CALCULATING A LIVING WAGE IN SONOMA COUNTY
Table of Contents:
What is a Living Wage for Sonoma County?:
The California Budget Project calculates that a self-sufficiency, or 'living wage,' for Sonoma County in 2010 was $19.11 an hour for two parents working full-time to support two children and to pay for housing, transportation, health care, child care and food (see below)
California Budget Project - Making Ends Meet: How Much Does it Cost to Raise A Family in California 2010?
The Great Recession has battered California's economy and left millions of workers and their families without jobs and with reduced incomes. While home prices in most parts of the state have fallen substantially, the cost of health care, child care, and other basic necessities has continued to rise. As a result, millions of Californians continue to struggle to make ends meet.This report estimates the amount families and single adults need to earn in order to achieve a modest standard of living without assistance from public programs. In developing these estimates, the California Budget Project (CBP) hopes to provide a benchmark for assessing the adequacy of current employment opportunities and public policies that address the economic challenges facing many working families.
Researchers and policymakers typically use the federal poverty line (FPL) as the benchmark to judge economic well-being ($22,050 for a family of four in 2010). For most purposes, the poverty line is an obsolete measure that fails to take into account the reality of modern families. For example, the poverty line does not take into account the cost of child care in determining what constitutes a family's basic needs. Moreover, as a national standard, the poverty line does not refl ect California's high cost of living. The shortcomings of the poverty line have led to efforts to develop more accurate measures of economic well-being. The US Census Bureau, for example, will soon release a new, supplemental measure based on how much families typically spend on basic necessities,adjusted for housing cost differences throughout the US. This report takes a similar approach. It starts from the ground up, building a basic family budget based on the cost of housing,food, child care, and other essentials needed to support a family without public or private assistance. The standard of living envisioned is more than a "bare bones" existence, yet covers only basic expenses, allowing little to no room for "extras" such as college savings, vacations, or emergencies.
Specifically, this report estimates typical costs of housing and utilities, child care, transportation, food, health coverage, payroll and income taxes, and miscellaneous expenses for fourhypothetical families: a single adult, a single working parent with two children, a two parent family with two children and one working parent, and two working parents with two children.Because housing and other costs vary throughout California,this report provides basic family budgets for each county in thestate. While the report includes an overall state estimate, housing and other costs vary suffi ciently that the countyestimates are more meaningful. Finally, this report translates the basic family budget into the hourly wage needed by each of thefour family types based on a 40-hour work week and year-round employment.
In order to support a modest standard of living, this report estimates that:
• A single adult needs an annual income of $30,445, equivalent to an hourly wage of $14.64. County estimates range from $25,298 in Kern to $36,319 in Monterey ($12.16 to $17.46 per hour).
• A single parent family needs an annual income of $64,239, equivalent to an hourly wage of $30.88. County estimates range from $52,433 in Tulare to $81,820 in Marin ($25.21 to $39.34 per hour).
• A two parent family with one employed parent needs an annual income of $54,039, equivalent to an hourly wage of $25.98. County estimates range from $45,491 in Tulare to $64,319 in Mono ($21.87 to $30.92 per hour).
• A family with two working parents needs an annual income of $75,500, equivalent to each parent working full-time for an hourly wage of $18.15. County estimates range from $62,953 in Tulare to $89,815 in Marin ($15.13 to $21.59 per hour for each parent).
The hourly wage needed to earn the basic family budget for families with children is three to four times the state's minimum wage ($8.00 per hour). The hourly wage required by single parents and the employed parent in two parent families with one worker also far exceeds the 2009 median hourly wage ($19.01) for California workers – the hourly wage earned by the worker exactly at the middle of the earnings distribution. Moreover, the hourly wage standard estimated in this report assumes full-time employment for 40 hours per week, 52 weeks per year and does not allow for any unpaid days off during a year. Part-time or part-year workers would need higher hourly wages to earn the same annual income. A single parent must earn almost as much as the two working parents in order to pay for child care, while realizing only modest savings for food, health care, and other household expenses. On the other hand, a two parent family in which only one parent works can live on less, since one parent can stay home with the children.
It is important to note what is not included in the basic family budget. For example, these estimates assume that families rent, rather than own, their homes and live in housing that many would consider overcrowded for a three- or four-person household. For many families, homeownership remains a dream, particularly in many of California's urban communities, which are among the most costly housing markets in the country. The basic family budgets assume that families use home-based child care, rather than more expensive center based care, and that health coverage is purchased privately with no assistance from an employer. Finally, these estimates allow very little to no room for savings toward retirement or a child's college education
Many Californians support their families on less than the standards estimated in this report. Some can live on less because they receive health coverage from their jobs or are able to leave their children with family or friends while at work, or because they cut costs to make ends meet. Others, including many working families, rely on public programs such as food stamps, subsidized child care, Medi-Cal, or Healthy Families in order to make ends meet; others rely on private charities or go into debt because their income is insufficient to pay for basic needs. The CBP's basic family budget provides an estimate of the income needed to meet basic needs without assistance.
