support Newsom and other Democrats at the polls.”
—David M. Greenwald reporting
Some of the points in this article contradict with each other.
First, a point is made regarding lower-income people getting priced-out of California.
Then, a claim is made that development restrictions impact economic development.
Last time I checked, lower-income people get priced-out even further, by economic development. In fact, they’re actively “displaced”. One need look no further than Silicon Valley and San Francisco, to see this in action. I believe this phenomenon has even spread to Oakland.
There is no contradiction there – economic development creates jobs, unaffordable housing keeps people out of housing opportunities.
There is a contradiction, unless economic development and vast amounts of housing are constructed to house those new workers. In other words, business as usual – with no apparent goal (other than continuous sprawl). This type of thinking is the reason that California exists in its current state.
Your example also assumes that the low-income folks (who already live in a given area) are the same ones who would be getting the new jobs. Based upon history, nothing could be further from the truth.
You’re correct, if you lack sufficient housing (which is the problem with the high cost of housing), the housing you have will be too expensive. There is no inherent contradict here.
That is simply incorrect. Economic development will primarily create jobs for those who don’t already live in a given area, and increase the demand for higher-end housing. It does nothing for lower-income folks, who will be further challenged.
You seem to be assuming that economic development combined with building a “sufficient” amount of additional housing will drive housing prices down to the point that lower-income folks would then be able to afford a higher-priced area. I’d suggest you’re not putting forth realistic arguments, to say the least. Of course, you’re also not putting forth any actual numbers or examples, so it’s really a pretty silly article/claim.
That’s silly. Creating jobs helps low income people.
I have seen business/commercial areas develop without providing the services, retail, and food options that people need, such as when Natomas first got built. The nursery association moved their offices there and when we went to meetings we literally had to go miles just to find lunch. But if a business park is done right, it includes small retail such as convenience stores, it includes fast food and mid-price eateries, and all of those support businesses require staff. Adding a hotel creates a large number of jobs for entry-level workers. The businesses themselves also require landscaping and janitorial services.
Properly planned and developed, economic development creates jobs at a range of income levels.
If they’re landing a low-wage job in a high-priced area (with prices driven even higher by economic development), then they are not necessarily being helped, as a whole.
I think you’re not putting forth honest arguments, here. And, I suspect that you know better.
Some have resisted the YIMBY movement because it’s displacing lower-income folks. (And, those concerns are originating from those communities – which are disproportionately communities of color). Given your concern regarding social issues, I find it strange that you’re not reporting on that.
Is your argument really that it’s better that low income people don’t have a job?
Don: To add to your point, one of the benefits of the high tech industry is that they offer good jobs that don’t necessarily require college or advanced degrees.
David: Again, economic development primarily helps those who are in a position to take advantage of it. And, it drives housing prices up even higher.
If you’re going to put forth these types of arguments, I’d suggest that you include actual numbers regarding the amount of housing that would be required to drive housing prices significantly downward, especially if new economic development is simultaneously pushing prices in the opposite direction.
I’m also looking forward to your reporting on the concerns related to the YIMBY movement, which are primarily coming from communities of color (who are being displaced by higher-income people).
Ron, I don’t know how else to put it, but you’re wrong. Period. The problem you’re citing is lack of affordable housing, not economic development.
I’m not sure if you’re referring to “Affordable” housing, or “affordable” housing.
If you’re referring to affordable (non-subsidized) housing, I’d suggest that you put forth some actual numbers, regarding the amount of new housing that would be required to drive prices significantly downward. Especially if you’re simultaneously advocating for economic development, which drives housing prices in the opposite direction (upward).
By the way, I’m quite certain that MRIC (in any form) will be used by development activists (such as yourself) to advocate for more housing. The writing is clearly on the wall, regarding this – even before the proposal comes forth.
And, when the fiscal costs of housing are included in analyses, the economic arguments start disappearing.
I am referring to both. Housing that people can afford whether it be market rate or subsidized.
Greenwald said: “Ron, I don’t know how else to put it, but you’re wrong. Period. The problem you’re citing is lack of affordable housing, not economic development.
