Wednesday, October 17, 2007 (SF Chronicle)
A Bay Area couple with two kids can't make it on $50,000 a
year
Sam Zuckerman, Chronicle Staff Writer
Maria Frias thinks of herself as middle class.
She works as an office manager for Bay Area Legal Aid, where
she draws a
salary of about $27,000 a year. Her husband, Ricardo, drives
a laundry
truck and takes in about $26,000.
But all they can afford is a $750-a-month, one-bedroom
apartment in San
Francisco's Excelsior neighborhood. They sleep in the same
room as their
daughters, Stephanie, 10, and Andrea, 6. They have no
telephone. And Frias
has to set aside about $400 a month to pay off a credit card
balance that
went into collection.
"It's so hard," Frias said. "I'm falling
behind."
The hard truth is that $53,000 a year doesn't cut it anymore
in the Bay
Area. Tens of thousands of working families in the region,
even those with
what many would consider decent-paying jobs, find a modestly
comfortable
standard of living is out of their reach.
A family of four in the Bay Area with two working adults
must earn
$77,069, equaling an hourly wage of $18.53, just to pay for
basic
necessities, a study released today calculates. If only one
adult works,
that figure falls to $53,075, largely because the family
doesn't have to
pay for child care, according to the report by the
California Budget
Project, a liberal Sacramento research group. But that one
wage-earner
must make $25.52 an hour.
And a single parent with two children needs to take in
$65,864 annually,
at an hourly wage of $31.67, to cover expenses, the Budget
Project
figures.
Statewide, the two-working-parent family needs an annual
income of $72,343
to cover necessities; the family with one working adult must
earn $50,383.
That's in a state with one of the highest minimum hourly
wages in the
country - $7.50. In San Francisco, the minimum wage is even
higher, $9.14.
The federal minimum wage is $5.85.
"Most Californians live on less than $50,000,"
said Michael Shires, an
associate professor of public policy at Pepperdine
University.
The Bay Area is by many measures the richest region in the
United States.
Median household income - the level at which half of
households are above
and half below - was $62,024 in 2000, the highest in the
nation, according
to the Census Bureau.
But that means that almost half of all households in the
region don't take
in what the Budget Project reckons is needed to make ends meet.
Those
families often must do without some of the things viewed as
essential to
middle-class life, such as health insurance or a separate
bedroom for the
kids.
The federal poverty threshold, used by the government to
calculate how
many of the nation's people are poor, is an income of
$20,650 for a family
of four. That means basic necessities in the Bay Area cost
roughly 2.5
times the federal poverty level.
"This report shows that we do need to look at families
substantially above
the poverty line," said Jean Ross, the Budget Project's
executive
director.
Today's report marks the fourth time the project has toted
up the cost of
living in California. The last study, issued two years ago,
showed that a
two-parent family with one wage earner needed to bring in
$46,919 to
maintain a minimal middle-class living standard; a
two-earner family
required $70,708. The higher cost this year largely reflects
rising health
insurance premiums.
Project researchers looked at a living standard above a
bare-bones
existence, but covering only basic expenses, with little
margin for
discretionary outlays such as vacations and college tuition.
They estimated prices of housing, child care,
transportation, food, health
care, taxes and miscellaneous, a category that lumps
together everything
else. They looked at rental costs rather than home ownership
and made
certain other assumptions that have big effects on living
standards.
For example, they included as a necessity individually
purchased health
insurance, although many families are covered at least
partly through
work. And, in an effort to figure what it takes to support a
family
without public assistance, they didn't consider the help
many families get
from government benefits such as housing and child health
care subsidies.
According to those assumptions, the biggest expense was
rent, estimated at
an average of $1,312 for a family of four in the Bay Area,
higher than the
statewide estimate of $1,160. Child care was the second
biggest outlay at
about $1,216, followed by taxes and health coverage.
Real families, of course, vary tremendously in their
spending. Until a few
months ago, Maria and Ricardo Frias, who are both 34, paid a
babysitter
$800 every four weeks. Now, the daughters attend
after-school programs
until Maria is able to pick them up at the end of the day.
They pay rent far below the project's estimate, but the
trade-off is that
they don't have the space they need. Maria gets medical
insurance through
her job, but she says her out-of-pocket expenses are heavy.
The Friases
also are paying today for past living expenses, when they
earned far less,
in the form of credit card finance charges.
The couple has tried many times to come up with a way to pay
for a
two-bedroom apartment and adult education.
"Really working hard and maybe getting a second job ...
that would be the
only way," Maria Frias said.
Families in the Bay Area and the rest of the state use a
variety of
strategies to cope with high living costs, Ross noted.
"People cut corners in a variety of ways," she
said. "Some are in
below-market-rate housing. Many people go without health
coverage. And a
lot of people live by spending more than they earn.
The project says its findings show a need for public
spending on social
programs, such as subsidized child care and health coverage.
Health
spending is at the center of a major policy debate in
California, where
Gov. Schwarzenegger and state lawmakers are weighing plans
for universal
coverage.
"Many families may need assistance to make ends
meet," said Ross, the
project's executive director.
Those who believe government's role should be limited
disagree.
"To say $50,000 is a minimum to have a modest middle income
lifestyle is a
reasonable statement," Pepperdine's Shires said.
"But you have to be
careful when you start talking about policy
implications."
For her part, Maria Frias is sometimes frustrated and at
other times
philosophical about what it costs to raise a family.
"I see other people who are worse," she said,
"and I consider myself
lucky." Struggling with your finances?
Find help at these sites:
-- Consumer Credit Counseling Services: cccsintl.org
-- FinAid (student financial aid information): finaid.org
-- Mortgage-calc.com (mortgage and debt consolidation
calculator):
mortgage-calc.com
-- Spread Spectrum Scene (personal finance resources):
links.sfgate.com/ZBFQ Source: Chronicle research
Monthly living cost
How much households must spend on average each month to live
in the Bay
Area:
Single adult
$2,469
Single-parent family (two kids)
$5,489
Two-parent family (one working)
$4,423
Two-parent family (both working) $6,422
Note: In the study, the Bay Area is made up of Alameda,
Contra Costa,
Marin, Napa, San Francisco, San Mateo, Santa Clara, Santa
Cruz, Solano and
Sonoma counties. Source: California Budget Project
E-mail Sam Zuckerman at szuckerman@sfchronicle.com