Why Has Poverty in California Increased Since the Pandemic?
The California Budget & Policy Center (2026) examines how poverty in California has changed since 2021 and which populations face the greatest economic hardship. Using U.S. Census Bureau data and the Supplemental Poverty Measure, they find that California’s poverty rate increased from 11.0% in 2021 to 17.3% in 2025, a rise of 6.3 percentage points, affecting nearly 7 million residents. California ranked second highest nationally. Child poverty more than doubled, rising from 7.5% to 16.6%. Poverty among Black Californians increased from 9.5% to 20.5%, while Latino poverty rose from 12.6% to 22.6%. Older adults experienced the highest poverty rate at 21.5%.
Why This Article Was Selected for The Policy Scientist
The COVID-19 pandemic created an unprecedented opportunity to examine the effectiveness of government antipoverty programs as financial assistance was dramatically expanded and subsequently withdrawn. This unusual policy experiment provides valuable evidence about how poverty responds to substantial changes in government support. California’s experience illustrates the magnitude of these changes, with poverty falling to historic lows in 2021 before rebounding as temporary programs expired. The analysis is particularly timely as additional federal spending reductions take effect. Census data provide reliable estimates and permit comparisons across states, although descriptive trends cannot establish causation. Future research employing causal inference methods could identify which policies most effectively reduced poverty.
Full Citation and Link to Article
California Budget & Policy Center. (2026, September). "Poverty in California remains steady, among the highest in the nation: Latest Census poverty data show Californians continued to face widespread economic hardship in 2025."
Central Research Question
How has poverty in California changed since the expansion and subsequent withdrawal of pandemic-era government assistance programs, and which populations have experienced the greatest increases in economic hardship?
The California Budget & Policy Center examines changes in poverty between 2021 and 2025, emphasizing California's persistently high poverty rate relative to other states. The analysis considers how poverty differs across age groups and racial and ethnic populations, while examining the relationship between government assistance programs and household economic security.
The COVID-19 pandemic provides an unusual historical context for understanding these developments. During 2020 and 2021, federal policymakers substantially expanded financial assistance through enhanced tax credits, food benefits, and other programs. Many of these temporary measures subsequently expired, creating an opportunity to observe changes in poverty following both the expansion and withdrawal of government support.
The report also establishes a baseline for evaluating subsequent reductions in federal assistance programs. Its central contribution is documenting the magnitude and distribution of poverty changes during a period of unusually substantial changes in government assistance.
Previous Literature
The report builds on research examining the relationship between government transfer programs, household resources, and poverty. A substantial body of scholarship has investigated how refundable tax credits, food assistance, and other income-support programs influence economic security, particularly among families with children.
Rather than presenting a conventional academic literature review, the report draws primarily on Census Bureau poverty statistics and existing research concerning the effects of public assistance programs. It does not provide an extensive bibliography of peer-reviewed studies or identify a set of foundational academic articles.
One important research reference concerns the expanded federal Child Tax Credit implemented in 2021. Previous analyses have documented substantial reductions in child poverty associated with the temporary expansion. The report contrasts those outcomes with subsequent years, when the credit returned to a less generous structure.
The report also incorporates findings from the RAPID Survey Project, which examines economic hardship among households with young children. These findings provide additional evidence about difficulties meeting basic household expenses.
Together, these sources place California's experience within the broader literature on income transfers, poverty measurement, and the economic consequences of government assistance programs.
Data
The analysis relies primarily on poverty estimates from the U.S. Census Bureau, using the Supplemental Poverty Measure (SPM) rather than the traditional Official Poverty Measure.
The SPM provides a more comprehensive assessment of household economic resources because it incorporates government assistance, tax obligations, housing costs, medical expenses, and other factors affecting disposable income. This distinction is particularly important in California, where housing costs are substantially higher than in many other states.
The principal analysis examines poverty rates from 2021 through 2025, with particular attention to comparisons between the historically low poverty levels observed in 2021 and subsequent increases.
The report presents estimates for California's overall population, children, working-age adults, older adults, and several racial and ethnic groups. National comparisons establish California's relative position among states.
Additional information comes from the RAPID Survey Project, which documents financial difficulties among California households with children younger than six.
These datasets provide a broad descriptive picture of economic hardship. However, the analysis does not use individual-level longitudinal data to follow the same households over time.