Actually, he’s right. And you are being naive about the neoliberal deregulation that YIMBY types are pushing. Ron is referring to opposition groups such as those described in the article who helped to kill SB827:
“The YIMBY movement has a white privilege problem,” said Anya Lawler, a lobbyist with the Western Center on Law & Poverty, a legal advocacy group and adversary of SB 827. “I don’t think they recognize it. They don’t understand poverty. They don’t understand what that’s like, who our clients really are and what their lived experience is.”
https://www.latimes.com/politics/la-pol-ca-housing-bill-failure-equity-groups-20180502-story.html
The YIMBY groups also failed Civics 101: “In this case, Hanlon said, guarding against displacement and promoting affordable housing were always at the front of his mind. But because he was just starting his organization, Hanlon said he didn’t have time to meet with equity groups before the bill was released. He planned on addressing their issues as SB 827 moved through the Legislature.
Ron
Are you saying that economic growth always prices the poor out of housing? That poor are always made worse off by economic growth? That the only solution to reach equity is to pull everyone down to the level of the poor? Because I’m not seeing what your alternative is that is implementable in today’s world.
Richard: The answer to your three loaded questions is “no”.
Perhaps you’d care to answer the questions I’ve been asking of the other development activists. That is, by how much would you like to see housing prices decline? And, how many houses would it take to accomplish that goal? And, how would you reconcile that goal with the pursuit of economic development (which tends to drive housing prices higher)?
Let’s see some actual, supported numbers. And then, we can move on to follow-up questions regarding fiscal, environmental, and infrastructure impacts.
If your answers are “no” then why do all of your comments presume “yes”? You have not specified the conditions of why the current situation in Davis leads you to say “yes” to these three questions for this situation. And you still haven’t specified your alternative.
Provide me with the funding to undertake the study and I can provide you with a range of forecasts for how the housing market might evolve. But given that this is a website discussion, I’m not prepared to spends the hundreds of professional hours required to develop that forecast for free. Given that you answered “no” to my 3 questions, the burden is on you, not me, to demonstrate that increases economic development and housing will NOT lead to reduced housing cost pressures. (BTW, my housing cost metric is not a change in price, but rather in increased affordability for a larger share of households. That can come about through increased economic development even in a rising housing price market.)
Yet, you still have not answered the first question that you answered with a question. Start with that instead. You don’t deserve an answer to your question until you do that.
“No soup for you”. 🙂
https://en.wikipedia.org/wiki/The_Soup_Nazi
David writes: “The bad news is that the 2018 report is just as bad – although the numbers are slightly better with *only* 19 percent in poverty this year as compared to 20.4 percent last year.”
I was out in Winters this weekend where a couple young white guys who went to Cal Poly were using a GPS device to map the planting of a new orchard and another white guy (that has a nice F350 to tow his Bobcat tractor who lives with his parents in Orangevale) was working on a drainage project.
The farmer I was out there with said that as more things get automated he has a lot less people working for him and even as the percentage of Latinos in the state increases he is hiring less and less Latinos since not many of them own the specialized machines or have the specialized skills he needs.
A relative works for a group in Ventura county that runs programs for school age kids and she said almost every public school kid in Ventura county gets a free lunch (and almost every kid at the private school Thacher comes from a family with more money than you can imagine) and that Ventura county is becoming a place for rich old people and some poor families (and a private boarding school where the super rich from SF and LA pay $250K per kid for high school).
P.S. I wonder if Ron has ever looked in to moving to Ventura County with even less growth than Yolo County…
Ken: I wonder if you’ve ever considered moving to a place that has development policies more to your liking. Such places are not in short supply, even though they are not necessarily doing well economically – despite those policies.
Seems like recent trends point away from Ron’s viewpoints in Davis, but who knows about the longer term.
Ken – not sure I’m following your point?
My point is that as farming (in both Ventura and Yolo counties) gets more high tech it will require less and less people (ask some Yolo County old timers how many people worked to with tomatoes in the 1960’s vs. today) and the smaller number of people will be better educated and better paid.
