A recent CalMatters article by Dan Walters, “High living costs make people poor,” calls out a striking inconsistency between rhetoric and action among California policymakers. While elected officials claim to be focused on ending poverty, their actions are making life harder for working families across California.
Citing data from the Census Bureau and the Public Policy Institute of California from before the COVID-19 pandemic, Walters notes that a full 20% of Californians are impoverished – and another 20% are experiencing “near-poverty” where a surprise medical bill, rent hike, or reduction in work hours could push their household below the poverty line.
But, as Walters argues and the data shows, “the most important factor in California’s high, and apparently increasing, level of poverty is not income, but our very high cost-of-living.”
While housing costs are obviously significant, they are not the only factor pushing household expenses higher. According to the California Business Roundtable, California consumers and businesses pay almost a full dollar more per gallon of gas than the average of the other 49 states. That’s a 47.3% markup on fuel costs.
The same Business Roundtable report found that Californians pay 55.8% higher residential electric power rates than other states, costing residents $6 billion more per year. Meanwhile, commercial customers pay 69.7% higher power rates and industrial customers pay more than double – a shocking 115% higher rates – for power than they would in other locations.
A recent Los Angeles Times op-ed pointed out that California’s poverty rate is the highest of any state and “higher in 2019 than in 2007.” It too noted high costs as a key factor exhausting working family budgets and driving away jobs: “California’s energy prices, now among the highest in the nation, hit not only the pocketbooks of working and middle-class Californians but have discouraged more jobs in manufacturing.”
Cost-driving policies that discourage middle-class jobs in industry and manufacturing make life harder for workers without a college degree. As the Times op-ed pointed out, “No metro area in California ranks in the top 10 in the U.S. for well-paying jobs for people without a college degree, but in 2019 four — Ventura, Los Angeles, San Jose and San Diego — were among the 10 worst in the country for non-college educated people looking for better paying jobs.”
The fact that Ventura and Los Angeles appear among the 10 worst metro areas for workers without a college degree is not surprising, given recent policy pursuits among local officials there.
- In Ventura County, despite the massive economic challenges posed by COVID-19, local officials are unnecessarily rushing to complete a General Plan update that will kill jobs and decrease revenues for essential services. Ventura County is going out of its way to restrict local energy production, choosing to send energy jobs and tax revenues overseas as the state is forced to import more oil to make up for the lost local production.
- In Los Angeles, meanwhile, the County government is pursuing new policies for its oil well ordinance, including a redundant and unnecessary requirement for existing, safe oil production operations to go through a costly and burdensome re-application process to continue to operate. Other provisions would effectively ban new energy production in the County. Taken together, these new policies would eliminate thousands of good-paying, middle-class jobs.
- At the statewide level, Sacramento is also pursuing potentially damaging new policies. Legislators there are considering AB 345, a bill which would blindly mandate a new 2,500-foot setback mandate for oil and gas operations statewide. According to an analysis conducted by the California Assembly’s Appropriations Committee, AB 345 would cause up to $4 billion in state revenue losses as local operations are shut down, killing tens of thousands of jobs in the process. These losses would impact several regions, but California’s Central Valley would be particularly devastated given communities there are already facing high rates of unemployment and poverty.
To be sure, the oil and gas production industry is not the only economic sector negatively impacted by policies that raise costs, deter investments, and ultimately kill job opportunities for workers without a college degree.
But these policy pursuits clearly illustrate the striking inconsistencies Walters and others are pointing out: State and local elected officials like to talk about ending poverty, but their actions do the opposite by raising household costs and eliminating good-paying jobs for working families.