How California’s Sky-High Rents Cancelled Out $11 Billion in Food Stamp Benefits
California’s 17.7 percent poverty rate—more than double Minnesota’s 7.4 percent—stems almost entirely from housing costs that have spiraled beyond what typical families can afford. In San Jose, a family of four needs $57,673 just to meet basic needs, compared to $39,674 for the same family in Minneapolis. This creates a situation where California workers earning decent wages still can’t afford basic living expenses.
In “Housing Policy and Poverty: The Case of California,” Zachary Parolin of the Niskanen Center analyzed decades of rental price data and poverty measurements across all 50 states to understand why California consistently ranks among the worst states for poverty, despite its economic prosperity.
Key Takeaways:
- Housing costs alone explain California’s poverty crisis: Removing housing cost adjustments drops California’s poverty rate from 17.7 percent to near the national average.
- Rental price growth tends to track the incomes of wealthy families, rather than those of low-income families. From 1985 to 2023, California rents rose 75 percent, closely aligning with the growth of family incomes in the 90th percentile. However, the incomes of families in the 10th percentile increased by only 40 percent.
- Rising housing costs erased food stamp gains: California’s $13.3 billion increase in poverty costs from housing completely offset $11.4 billion in additional SNAP benefits since 1980.
These findings stem from Parolin’s analysis of the federal government’s Supplemental Poverty Measure, which takes into account benefits such as food stamps and establishes higher poverty lines based on geographic cost differences, including housing costs. By removing only the housing cost adjustments from poverty thresholds, Parolin isolated the specific impact of housing on poverty rates. This creates a controlled comparison where the same families with identical incomes and benefits are measured against different poverty benchmarks, revealing whether families truly lack resources or simply live in areas where housing costs inflate the poverty line. Here’s what he found:
Housing drives poverty rankings: When housing cost adjustments are removed from poverty calculations, California’s ranking improves from worst in America to average performance. This suggests that the state’s poverty problem stems from unaffordable housing rather than low wages, as the same families with the same incomes are no longer considered poor when measured against cost standards not inflated by housing costs.
Rents track wealthy households, not low-income ones: Since 1985, California rents have increased by precisely the same amount as wealthy families’ incomes—both 75 percent—while leaving behind working families whose incomes have only grown by 40 percent. Housing prices are based on what wealthy families can afford, rather than on what middle-class or low-income workers earn, a phenomenon that occurs in only six states, compared to 44 where low-income people’s wages keep pace with rent. This helps explain the state’s overall wealth, despite its high poverty rates.
Housing costs cancel out food stamp gains: The extra money California families need because of high housing costs adds up to $13.3 billion since 1980, which nearly mirrors the $11.4 billion increase in food stamp benefits families received, meaning every dollar of improved nutrition assistance got absorbed by rising housing costs.
Policymakers should consider building housing as a poverty alleviation measure. Parolin’s research indicates that increasing the housing supply by 10 percent in a metropolitan area reduces poverty rates by 2.5 percentage points, building on prior research showing that increased housing supply reduces rental prices (Li, 2022; Mense, 2025; Pennington, 2021). Indeed, Parolins’ analysis concludes that a 15 percent reduction in relative housing costs would provide families $3,600 annually, nearly matching 2021 Child Tax Credit expansion benefits. Simply put, tackling housing affordability is critical to poverty reduction in California.