Analysis Highlights Need for Policies That Boost Wages, Help Families Make Ends Meet
FOR IMMEDIATE RELEASE
SACRAMENTO – Many families across California struggle to cover the costs of housing, child care, health care, food, and other necessities, according to a study released today by the California Budget Project (CBP), a nonpartisan public policy research group. The report underscores the need for targeted public policies that help boost workers’ earnings and that help Californians pay rent or buy a home, afford child care, and cover other basic family costs.
Making Ends Meet: How Much Does It Cost to Raise a Family in California? looks at the income needed to support a family with two children or to live as a single adult in California, allowing only for basic expenses: housing and utilities, child care, health care, food, transportation, and other necessities. The report provides estimated household budgets for four different family types, with both statewide averages and estimated budgets in all 58 counties. These estimated budgets assume no assistance from public programs and no job-based benefits outside of earned income.
“When you look at what it takes to cover day-to-day necessities in California, it’s clear that our economy is not meeting the needs of many workers and families across the state,” said Luke Reidenbach, CBP policy analyst and author of the report. “This study provides a key benchmark for assessing family well-being, and our findings point to a need for investments in child care, housing, education, and other underpinnings of broad-based economic opportunity.”
Making Ends Meet finds that for a California family of four with two children and one working parent, it would take – on average – an annual income of $60,771 to afford a modest standard of living. This is equal to an hourly wage of $29.22 for full-time work, which far exceeds the statewide median hourly wage of $19.07 in 2012 and is well above the state minimum wage.
For the other three family types covered in the report, Making Ends Meet finds that:
- A single parent with two children needs an annual income of $74,477, equivalent to an hourly wage of $35.81 for full-time work.
- A family with two working parents and two children needs an annual income of $81,553, equivalent to both parents working full-time, each with an hourly wage of $19.61.
- A single adult needs an annual income of $32,625, equivalent to an hourly wage of $15.69.
Estimated budgets at the county level show how widely the cost of living varies across the state. For a family of four with two children and one working parent, for example, the basic family budget ranges from a high of $71,646 in Marin County to a low of $50,350 in Modoc County.
In addition, Making Ends Meet highlights some of the specific economic challenges faced by California families. These include:
- A lack of affordable housing in California. High housing costs in California present a major hurdle for many individuals and families. In 2012, nearly one-third of households (30.5 percent) spent at least half of their income on rent. In addition, from 2010 to 2012, California’s homeownership rate was the second-lowest of all states, averaging 54.9 percent.
- High child care costs. The CBP’s analysis estimates that child care costs in California average more than $1,100 a month for families with two children. State policymakers have cut support for child care and state preschool in recent years. Between 2007-08 and 2013-14, combined funding for California’s child care and state preschool programs fell by nearly 40 percent, after adjusting for inflation, resulting in the loss of 110,000 funded “slots” in these programs.
- Rising family health care costs – which implementation of federal health care reform will help address. The cost of health coverage has risen sharply over the last decade in California – increasing at roughly five times the rate of inflation between 2002 and 2012. Statewide, the monthly cost of health care – including insurance premiums and out-of-pocket costs – averages nearly $500 for an individual and slightly more than $1,400 for a two-parent family with two children, according to CBP estimates. In many California counties, health care costs are the largest single expenditure in the basic family budget. Beginning next year, subsidies provided by the federal Affordable Care Act will lower insurance costs for certain families who purchase their own health coverage.
“State and federal policies can play a huge role, not only in helping working families pay the bills, but also in connecting people to good jobs,” said Chris Hoene, executive director of the CBP. “The right kinds of public investment are always important, but they’re especially key right now with so many families still reeling from the impact of the deepest economic downturn in generations.”
The Making Ends Meet report – including an interactive family budget calculator with data from all 58 counties – is available online at www.cbp.org/MakingEndsMeet.
# # #
The California Budget Project (CBP) engages in independent fiscal and policy analysis and public education with the goal of improving public policies affecting the economic and social well-being of low- and middle-income Californians. Support for the CBP comes from foundation grants, subscriptions, and individual contributions. Please visit the CBP’s website at www.cbp.org.