California policies stifle poor’s upward mobility

We’ve often pointed to the irony that, in politically progressive California, poverty rates are the highest in the nation when the cost of living is factored in the equation. A new study from the Urban Reform Institute sheds new light on this poverty problem by examining the economic impediments faced by minorities in the nation’s 107 largest metro areas.

Not surprisingly, the issue centers on the economic and regulatory policies embraced by big-city and state lawmakers. The group has developed an Upward Mobility Index that places California’s metropolitan areas at the bottom of the list.

“California, with the nation’s largest Hispanic population, now includes nine of the bottom metros on the Hispanic Upward Mobility Index,” according to the report. Likewise, California’s urban areas scored poorly for its African American residents. The coronavirus-related shutdowns have only exacerbated these troubling disparities.

California’s tough environmental regulations, inflexible labor code, high tax rates and antipathy toward manufacturing industries have depleted the number of high-paying blue-collar jobs. Other states, especially in the Midwest and South, offer better upward mobility opportunities for people on the lower rungs of the economic ladder.

There’s no getting around the difficulties that our high cost of living pose for poor and working-class people. California’s home prices are among the highest in the nation. In Los Angeles, the median home price is nearly $700,000 compared to around $250,000 in Dallas. Almost everything costs more here, from gasoline to taxes, which makes it harder to enter the middle-class mainstream.

Most of those sky-high costs are self-imposed. California’s slow-growth policies and steep developer fees inflate the cost of homes. This is a particularly tough state to start a small business, yet small businesses have traditionally been a path to prosperity. We have the nation’s most onerous occupational-licensing rules, which impose time-consuming and costly barriers on those seeking better-paying jobs in a variety of fields.

Too often, California’s policy makers view poverty as a static situation – and then seek to boost wealth-transfer payments to those who fall under the poverty line. In reality, poor people often move their way up the economic ladder. But instead of allowing opportunities to flourish, California lawmakers impose one hurdle after another on businesses and workers.

“Results are what matter, and it’s clear that common ‘progressive’ strategies – affirmative action, higher taxes, more regulation – certainly have not eliminated poverty,” as the report notes. “Our analysis suggests that economic growth throughout the entire economy, well beyond just the tech or financial sectors, seems a logical prerequisite to greater opportunity for minorities.” Yes, our tech sector is impressive, but not everyone can be an internet entrepreneur.

The report found that minorities do best in metros with the best tax and business climates, which is why so many Californians from all ethnic and income groups have been fleeing to places such as Texas, Arizona and Nevada. If California officials are serious about helping the poor and minorities, they need to re-examine their own policies.