This report illustrates the diffi culties that families face in meeting basic living expenses. The basic family budgets presented in this report all require incomes much higher than those provided by minimum wage work and, in many cases, more than the median wage. The disparity between the wages available from work and the cost of raising a family provides an important foundation for policy deliberations. Public policies can help families move toward self-suffi ciency by boosting incomes or by providing help with access to necessities, such as child care and health coverage. Public policies also can target public dollars, such as job training and economic development programs, toward higher-wage jobs and industries that pay their workers a sufficient income to make ends meet.
To download the entire report by the California Budget Project click here.
The report by New Economy, Working Solutions (NEWS), "The Limits of Prosperity: Growth, Inequality and Poverty in the North Bay" (2005) analyzes the growth of low-wage employment and the emergence of the 'hour-glass' economy in the North Bay.
Santa Rosa Press Democrat
Study: Income Gap Grows in County
by Mary Fricker
Pay in 1990s found to rise average of 4% for poor families, 24% for wealthy
The North Bay was a spectacular job machine in the 1990s and into 2001, but the benefits went overwhelmingly to high-income workers while a growing number of low-income residents hardly gained ground, according to a study to be released today by a Sonoma County research group.
"Economic growth in the North Bay has failed to bring shared prosperity to the region's residents," said Martin Bennett, executive director of New Economy, Working Solutions, a group representing union, housing and religious organizations.
The study covering Sonoma, Marin, Napa and Mendocino counties shows "a crisis of low-wage employment and working poverty has spread across the North Bay," Bennett said. Growing wage disparity has been an issue nationwide among economists and policymakers for at least a decade or more. Several studies have documented the trends both in California and nationwide.
"It's the same everywhere. The well-off are doing better, and the worse-off are doing worse," said Christopher Thornberg, a senior economist at UCLA Anderson Forecast.
The 81-page study, using standard U.S. Census and state employment data, is the first to focus on incomes for specific economic groups in the North Bay. Earlier studies documented overall income gains but didn't look at the lowest, middle and highest earners in such detail.
The study found that in the 1980s, low-income families in Sonoma County made significant financial gains on par with the county's wealthiest households. But in the 1990s they fell behind.
After rising at almost exactly the same rate in the 1980s - 23 percent and 22 percent, respectively - the average income of the lowest paid rose only 4 percent while the highest paid soared 24 percent in the 1990s.
Many economists blame several factors: technology, which cuts the need for low-skill jobs and raises demand for high-skilled people; immigration of lower-skilled workers; and trade, which moves lesser-skilled jobs to other countries. Together, these trends hold down already-low wages and increase the demand and wage for high-skilled workers.
"The main factor is that there are two distinct labor markets in Sonoma County ... based on skill level," said Robert Eyler, chairman of the economics department at Sonoma State University. "There is a large amount of working poor, where their skill level does not allow them to pursue job opportunities that keep pace with the cost of living."
Experts offer a variety of solutions. Some focus on creating high-wage jobs that help support other workers; others say the key is higher levels of education and workplace training."Education, education, education" is the antidote, Thornberg said. Stephen Giordano of Rohnert Park came to that conclusion last year when he was making about $13 an hour as a driver for a courier service and decided to go back to school.
Now he's halfway through two years of night school at Empire College in Santa Rosa, working toward his associate degree in information technology, where jobs can start at $25 an hour. "The main goal for me is to make a liveable wage to start a family," said Giordano, 37, who now earns $16 an hour as warehouse supervisor at Merry Edwards Wines in Windsor.
The New Economy, Working Solutions study agrees education is a key solution. But it has a 10-point plan that also calls for building community support for unions, raising the minimum wage and passing living wage ordinances.
It says technology and trade don't fully explain the trends this decade in the North Bay, where the economy is creating mostly low-paying jobs that can't be moved abroad, such as restaurant work, nurses aides and retail clerks - jobs that are not affected much by either technology or trade.
The study compares the bottom and top one-fifth of the county's estimated 100,000 working families, ranked by average income and adjusted for inflation. In Sonoma County, the average income for these groups in 1999 was $24,000 and $180,000, respectively.
In neighboring Marin, Napa and Mendocino counties, income for low- and middle-income working families lagged the wealthy in both the 1980s and 1990s, but the difference was bigger in the 1990s.
The trend is not likely to change soon, according to labor analysts at the state Employment Development Department. They predicted two-thirds of new jobs in Sonoma County at least through 2008 will be in fields that require no advanced education, only on-the-job training, the New Economy, Working Solutions study said.
New Economy, Working Solutions commissioned the study which was done by the University of California's Institute for Labor and Employment.
San Francisco Chronicle
Gap Widens Between Rich and Poor: Study Shows Big Increase in Number of Working Families Living in Poverty
by Jim Doyle
The gap between the rich and poor in North Bay counties grew significantly during the economic boom years of the 1990s, according to a new study being released today .
