Joseph Latichinson works full time as a security guard at a shopping plaza in San Francisco’s Bayview neighborhood. He makes $12 an hour — $2 more than the newly increased statewide minimum wage.
But Latichinson doesn’t have a place to sleep — he’s homeless. He said it’s impossible to make ends meet in a city as expensive as San Francisco unless you have subsidized housing or other help.
“I live in a shelter,” he said. “Even if you raise the minimum wage, if you don’t lower the costs of all the other things you need to survive, then minimum wage is a joke.”
Advocates for the poor said Latichinson’s story isn’t unusual — especially for families with kids. According to the California Budget and Policy Center, which studies how budget and tax policies affect low- and middle-income Californians, nearly one in six Californians lives in poverty. And kids, who make up less than one-quarter of the state’s population, account for about one-third of its residents who live below the federal poverty line.
Figures like those are why some Democrats are pushing for renewed spending on programs that help low-income Californians survive. While Gov. Jerry Brown has made clear that his priority this budget season is to put as much money as possible into the state’s savings account — known as a rainy day fund — to prepare for the next economic downturn, some lawmakers and others think the state should also be investing in things like increased welfare payments, child care subsidies and another minimum wage hike.
State Sen. Holly Mitchell, D-Los Angeles, said the state’s finances — and therefore the budget debate — are dramatically different from five or six years ago.
“There was so little money we were simply trying to levy the cuts that did the least amount of harm,” she said. “Now there’s money on the table and that gives us an opportunity … we have got to invest in people.”
Alissa Anderson, a senior policy analyst for the California Budget and Policy Center, said it’s easy to think that recent economic growth has benefited all Californians equally.
“A lot of the economic news we hear tends to focus on the fact that California is adding jobs faster than most states and that the unemployment rate has dropped significantly — and those are all really good things,” Anderson said. “But the reality is millions of people are not benefiting in those economic gains … people are struggling all over the state, poverty rates are higher in most counties than they were before the recession began, and that’s even true in parts of the state where we have seen exceptionally strong job growth.”
Anderson said it’s not that people don’t have jobs — nearly 70 percent of families living below the federal poverty line work. But she said low wages and a lack of available hours, combined with California’s high cost of living, mean that many workers aren’t making ends meet.
The governor acknowledged the state’s growing inequality in his State of the State speech, but said the state has done much to “counteract these powerful trends.”
He cited the Jan. 1 minimum wage hike to $10 an hour, a new earned income tax credit for the extremely poor, an expansion of paid sick leave and new health care coverage for undocumented children.
But in his budget proposal this year, Brown pushed back against two ballot measures that would raise the statewide minimum wage to $15 an hour, saying they would cost the state as much as $4 billion a year by 2021 and return the state budget to annual deficits.
That’s because the state pays many in-home care workers and others the minimum wage — meaning they qualify for state programs like Medi-Cal.
That rubs some Democrats the wrong way. Lt. Gov. Gavin Newsom, who is running for governor in 2018, has thrown his support behind both ballot measures to hike the minimum wage, arguing that by “paying substandard wages,” taxpayers are really hurting themselves.
“For a state and its taxpayers to subsidize twice — by inadequate wages and then by having to provide social services on the back end, to me makes no fiscal sense and it doesn’t make moral and ethical sense,” Newsom said, adding that no one in California can live on the current minimum wage, which amounts to about $21,000 a year.
Anderson agreed, saying the Budget and Policy Center estimates that a single parent with two kids would actually need to make $75,000 a year, or $30 an hour, to truly afford the basics in California. She said the minimum wage does need to rise, and to be tied to inflation.
But she cautioned against using a minimum wage hike as an argument for cutting spending on public support programs like child care and health care subsidies or food assistance programs, because those programs provide an important lifeline when people do fall on hard times.
“I think given our high cost of living, the reality is we can’t raise the minimum wage to a level that’s high enough to make sure that everyone can maintain a decent standard of living,” she said. “The minimum wage is an important tool for reducing economic hardship, but it’s not the only tool.”
Democrats seem confident they will be able to extract some new spending out of the famously frugal governor, saying he’s come around to programs like the earned income tax credit after nudging by legislative Democrats.
“He’s always cautious, so it’s not unusual that he has a cautious approach for us at all,” said Assemblywoman Shirley Weber, D-San Diego, who chairs the Assembly’s Budget Committee. “If you notice in many of his proposals, we will come out one year with something he will not accept, and then he will come back and work to make it happen.”
She cited the issue of homelessness, as well as help for the developmentally disabled, welfare assistance for working families and health care, as areas she wants to see focused on during this spring’s budget debate. And Weber expressed optimism that the Legislature and governor can strike a balance between saving for the next bust and supporting those programs.
“We know his heart is right. He loves California,” she said. “He is going to focus on what’s good for California.”