California leads the rest of the United States in poverty, at 20.6%, despite having one of the highest minimum wages, at $10.50 an hour. While the Golden State accounts for around 12 percent of the U.S. population, and one of the largest economies in the world, Californians use one third of all Temporary Family Assistance for Needy Families. In 2013, California alone had the 7th largest economy, creating nearly 250 trillion in gross domestic product. So why are Californians so poor?
Nearly one in five Californians live below the poverty line, as minimum wage continues to rise each year. Though the average is 20.6%, large, democratic cities suffer the most. For example Los Angeles’s poverty percent spiked at 23%. The Los Angeles unemployment rate ended 2017 at 5.4 percent. The poverty percentage of San Bernardino recently reach 32.3%, and is currently the tenth most dangerous city in California.
There are many factors causing the spike of poverty. The great demand for housings outweighs the supply, driving up the price of a home. The cost to buy a house in California, on average, is about $440,000. That’s two and a half times greater than the national average for a home. The second closest state, in cost of housing, is Massachusetts, which sits on an average of $330,000. Rent in California, averagely comes out to $1,240, which is 50 percent higher than the national average. Perhaps the great influx of illegal aliens over the past few years, has had this effect; to drive up the demand.
In 2015, according to the most recent data, about 10 million citizens in California were immigrants(including legal and illegal immigrants). Around 70% of illegal immigrants were from Mexico. According to the Public Policy Institute of California, almost 1 in 10 California workers were illegals, in 2015, making up 1.75 million of the workers in the labor force. The majority of those people live in Los Angeles, San Bernardino, San Diego, Ventura, Orange, and other large or major cities. These cities did not have the supplies to take in these immigrants, as the large influx of people drove up the price for everyone.
Another factor is the rising minimum wage. Los Angeles county passed an ordinance that will have the minimum wage set at $15 U.S. dollars an hour, by 2021. In 2017, the minimum wage increased from $10.50 to $12 for large companies. This year, $13.25 will be the new minimum wage, and will increase next year to $14.25. In 2020, the wage for large companies will be, at minimum, $15. The ordinance affects smaller companies as well, but at a slightly slower rate. They’ll still reach $15 an hour by 2021.
The problem with this increase, is inflation, and a near impossible task to start a business in California. The Golden State has the highest failure rate for small businesses; only one out of every four businesses will survive the first two years. Trump helped small businesses around the U.S, California included, with his major tax cuts, decreasing the percentage that businesses are taxed at. Many believe the tax cuts will not be enough, as democrat-run California always finds a way to tax their citizens, and take money out of their pockets.
Already, prices in every commodity has gone up over these past few years, and are expected to skyrocket as the minimum wage goes up. The average price of gas in California is $2.78, compared to $2.21 nationally. In bigger cities, the price is, predictably, higher. Los Angeles gas prices are sitting, now, at $2.86. In a ten gallon tank, to fill up your car in L.A. would cost you almost seven dollars more.
Nearly everything is more expensive in California, including the amount of taxes you must pay to live and work there.