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Chuck-DeVore

Chuck DeVore

Report Shows Big Declines In Poverty In 2019, But California Leads The Nation – In Poverty – With Austin, Texas Trying Hard To Catch Up

By Chuck DeVore

Policy
Texas Public Policy Foundation VP and former California legislator

The Census Bureau’s annual reports on poverty in America were released on Sept. 15.
The reports provide three salient observations.

First, that the largest reductions in poverty in the past 10 years occurred in 2019, as American employment and wage growth was particularly strong in minority communities in the wake of President Trump’s economy-boosting tax cuts and regulatory reforms.

Second, that California’s persistently high housing costs drive almost 2 million people into poverty, with 17.2% of Californians in poverty, the nation’s highest, compared to 12.5% nationally. For the past 10 years, California has had the nation’s highest poverty rate as determined by the Supplemental Poverty Measure.

And, third, that Texas, specifically, Austin, is replicating the California policies that have result in out-of-reach housing costs. Texas’ poverty rate was 13.7% in 2019, the nation’s sixth-highest, just behind New York, and has been slowly trending up relative to other states. In 2013, Texas was tied for the 11th-highest poverty rate at 15.9%, which was also the national average that year.

The strong economy—before the onset of COVID-19 and the widespread government-ordered economic shutdowns—served as a highly effective poverty reduction program, as Black and Hispanic unemployment hit record lows while wages showed robust gains.

In 2009, in the midst of the Great Recession, some 14.5% of Americans were under the poverty line per the Official Poverty Measure, while 15.1% were in poverty per the Supplemental Poverty Measure (a metric that was first published that year after 20 years of study).

There are two main differences between these measures of poverty. The official doesn’t account for regional housing cost differences and it doesn’t account for the value of non-cash government assistance programs such as food assistance and housing subsidies as well as certain expenses.

By 2019, 10.5% of Americans were under the Official Poverty Measure line, while 11.7% were in poverty according to the Supplemental Poverty Measure. Had the same share of people remained in poverty in 2019 as in 2009, 11.3 million more Americans would be in poverty according to the newer Supplemental Poverty Measure.

And what of California, the state currently suffering from blackouts due to a lack of reliable electricity, record wildfires, and rising taxes? For the first time since the Gold Rush in 1849, the Golden State lost population in the latter half of 2019. As a result, not due to a housing construction boom or a reform in the development approval process, but rather to population growth slowing to a standstill, California added more housing units than people for the first time in its recent history.

When the electricity is on and the smoke clears from the fires, California can be a great place to live. Its political boosters like to claim that the state’s high housing costs are a form of a “good weather tax” as people from all over the world desire to live in California. That is part of the equation. But it’s also true that restrictions on development, fees, taxes, and environmental lawsuits result in significant delays in housing construction and can add more than 30% to the cost of housing in California.

This is seen in the Census Bureau’s metro area cost-of-living table that accompanies the poverty reports. Based on median rents, California’s metro areas range from 2.13 in San Jose—meaning about double nationwide averages for a modest apartment—to 0.86 in the Hanford-Corcoran metro in California’s Central Valley agricultural region. The Los Angeles-Long Beach metro, California’s most populous, has a median rent index of 1.56.

Texas has seen its Supplemental Poverty Measure rise relative to the rest of the nation over the past five years. Some of this is likely due Texas’ continued strong population growth, as the major urban areas struggle to meet housing demand.
Nowhere in Texas is that more apparent than in Austin, where the rent index stands at a California-like 1.26, far higher than the second-most costly metro in Texas, Odessa (including Midland) in the heart of Texas’ Permian Basin oil and gas region at 1.10. Texas’ two largest metros, Dallas-Fort Worth-Arlington and Houston-The Woodlands-Sugar Land, stand at 1.08 and 1.04, respectively. Returning to Midland and Odessa, in a 2019 news release, the Census Bureau announced that these Texas metros were America’s first and fifth-fastest growing urban areas from July 1, 2017 to July 1, 2018.

Despite the recent rapid population growth in Midland-Odessa, there’s a reason why rent is more affordable there than in Austin—red tape.

In Midland, the city’s construction inspection team, from the leadership to the line workers, see themselves as being in partnership with the community—providing a service to both builder and homeowner. The city employees who approve developments and inspect construction sites view their jobs as serving the public, not the other way around. (The author visited with Midland city employees in 2018.)

In Austin, however—a city so progressive that its city council just voted to defund the police—homebuilders have complained about increasing development approval backlogs for years.
In 2015, the city-commissioned Zucker Report was released, detailing shortcomings in Austin’s development bureaucracy. The report found that customer feedback in Austin was “…the worst we have seen in our national studies, including many Texas communities.” The report further found that city employees involved with permitting gave their supervisors low marks that were “among the worst we have seen.”

In the wake of the Zucker Report’s recommendations, the Development Services Department was reformed and improved. But would-be Austin builders still must navigate 12 other departments, often coordinating meetings between various government fiefdoms, such as Austin Water and Austin Energy, to get their applications through all the agencies that must sign off. The whole process is exhausting and typically takes 12 to 18 months just to get site plan approval.

Chuck DeVore is Vice President of National Initiatives at the Texas Public Policy Foundation. He was a California Assemblyman and is a Lt. Colonel in the U.S. Army

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FILE - In this April 8, 2020 file photo, a construction worker uses a nail gone as he works on ... [+] ASSOCIATED PRESS

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SAN FRANCISCO, CALIFORNIA - SEPTEMBER 01: A for rent sign is posted in front of an apartment ... [+] GETTY IMAGES

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