Assembly hearing highlights inflation and housing as central drivers of California affordability crisis

The Assembly Committee on Economic Development, Growth and Household Impact convened an informational hearing in Room 127 to examine rising costs and household impacts across California, hearing from academic researchers, the Legislative Analyst's Office and state economic advisers.

The panelists told lawmakers that inflation since the pandemic, persistently high housing costs and elevated energy prices are the most immediate affordability pressures, while long-term wage stagnation for lower- and middle-income households compounds the challenge.

"Inflation is really the primary driver of the recent kind of major concerns Californians have about the economy," said Sarah Bone, vice president and director of economic policy and senior fellow at the Public Policy Institute of California. Bone told the committee that, after the pandemic spike, price growth had slowed but price levels remain substantially higher than before the crisis.

The panel laid out a mix of short- and long-term concerns. Bone reported wage growth of roughly 26% between January 2020 and January 2025 but said most of those gains were eroded by inflation, leaving a real increase "that feels like a 2.9% raise over five years." She also noted that low-income families spend a larger share of income on necessities: in the PPIC data cited to the committee, low-income California households spend about 82% of resources on food, housing, transportation and health care and across income groups 35% to 44% of household spending goes to housing.

Brian Euler, deputy legislative analyst for economy, taxes and labor at the Legislative Analyst's Office, stressed that housing remains the largest expense for most Californians and that the underlying issue is inadequate housing supply. "The fundamental reason California housing is expensive is because we simply don't have enough housing for everyone who wants to live here," Euler said, and he urged lawmakers to focus follow-up inquiry on which recent state policy changes have or have not spurred housing production.

Panelists also discussed energy and insurance costs as affordability drivers. Bone noted food and energy price increases since 2020 of roughly 28% in her prepared remarks, and Euler highlighted that wildfire-related costs and some public-purpose electricity programs can feed through to higher electric rates. Panelists recommended careful legislative review of programs funded through rate charges to ensure cost-effectiveness.

Committee members repeatedly raised the question of timing: what can the legislature reasonably do in the near term, when many housing solutions require years to affect supply? Panelists pointed to targeted subsidies and streamlined, narrowly defined approvals (for example, accessory dwelling units and transit-oriented development near transit) as areas where more immediate gains may be possible, while acknowledging the limits of short-term action.

The hearing framed affordability as a multi‑dimensional problem requiring parallel action on prices, consumer supports and pathways to higher-wage jobs. The committee indicated it will pursue follow-up work on targeted housing streamlining, program monitoring and linking statewide investments (child care, housing, workforce) to job access and regional strategies.

The hearing included subsequent panels on regional economic planning, small-business support and workforce training.