Poverty line poor fit with costs, report says
Everyone knows living in California isn’t cheap. But a new report casts a light on how challenging it is to afford basic necessities -- and how inadequate a minimum-wage job is to meet those needs.
A person working full-time for the state’s minimum wage of $7.50 an hour earns $15,600 annually. But a single adult in Los Angeles needs to make $28,126 a year to live modestly, while a single parent needs $62,393, according to the California Budget Project, the policy group behind the report being released today.
A two-parent family in Los Angeles with one working member needs $51,035, while a two-working-parent family needs $74,044, the report calculated.
The group estimated the cost of housing, food, transportation, child care, healthcare, taxes and miscellaneous items in regions across the state.
Calculations were based on families who do not receive healthcare through employment, rent rather than own real estate and have a car.
“The standard of living envisioned is more than a ‘bare bones existence,’ ” the report says, “yet covers only basic expenses, allowing little to no room for ‘extras’ such as college savings, vacations, or emergencies.”
Many California families, even those who earn more than minimum wage, do not make enough to pay for basic necessities, the report noted.
“Many families at several multiples above the poverty line struggle to make ends meet,” said Jean Ross, executive director of the California Budget Project, which advocates for low- and middle-income residents.
The report is intended to help policymakers assess where families need the most aid, Ross said. It presents its calculations as alternatives to the federal poverty line, which is often used to measure how families are faring economically.
But the poverty line, the report says, “is an obsolete measure that fails to take into account the reality of modern families.” The federal poverty line for a family of four was $20,650 in 2007, less than a third of what this report estimates they need.
Housing and health insurance are two of the most expensive items in a family’s budget, Ross said, which highlights the need for programs to help families pay for them.
The report “really points out the need for healthcare reform,” said Annelle Grajeda, president of the Service Employees International Union Local 721. “That part of our everyday life should be taken care of.”
In September, the California Legislature approved a plan to overhaul the state’s healthcare system, but it was vetoed by the governor. He called a special session to work out a compromise, but no deal has been reached.
The study said the San Francisco Bay Area was the most expensive region in the state to raise a family, requiring a basic budget of about $77,069 for a family of four with two working parents. The San Joaquin Valley was the least expensive, with an estimated budget of $62,624 for the same family.
California families spend more on housing than families in many other states. The report estimates that 23.3% of a single parent’s $4,978 monthly budget is spent on housing and utilities.