Methods
The report employs descriptive statistical analysis to examine changes in poverty rates across years and demographic groups. Its primary approach involves comparing poverty estimates from 2021, when pandemic-era assistance was unusually extensive, with estimates from subsequent years as temporary programs expired.
The analysis calculates differences in poverty rates, expressed in percentage points, and examines variations across demographic categories. It also compares California's poverty rate with those of other states.
The report distinguishes statistically significant changes from fluctuations that could reflect sampling uncertainty. For example, the decline in California's poverty rate between 2024 and 2025 was not statistically significant.
However, the study does not employ multivariate regression, randomized controlled trials, difference-in-differences estimation, or other causal inference techniques. Consequently, observed changes cannot be attributed exclusively to the expiration of pandemic-era assistance. Inflation, employment conditions, wages, housing expenses, and demographic changes may also influence poverty rates.
The findings therefore establish descriptive relationships rather than independently estimated causal effects.
Findings/Size Effects
California's poverty rate remained exceptionally high in 2025, reaching 17.3%, compared with 17.7% in 2024. The decline of 0.4 percentage points was not statistically significant. Approximately 7 million Californians lived below the Supplemental Poverty Measure threshold, giving California the second-highest poverty rate nationally, behind Louisiana.
The broader historical pattern is more substantial. Poverty increased considerably following the expiration of temporary pandemic-era assistance programs, reversing the historically low poverty levels recorded in 2021. By 2025, California's poverty rate had exceeded its pre-pandemic level.
Children experienced particularly large increases. California's child poverty rate rose from 7.5% in 2021 to 16.6% in 2025, an increase of 9.1 percentage points. This represents a relative increase of approximately 121%, meaning child poverty more than doubled over four years.
Changes in the federal Child Tax Credit provide important context. The expanded credit reduced child poverty by 4.3% in 2021, according to the estimate reported in the analysis. By 2024, the credit kept approximately 1.8% of children out of poverty. These estimates suggest that the credit's poverty-reducing contribution was considerably smaller after its temporary expansion expired.
Additional evidence indicates that financial difficulties remained widespread among families with young children. Between November 2022 and July 2025, an average of 56% of California families with children younger than six reported difficulty affording at least one basic necessity.
Working-age adults also experienced substantial increases in poverty. Among Californians ages 18–64, poverty rose from 11.1% in 2021 to 16.3% in 2024, an increase of 5.2 percentage points.
Older adults experienced the highest poverty rate of any age group in 2025, at 21.5%. The report identifies out-of-pocket medical expenses as an important contributing factor, particularly because older adults are more likely to require continuing treatment, medications, and other health services.
Racial and ethnic differences were also pronounced. Among Black Californians, poverty increased from 9.5% in 2021 to 20.5% in 2025, an increase of 11 percentage points. This represents a relative increase of approximately 116%.
Among Latino Californians, poverty increased from 12.6% to 22.6%, a rise of 10 percentage points, or approximately 79%. These increases exceeded those experienced by several other demographic groups.
The report also discusses prospective consequences of reductions in federal food assistance and health coverage. However, because many changes had not yet taken full effect, their eventual effects are not incorporated into the 2025 poverty estimates.
Conclusion
California's experience illustrates the substantial changes in measured poverty accompanying the expansion and subsequent withdrawal of pandemic-era government assistance. The historically low poverty rates recorded in 2021 were followed by pronounced increases, particularly among children, Black and Latino residents, and working-age adults.
The findings demonstrate the importance of examining poverty over extended periods rather than relying exclusively on annual fluctuations. Although California's poverty rate changed little between 2024 and 2025, this apparent stability followed several years of substantial increases.
The analysis also establishes a useful baseline for evaluating subsequent changes in federal and state assistance programs. Its reliance on standardized Census measures facilitates comparisons across jurisdictions and demographic groups.
Nevertheless, the descriptive research design limits conclusions about the independent effects of particular policies. Future studies using credible causal inference strategies could exploit differences in program eligibility, benefit amounts, or implementation timing to estimate the effects of specific assistance programs.
The broader significance of the findings lies in the opportunity to study poverty during an unusual period when government assistance was substantially expanded and subsequently reduced. This experience provides a foundation for understanding how changes in public assistance relate to household economic security and for evaluating the effectiveness of individual antipoverty programs.
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