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Income and Socioeconomic Factors

California's income distribution is quite broad; compared to the U.S. as a whole, California has relatively more residents with no income and with income over $100,000. Combined with high housing costs and other costs-of-living, this means California's poverty rate is also much higher than that of the U.S. as a whole. Calculated by comparing household income to a locally-adjusted poverty threshold, the Census Bureau’s Supplemental Poverty Measure reports that 20.7% of California's population has less income than needed to meet their basic needs, as compared to 12.9% in the U.S. as a whole. This calculation of income includes the benefits of California welfare programs such as food stamps and earned income tax credits—without them, California's poverty rate would be 28%. In other words, about a quarter of the people in the 1–2× bracket in the figure would be below their poverty line without these benefits.

A comparison of the distributions of California (left) and U.S. (right) households by their income relative to their estimated cost of living, showing the higher rates of poverty and near-poverty in California. Uses 2017 CPS data about incomes in 2016. Comparison is of NAS Family Income minus Medical Out-of-Pocket to CE-Based Poverty Threshold with CPI-U and Geographical Price Adjustments, as per [1].

The trends and patterns of incidence of low income in California are complex and diverse, yet some of the most dramatic can be seen in Census and tax data. From 1975 to 2014 real (inflation-adjusted) incomes have fallen for all but the highest earners (those in the top 20th percentile). This pattern is volatile—in some years lower incomes grew, in some they fell sharply—but on average the bottom 20th percentile has seen a decrease in income of 1% per year. Correspondingly, the percent of Californians with income below their poverty threshold has risen and fallen, but has on average increased by a tenth of a percentage point per year.

This significant income inequality has many effects on Californians' lives, but one of the easiest to measure is life expectancy. This can be taken as a proxy for health or even general welfare. A study conducted by Clarke et al. related life expectancy to socioeconomic status (SES, an index including income and other related factors), finding that Californians in the top 20% by SES live on average 6 years longer than those in the bottom 20% (81 years, compared to 75). This disparity becomes even more pronounced when studied in intersection with race: White males in the top 20% live 14 years longer than African American males in the bottom 20% (for females the difference is 10 years). This illustrates both the extreme extent of socioeconomic inequality in California, and its severe consequences.

Oakland is the site of an interesting example of the varied and complex interactions between income and other demographic characteristics. The City of Oakland implemented the nation's first policy of targeting bilingual applicants for public-facing city jobs in 2001 in response to growing Chinese- and Spanish-speaking populations. This increased the public employment of Hispanic and Chinese bilinguals, not just in the targeted public-facing positions, but in other sectors as well. Correspondingly, the policy resulted in a decrease in Black monolingual employment. In this way a policy intended to remove lingual barriers to city services also had notable impacts on the racial segmentation of public employment, and so on racial differences in income.