Struggling to Move Up: The Real Cost Measure in California 2021
Nearly one in three California families are struggling to cover their daily needs, according to a new study released by United Ways of California that defines which families struggle financially in California more accurately than the federal poverty level, and demonstrates that the current policy debates around child care, housing costs, and family tax credits are more urgent than ever.
The study, Struggling to Move Up: The Real Cost Measure in California 2021, finds that the share of families that struggle financially is 250 percent higher in California than what is factored in the federal government’s measure. It amounts to 3.5 million families who are unable to meet basic needs — a situation affecting Latino and Black households at much higher rates than other communities. The federal government uses an outdated formula for calculating poverty —one that fails to take into account how much rent, transportation, healthcare, and other basic needs cost in California.
“This study shows that many more California working families struggle to meet living costs than official estimates, and identifies significant gaps between what it costs for families and their children to live with dignity and what they actually earn,” said Peter Manzo, President & CEO of United Ways of California. “This new perspective should be the yardstick by which we set our priorities, and the study is a wake-up call to local community partners, civic leaders, the business sector, and elected officials that so much more needs to be done to help families not just survive but actually thrive.”
According to the study, the actual cost of living for a family of four (two adults, one pre-schooler and one school-aged child) in Los Angeles County is $95,112 and $77,072 for a similar family in Sacramento County. By comparison, the federal government says those same families would only need $26,500 to be categorized as not living in poverty.
The study’s other key findings include:
❖ Struggling Households Work: Of the estimated 3.5 million households in California that fall below the Real Cost Measure, 97% have at least one working adult.
❖ Housing Burden: Nearly 4 in 10 households in California (38%) pay more than 30% of their income on housing, which is considered a dangerous threshold by affordable housing advocates.
❖ Child Care Costs Can Be Even More Expensive Than Housing for Many Families: In Fresno County, the annual cost of child care for a family with two adults, one preschooler and one school-aged child can reach $14,429 versus $19,740 in Orange County.
❖ Over Half of Young Children Live in Struggling Households: 53% of households in California with children younger than six-years-old fall below the Real Cost Measure.
❖ Households of All Races Struggle, but Is Highest for Latino and Black Families: Over 1.7 million Latino households (or 51% of them) are estimated to not earn enough to get by, compared to over 1.06 million white households (20%); 481,618 Asian American households (28%); 259,516 Black households (41%); and 13,592 Native
American/Alaska Native households (39%).
❖ Less Education Results in Greater Struggles: Nearly 7 in 10 California households without a high school diploma or equivalent (68%) fall below the Real Cost Measure, compared to those with at least a high school diploma (47%), those with at least some college education (34%), and those with at least a bachelor’s degree (15%).
❖ Single Mothers: 7 in 10 households led by single mothers in California (70%) fall below the Real Cost Measure.
❖ Foreign-Born Households Have More Trouble Meeting Basic Needs: Thirty-six percent of households in California that are led by a person born outside the U.S. are below the Real Cost Measure, a figure which rises to 59% when the household is led by someone without U.S. citizenship. Meanwhile, only 26% of households led by a person born in the U.S. earn income below the Real Cost Measure.
The Real Cost of Living in San Luis Obispo County
Struggling to Stay Afloat: The Real Cost Measure in California 2018
Struggling to Stay Afloat: The Real Cost Measure is a statewide report outlining the financial challenges for working families. Unlike the official poverty measure which does not accurately account for local costs of living, the Real Cost Measure factors in the costs of housing, food, healthcare, childcare, transportation and other basic needs to determine what it really costs to live in California. Also discussed are the challenges facing specific households such as single mothers, households with young children, households of color and seniors.