I’m wondering if David can tell us what percentage of “high tech industry” workers didn’t go to college (and if he consider the janitors at Oracle, Facebook and Google as working in the “high tech industry” when he writes “one of the benefits of the high tech industry is that they offer good jobs that don’t necessarily require college”)…
I think Dave is nostalgic for the good ole days of tech, these days, its bachlor’s or masters – https://www.cnbc.com/2017/07/26/how-long-youll-need-to-go-to-school-to-work-at-top-tech-companies.html
However, I think his broader point along with Don’s is correct – economic development doesn’t just mean jobs for the well to do and the problem isn’t the jobs, it’s the lack of housing
Least surprising pivot ever: Greenwald starts off discusses PPIC data that accurately diagnoses some of the problem (for example, from one of the PPIC’s recent reports “The state’s affordability problem has been aggravated by slow growth in household income”) and then spends the last part of the article extensively quoting Dan Walters’ and Matthew Fienup’s propaganda straight out of the build-baby-build and deregulation “solutions” being pushed by the California Building Industry Association and the like.
You wouldn’t know from Greenwald’s article that a January 2018 PPIC report shows that Ventura County’s housing prices have increased the least from the 2011/2012 low among the California 15 most populous counties, and have also not risen past the 2006/2007 peak levels.
Here’s some context: Walters’ decades-long career as the token conservative columnist at the Sac Bee is a history of failed ideas, bad prognostications, and terrible policy advice. Fienup has been a vocal proponent of Trump’s corporate tax giveaway who wants to provide even more corporate welfare to keep California “competitive”.
As a side note, broader forces are now starting to force housing prices downward. It is the beginning stages of a correction:
https://www.msn.com/en-us/money/realestate/home-construction-tumbles-and-a-top-analyst-calls-a-correction/ar-BBR7SMt?li=BBnbfcN
Ron: if/when another housing crash/downturn happens, we can observe once again that when things are booming and prices are increasing, the BIA types talk about “undersupply” and the need for deregulation. But then when the crash happens, they don’t talk about “oversupply”.
We can’t ignoring the housing issues just because a crash might happen or the market is cyclical.
Rik: That’s for sure.
One of the “pluses” of the Davis housing market is that it doesn’t experience the same level of downturns or upturns as other communities do. Based upon your 10:05 a.m. comment, it sounds like Ventura doesn’t, either.
Anyone who’s advocating “building our way” to affordability while simultaneously pursuing economic development should be prepared to put forth actual, supported numbers regarding the amount of housing that would be needed to accomplish that goal. The goal itself is also undefined, in terms of the actual drop in housing values that some are seeking.
Where do you get affordability without building more housing – your fairy godmother?
Again, by how much would you like to see home values drop, and how many houses would it take to accomplish that goal (while simultaneously pursuing economic development)?
For those who are honestly seeking a drop in home values, broader market forces are now causing that to occur. This should be welcome news, for some. (I view it that way.)
Per Gov.-elect Newsom, 500,000 houses a year.
https://la.curbed.com/2018/11/8/18073066/california-governor-election-gavin-newsom-housing-plan
The biggest threat to slow-growth policies is likely to come from the political leaders in Sacramento. But on the plus side, if you are looking for funding for affordable housing, he has pledged to significantly increase funding for that.
Wrong question. What matters is how much housing do we need and how much of that should be some level of affordable.
The need defined by whatever developers are willing to build, if they’re given approval to do so?
Again, by much would you like to see housing values drop, and how many houses would be required to accomplish that goal (while simultaneously pursuing economic development – which increases the need)?
I have no idea what you are trying to say. I already answered your question, why are you asking it again, you’re not going to get a different answer.
Craig: You haven’t answered the question.
Don: The governor is primarily proposing Affordable housing, which some argue drives up the cost of non-Affordable housing.
No, the 500,000 units and the affordable housing proposals are two different things.
Where should people live, Ron? Where should people work?
You never answer those questions, except with some version of “somewhere else.”
My answer Ron is still that you asked the wrong question. What we need to focus on is the input – houses marketrate and affordable – not the output – cost.