Housing Policy and Poverty

• In Event: Poverty Measurement: New Advances, Insights and Policy Implications

Abstract

This study investigates how housing policy and housing costs have affected poverty rates in California between 1980 and 2023. I present five core findings to help understand why California consistently ranks among the highest-poverty states in the U.S., and to document the extent to which increases in housing supply could help high-cost cities within California reduce their poverty rates. First, I detail that California’s high housing costs are the primary reason for its elevated poverty rate; if the state’s housing prices were to be comparable to the national average, California would improve from worst among the 50 states to 34th worst with respect to poverty rates. Second, I show that rental prices in California have grown in tandem with the incomes of California’s richest households, but have far outpaced the incomes of California households near the poverty line since the 1980s. Third, I show that the increase in California’s poverty threshold due to housing costs has effectively nullified all of the poverty-reducing impact of increased SNAP benefits since the 1980s. Fourth, I find that a 15% reduction in relative housing costs in high-cost cities would yield resources-to-needs gains that are comparable to those of the 2021 Child Tax Credit expansion. Finally, I show that the increases in housing supply necessary for California’s high-cost cities to make meaningful reductions in poverty are extraordinarily high, but are also not without precedent among large California cities. I conclude that, in high-cost regions, increases in housing supply offer redistributive benefits comparable to major income support programs and should be understood as an important anti-poverty tool.

 

Author

• Zachary Parolin, University of Oxford
  Presenting Author