With the highest poverty rate in the country, the California government has spent nearly $958 billion from 1992 to 2015 on public welfare programs and as a result, one out of every five residents is still poor.
The Golden State is a hungry bureaucratic machine and according to Kerry Jackson, a fellow with the Pacific Research Institute, one huge problem is that the state has had a hard time embracing pro-work reforms.
Social services eat up most of the state’s budget and because California employs so many people, many have a vested interest in keeping the wheels turning.
Those who are employed by the state and local governments to serve welfare recipients also have a powerful incentive to continue growing their base. If they fail to create more “customers,” these social workers lose their budget. If they lose their budget, they lose their jobs.
California welfare recipients receive a much larger amount of “no-strings-attached” cash than other state residents. This dependency market has created such a large clientele that many immigrants are now falling into it.
Part of what makes the state the perfect environment for poverty to thrive is its unmanageable housing crisis.
In California, restrictive land-use regulations are responsible for high costs of developing new housing. One example cited by Jackson is the California Environmental Quality Act, which was passed in 1971. The law often adds $1 million to the overall cost of finishing a housing development. These costs are ultimately passed on to consumers home buyers, many of whom are already struggling to afford increasing mortgages and high cost of living.
Energy is also a huge expense to Californians and that’s due to the state’s extensive environmental regulations. While they were put in place to reduce carbon dioxide emissions, they also tighten the access to electricity, making it more expensive. As a result, consumers in California may spend as much as 50 percent more on energy than the Americans living elsewhere.
Making matters even worse, Jackson adds, California lawmakers have just raised the state’s minimum wage from $10 to $15 an hour, which should be fully implemented by 2022.
To the 60 percent of the Californians who are without a job, under-employed, or living in absolute poverty, this policy will do nothing to change their situation. As a matter of fact, minimum wage laws often create more poverty by forcing employers to cut on hours and on payroll.
State lawmakers who pass bills with good intentions don’t often see or understand the unintended consequences that affect the very residents they are trying to help. As such, they ignore that the only compassionate and effective way to help the poor is to actually work to improve employment growth and economic opportunity by diminishing the role that the state plays in our affairs.
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