Silicon Valley obtains the worst poverty rate in the USA

It often happens that things we see differ greatly from what they really are. The most recent example of this statement is the situation in Silicon Valley. Everyone tends to think that only reach people can allow themselves to live there. however the recent studies showed that California is the poorest state in the USA.

Photo: Silicon Valley obtains the worst poverty rate in the USA

California's high cost of housing has given the state one of the worst poverty rates in the nation, according to an independent study that was welcomed by critics who believe the government's method of counting the poor overlooks many people.

Thousands of Silicon Valley residents, for example, are living in poverty even though they earn more than the official federal standard, according to researchers at the non-profit Public Policy Institute of California, who calculated the numbers after adjusting for local housing costs.

The study confirms what social workers and the working poor have known for years:

“If you're poor here, you're really poor,”said Candy Capograssi, deputy executive director of the Santa Clara County Housing Authority, which recently had more than 70,000 people submit applications for a housing subsidy waiting list.

Critics have long complained that the federal government uses an outdated formula to calculate the official poverty standard, which determines individual eligibility for welfare and other programs, and is also used by the federal government when it allocates money to state and local agencies.

The formula is based on income levels and the cost of food, but does not take into account housing costs that vary greatly from one region to another, said Deborah Reed, who wrote the PPIC report.

For example, the federal poverty level for a family of four in 2004 was $19,157. But the U.S. Department of Housing and Urban Development estimated that fair market rent for a two-bedroom apartment that year in Santa Clara County was $21,852. That means a family earning $20,000 was above the poverty level, yet potentially homeless.

“There are people living just above the federal poverty level in California who are not doing as well as people who are officially living in poverty in Mississippi and Louisiana ,” Reed said.

Using the official federal standard, California has the 15th-highest poverty rate in the country, with 13.3 percent of its residents living below the poverty threshold.

But when Reed adjusted the formula to reflect the cost of housing, California's poverty rate rose to 16.1 percent. That gave it the third-highest ranking in the country, Reed said - behind onlyWashington, D.C., andNewYork.

Using Reed's calculations, 15 percent of Santa Clara County residents live in poverty, compared with 12 percent nationally.

She also found that three California counties - Monterey, San Francisco and Los Angeles - have poverty rates comparable to some of the poorest counties in the country.

“The federal calculation doesn't fully capture the state's circumstances,” Reed said. A more comprehensive measurement, she added, “would give a better sense of the number of poor and degree of need.”

Local officials and others who work with the poor in Silicon Valley endorsed her argument.

They noted that eligibility for welfare payments, food stamps and Medi-Cal is based on the federal poverty standard.

“The fact that it doesn't get adjusted based on the actual cost of living means the same basic grant is going to go further in another county than it goes here,” said Greta Helm, an official at the Santa Clara County Social Services Agency. “We still get less bang for the buck.”

Other analysts note that the federal formula has been a political football for partisans on the left and right, as they argue about the quantity and need for various aid programs. Reed said her formula may not be a perfect measurement, but added that it's important to strive for a more accurate picture.

After adjusting for housing costs, Reed reported that California's poverty rate is higher than it was in the 1960s and 1970s - in contrast with other parts of the country, which saw a decline or remain similar to the rates of the 1960s.

She cited several factors for California's high poverty rate, including more low-income immigrants and single-mother families. Low-income families in California saw their real income decline slightly since the 1960s, while the number of impoverished families with at least one person working had increased, she said.

Reed also found that adjusting the formula produced a different picture of poverty within California.

By the federal standard, the San Francisco Bay Area and Sacramento are both considered to have relatively low poverty rates, compared with Los Angeles County and the San Joaquin Valley.

But after allowing for the costs of housing, she found the number of San Francisco residents living in poverty had nearly doubled. The number in Santa Clara, Alameda and Santa Cruz counties also grew sharply. The Sacramento area, however, remained at about the same level.

Source: Mercury News