Problems of Middle-Income Families Studied

A two-parent family of four needs at least $44,880 a year to make ends meet in California--2 1/2 times the so-called federal poverty level--and one in four of the state’s children lives in poverty, separate studies released Tuesday show.

A report by the California Budget Project, a liberal nonprofit organization, says that the $44,880 figure assumes the family rents its home and the parents save little or nothing toward retirement or their children’s college education.

The cost of living modestly in the San Francisco area is by far the highest--$53,736 a year--in California. Life in the Los Angeles area costs less--$44,700--when rent, transportation, health care, child care, food and utilities are added.

A family of four with two working parents needs $47,688 in Orange and Ventura counties, and $38,736 in the Inland Empire.

“Middle-income Californians are having a hard time making ends meet,” said Jean Ross, director of the California Budget Project.

Among the solutions, Ross suggested that the state might consider raising the minimum wage, which could boost all wages. Government also could assist middle-income Californians by subsidizing child care, health insurance for adults and affordable housing near where people work.

In a separate study, the Oakland-based Children Now released a county-by-county survey saying that one in four Californians under 18 lives in poverty--more than 40% of them in Los Angeles County.

The federal poverty level is $16,700 a year; minimum wage earners in California have an annual income of $11,960.

The Children Now study found that 13 of the state’s 58 counties have one in three young children living in poverty.

Poverty rates in California are highest among younger children, especially in black and Latino families. Twenty-seven percent of Latino families earn below the federal poverty level, followed by 24% of black families, said Amy Dominguez-Arms, director of policy for Children Now, which conducted the poverty study.

In Los Angeles County, half of all black children 5 and younger are on welfare, the survey found.

With rent and child care each costing more than half of what minimum wage earners are paid, low-income families with children tend to live in substandard housing. “We will pay for this dearly in terms of these children’s school readiness and their ultimate success as adults,” said Children Now President Lois Salisbury.

Child advocates hope money raised by the Proposition 10 tax on tobacco will help improve these children’s lives. Los Angeles County has received slightly less than a third of the $363 million generated so far by the tobacco tax initiative championed by actor-director Rob Reiner.

The Children Now study was based on data collected by such agencies as the U.S. Census Bureau, California Department of Health Services and California Department of Social Services.

The California Budget Project, meanwhile, focused on middle income earners, “pointing out that the poverty threshold is an obsolete measure that fails to take into account the reality of modern families.” The federal poverty standard also fails to consider California’s high cost of living.

The California Budget Project says a family of four needs $44,880 a year to pay its bills, a sum only slightly below the median income in California.

The California Budget Project assumes that a family in which both parents work and earn $44,880 pays almost $6,200 in state and federal taxes.

Housing is the biggest cost in much of the state. The average statewide cost of rent and utilities is $762 a month. But rent varies widely, from $1,167 for a two-bedroom apartment in San Francisco, to $749 in Los Angeles, to $481 in rural parts of Northern California.

The report assumes that on an income of $44,880, home ownership is virtually out of reach. Housing prices vary widely, from $330,000 median price in San Francisco to $300,000 in West Los Angeles, to $176,000 in Tracy. To buy a house in West Los Angeles, a family would need an annual income of $80,544, the report says.

Additionally, food for a family of four averages $583 a month. The survey assumes adults drive 750 miles per month. Based on the Internal Revenue Service allowance for mileage, the cost would be $244 per month. Health care costs are somewhat lower in California than in the rest of the nation, but still average about $330 for a family of four, less any contributions by their employers.

The budget project report was met by skepticism by the California Department of Finance, where chief economist Ted Gibson said the survey suggests that almost half the population is failing to make ends meet.

“I don’t think there is evidence for that,” Gibson said. “We have a poverty problem. But the vast majority of the population, at least 80%, are well-housed and clothed and fed.”

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Family Expenses in California

A two-parent family of four needs to earn more than twice the federal poverty level of $16,700 to make ends meet in California, according to a report by a liberal nonprofit organization.

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Expenses per Month for Working Families in California

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Two Parents Two working Single Parent (one working) parents Housing/utilities $608 $762 $762 Child care $926 0 $926 Transportation $244 $244 $244 Food $382 $583 $583 Health care $216 $330 $330 Miscellaneous $311 $379 $379 Taxes $382 $315 $516 Annual total $36,828 $31,356 $44,880

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Source: California Budget Project

Children of Poverty

One in four children in California under the age of 18 lives in poverty, according to Children Now, a child policy and advocacy organization. The following chart shows by area and race what percentage of children were on welfare in 1998.

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% through % through Black age 5 age 17 State 46% 40% L.A. County 49% 43% Orange County 20% 18% Ventura County 21% 16%

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% through % through White age 5 age 17 State 11% 9% L.A. County 10% 10% Orange County 4% 4% Ventura County 5% 4%

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% through % through Latino age 5 age 17 State 17% 16% L.A. County 18% 18% Orange County 8% 8% Ventura County 11% 11%

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% through % through Asian age 5 age 17 State 12% 16% L.A. County 9% 12% Orange County 10% 15% Ventura County 3% 3%

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Note: Income determines poverty level; not all poor families seek welfare help. People in either category may be employed.

Source: Children Now’s California County Data Book ’99

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Morain reported from Sacramento, Nelson from Los Angeles.