California's Economic Paradox: High Costs and Poverty Amidst Global Economic Clout

SACRAMENTO, CA – California, often lauded for its massive economic output, faces persistent challenges including a high unemployment rate, the nation's highest poverty rate, and a notoriously high cost of living. These issues have drawn sharp criticism, exemplified by a recent tweet from Steve Hilton, who characterized California as "the worst run state in America" and dismissed Governor Gavin Newsom's potential presidential ambitions as "a joke."

According to the California Employment Development Department (EDD), the state's unemployment rate stood at 5.4% in June 2025, a slight increase from the previous year. While the state has seen job gains since April 2020, the Public Policy Institute of California (PPIC) notes that the official unemployment rate does not fully capture those who have stopped looking for work or are underemployed, with nearly 2 million Californians estimated to be un- or underemployed as of early 2025. The U-6 rate, a broader measure of unemployment and underemployment, reached 9.6% in California through the first half of 2024, the highest among all states.

California also continues to grapple with the highest poverty rate in the United States when adjusted for the cost of living. The state's supplemental poverty rate reached 18.9% in 2023, translating to approximately 7.3 million residents unable to meet basic needs, a population larger than its four largest cities combined. This figure is significantly higher than the national supplemental poverty rate of 12.9%. Experts attribute this largely to California's extraordinarily high costs for housing, utilities, and other consumer necessities.

The high cost of living in California is consistently highlighted in various reports. Doxo's 2025 Cost of Bills Index identifies California as the most expensive U.S. state, with residents spending an average of $2,854 per month on essential household bills, 39% above the national average. CNBC's 2025 "America's Most Expensive States to Live In" ranking also places California at the top, noting that nearly 40% of its homeowners and renters allocate over one-third of their income to housing.

Regarding its business environment, California presents a mixed picture. The Tax Foundation's 2025 State Tax Competitiveness Index ranks California 48th out of 50 states, citing complex and high taxes as deterrents. However, other analyses, such as Workwell Global's "Best States for Business in 2025," rank California as number one based on the volume of workers onboarded by their clients. This perspective emphasizes California's robust $4.103 trillion economy (the world's fourth largest), its leading position in tech talent, and significant venture capital investment.

Amidst these economic complexities, Governor Gavin Newsom's political future has been a subject of speculation. While Newsom has not officially declared a presidential bid, his increased national profile and engagement in political discourse have fueled rumors of a potential run for the U.S. presidency. The tweet from Steve Hilton directly addresses these rumors, framing Newsom's ambitions as incongruous with California's current economic state.