Reports Cast Shadows on the Economic Picture for Black Californians

By Lila Brown | California Black Media
Recent studies suggest that the economic picture for Black Californians is not looking rosy.

Increasingly, the state is becoming more unaffordable for African Americans, leading many families to relocate to less expensive places both within and outside of the borders of the Golden state.

“After pandemic-era declines, California’s poverty rate is on the rise. Expansions to safety net programs during the pandemic reduced poverty substantially, but these expansions had mostly expired by the end of 2022,” reads a report published by the Public Policy Institute of California (PPIC) on October 24.

For Black Californians, the poverty rate at 13.6% is more than double the percentage of African Americans living in California, which currently stands at about 5.8% of the state’s population of nearly 40 million.

“While economic growth throughout 2022 countered some of these program losses — by boosting family resources from work — the state’s overall poverty rate increased from 11.7% in fall 2021 to 13.2% in early 2023,” the PPIC report continued.

The unemployment numbers for Black Californians also remain high – and continue to climb.
According to the Economic Policy Institute, the unemployment rate for Black Californians stands at 7.4%, which is higher than the 4.5% unemployment rate for all racial groups in the state for Q2 2023.

This is also higher than the national rate of 5.8%.

In California, the Black-White unemployment rate ratio is at 1.9 to 1.

The national Black-White unemployment ratio remained at 2-to-1 in the second quarter of 2023, maintaining the historic trend of Black workers being twice as likely to be unemployed as White workers. There’s nowhere in the country where the unemployment numbers for Black and White workers are equal.

For September, the California Employment Development Department (EDD) reported that unemployment is on the rise. The state’s unemployment rate crept up to 4.7%, an increase of 144,000 people. It is the second highest unemployment rate of any state. The labor force – Californians working or looking for work – also shrank.

Between 2021 to 2022, the overall poverty rate in California rose from 11.0% to 16.4%. This increase can be linked to the high costs of living, inflation, and the end of pandemic-era supports, such as the expanded federal Child Tax Credit and other welfare benefits. While financial assistance cut the poverty rate for Black Californians by three-quarters to 9.5% in 2021, it lessened poverty for Black Californians by well under half the following year, contributing to a near doubling of their poverty rate to 18.6%.

The California Budget Center checking the pulse of households from US Census data showed that more than half (54%) of Black Californians reported facing difficulty paying for essential needs like food and housing.

Los Angeles County (15.5%) and San Diego County (15.0%) had the highest poverty rates. The Central Valley and Sierra region had the lowest (10.7%), largely due to lower housing costs.

In China last week, Gov. Gavin Newsom highlighted the strength of California’s economy, the fifth largest in the world, and President Joe Biden released his Bidenomics report in June highlighting the achievements of his Invest in America plan.

The White House reports that under the Biden-Harris Administration, Black Americans have experienced their lowest unemployment rate on record and the highest employment rate since November 2000. The participation of Black workers in the labor force has also reached its highest level since August 2008. There has been reduction in the Black child poverty rate by greater than 12%, impacting over 200,000 children, through the Thrifty Food Plan.

Most reports point to signs that the nation is currently at pre-pandemic levels and California has recovered its pandemic-induced job losses in June 2022, according to the latest California Labor Market Review released in August. However, those numbers indicating the state economy is strong and stabilizing contrast with the harsh realities confronting many Black Californians struggling every day to make ends meet.

A study by the Urban Institute released in September shines light on the complex challenges Black Californians face as more of them make the decision to relocate to less expensive areas in the state, mostly driven by a combination of economic factors like housing unaffordability, rolling layoffs, rising inflation, an increase in renter evictions and stagnant salaries.

The report indicates that, “Over the last decade, several factors have contributed to many Black residents relocating from urban epicenters to the suburbs of metropolitan areas and to smaller, less dense, less populous cities.”

“This has been the reality of many Black Californians: as the Black populations of San Francisco and Alameda counties drop, those of Contra Costa and Sacramento rise. As Los Angeles sees its share of Black residents decline, neighboring Riverside and San Bernardino shares increase,” that report further highlights.

Lisa D. Cook, Governor of the Federal Reserve Board, says unemployment lies at the root of all America’s social problems and pushing for maximum employment for all Americans is the solution to minimizing poverty. Cook made the point while accepting the Joint Center for Political and Economic Studies’ Louis E. Martin Award on Oct. 18 in Washington, D.C.

“Maximum employment boosts long-run economic potential. It means that a vital resource is being used productively. A strong labor market increases labor force participation and the willingness of firms to recruit and upgrade the skills of workers,” cook stated. She explained that the Full Employment and Balanced Growth Act of 1978, also known as the Humphrey-Hawkins Act, set economic priorities for the federal government centered on promoting good-paying jobs for all Americans.

“Maximum employment also promotes business investment that boosts productivity and long-run economic potential. And the full participation of all segments of society should be expected to result in more ideas, including more diverse ideas, more invention, and more innovation,” Cook concluded.