USC Price School of Public Policy

Myers: Recession Did Not Cause Surge in Poverty

Great Recession Did Not Cause Surge in Poverty

By Merrill Balassone

Dowell Myers USC professor and lead author Dowell Myers
Photo by Philip Channing

Even as housing prices plummeted and unemployment rates hit double digits, the so-called Great Recession did not correspond to a surge of Americans in poverty, according to a new USC study released today.

Using the latest census figures, the study’s authors found conditions in California – one of the more visible examples of a boom and bust with scores of foreclosed homes and long unemployment lines – mostly improved since 2000.

The report, “California Roller Coaster: Income and Housing in Boom and Bust, 1990-2010,” is the first comprehensive assessment of the Great Recession that evaluates how California and Los Angeles fared when compared to the nation as a whole.

It found Los Angeles was spared the devastating spike in poverty it endured during the early 1990s recession. Housing demand in the region is also coming back to life here whereas the rest of the nation continues to languish.

“It’s surprising to see how well Los Angeles has fared despite greater losses than the nation in housing prices and employment,” said lead author Dowell Myers, professor of urban planning and demography with the USC School of Policy, Planning, and Development. “This is the opposite of the 1990s recession when Los Angeles was hit so much harder than the nation.”

Young adults were the group hit hardest by the economic downturn, suffering higher unemployment rates, poverty and the greatest losses in homeownership in the last decade.

Among the most notable findings of the report:

  • The national poverty rate rose at the same rate during the Great Recession as during the economic boom of the 2000s. From 2006 to 2009, the percentage of Americans in poverty increased from 13.3 percent to 14.3 percent.
  • Even after the economic crash, household incomes in Los Angeles topped the nationwide average by 8.3 percent in 2009.
  • Over the last decade in California and Los Angeles, median household income in real dollars and house values improved. The poverty and homeownership rates stayed flat.

But while Californians overall may have been hit less hard than we think, young adults fared the worst.

Nearly 20 percent of 16- to 24-year-olds looking for work were unemployed in 2009.

Among those aged 25 to 44, homeownership rates fell by 5.4 percentage points from 2006 to 2009.

“The younger generation was especially damaged by this cycle of events, and some of them may have been permanently dislodged to the status of renters,” Myers wrote. “But we might hope that the reduced house prices also have lowered the barrier to homeownership for countless others.”

Myers is director of the USC Population Dynamics Research Group and a specialist in urban growth and development with expertise as a planner and urban demographer.

He has been an adviser to the U.S. Census Bureau and authored Analysis With Local Census Data: Portraits of Change (Academic Press, 1992), the most widely referenced work on census analysis. Recent research projects have focused on the upward mobility of immigrants to Southern California, as well as on projections of the impacts of a growing California population.

Myers’ collaborators were USC graduate students Ray Calnan, Anna Jacobsen and Josh Wheeler.

This report is part of a larger study funded by the Los Angeles-based John Randolph Haynes and Dora Haynes Foundation.

For a full copy of the study, visit usc.edu/schools/price/research/popdynamics and click on “publications.”