"Two decades of stunning economic growth in the North Bay have left working families in the lurch, unable to find jobs that will sustain them at a minimum level of self-sufficiency," the study says. "The incomes of the richest one-fifth have grown at staggering rates, while those of the middle and the bottom have grown sluggishly, or actually declined."
As a result, the study says, the percentage of North Bay working families and children living in poverty rose substantially despite the 1990s economic growth spurt.
The 81-page report, titled "The Limits of Prosperity: Growth, Inequality and Poverty in the North Bay," examines demographic, employment, income and poverty data since 1979 in Marin, Sonoma, Napa and Mendocino counties.
The study was sponsored by New Economy, Working Solutions -- a nonprofit research and education organization supported by labor, religious and community groups in the North Bay. It was financed by UC Berkeley's Institute for Labor and Employment as well as foundation grants and donations from unions.
"We believe our report is the most comprehensive ever completed about employment patterns, wages and income distribution and self-sufficiency standards in the region," said Martin Bennett, who chairs New Economy.
Economic growth in the North Bay has produced an "hourglass economy," the study says, which is largely split between high- and low-wage occupations, and a shrinking middle class.
The study found that the North Bay economy grew much faster in the 1990s than the overall Bay Area economy or the state economy. Still, the North Bay's growth in jobs is skewed toward the creation of low-wage, low-skill jobs in service industries.
A growing minority underclass composed primarily of Latinos fills the lowest-paid, most insecure jobs such as those for child care workers, janitors, laborers and fast-food employees.
"We find that the proportion of families living in poverty rose by 5 percent in the North Bay during the 1990s despite robust economic growth," wrote UC Berkeley researchers Nari Rhee and Dan Acland. "The growth of poverty- wage jobs that fail to keep working families self-sufficient can force those at the bottom to depend on welfare for survival."
In Marin County, the average income of the top one-fifth of working families increased since 1989 by 38 percent to $326,000 a year; the income of those in the middle rose 11 percent to $94,000; and the income of the bottom one-fifth of Marin families decreased by 2 percent to $28,300.
The North Bay's overall population increased by one-third between 1980 and 2000, with Sonoma County doubling its population to about 477,400. Marin County's population is about 251,440; Napa County's is about 132,530; and Mendocino County's is about 89,700. The study found that 1 in 6 North Bay families lives in poverty. Eighteen percent of children live in poverty in Marin County; 23 percent in Sonoma County; 31 percent in Napa County; and 51 percent in Mendocino County.
Ten percent of North Bay residents in 2001 did not have health care insurance, the report noted, including about 15,000 people in Marin County and 46,000 in Sonoma County.
These patterns are likely to continue: 30 percent of the projected job growth in the North Bay is in occupations where entry-level jobs are at or just above the minimum wage of $6.75 per hour.
The study urges public officials to support a higher state minimum wage indexed to inflation, promote and expand tax credits for low-income working families and encourage economic growth that creates jobs that support a family and career ladders that provide economic upward mobility.
It recommends the development of education and training programs for low- wage earners, including immigrant worker centers to provide legal and social services. It encourages the support of initiatives that provide health insurance coverage for children living in poverty as well as housing initiatives that help ensure that low-wage workers can live in the communities where they work.
E-mail Jim Doyle at email@example.com.
March 4, 2005
Closer to Home
The Hour Glass Economy
by Martin Bennett
Dark clouds are gathering on the horizon as the North Bay moves unevenly into the economic recovery.
The collapse of Telecom Valley and the slashing of 4,500 high-tech jobs have cooled the robust economic growth of the late 1990s, a period when regional job growth outpaced the state and national rates. Now a sober assessment of the boom years reveals the dramatic growth of income inequality and working-class poverty in the North Bay.
This week the nonprofit New Economy, Working Solutions (NEWS), released a report, "The Limits of Prosperity: Growth, Inequality and Poverty in the North Bay," by University of California researchers Nari Rhee and Dan Acland.
The report examines the transformation of the regional economy over the last two decades and calls for new public policy to address the crisis of low-wage employment and the polarization of wealth and income in Marin, Napa, Sonoma and Mendocino counties. The spreading economic insecurity and the structural weaknesses of the regional economy could undermine renewed prosperity.
The report argues that the emergence of an "hourglass economy," with job growth concentrated at the top and the bottom of the labor market while middle-income jobs are shrinking is driving the current economic insecurity.
Income inequality grew at "staggering rates" in the 1990s compared to the 1980s. In Sonoma and Napa counties during the 1990s, the income of the top one-fifth of working families grew six times as fast as the bottom one-fifth. In Sonoma County income for the upper one-fifth ballooned by 24 percent, from $144,476 to $179,615 in inflation adjusted-dollars. For the bottom one-fifth family income was stagnant and grew by only 4 percent, from $23,001 to $23,991.
The hourglass economy spurs the rapid growth of the working poor, families for whom wages and incomes are not sufficient to pay for basic necessities such as food, housing, transportation, child care and health care. The report documents how incomes at the bottom have failed to keep pace with spiraling housing, medical and other costs of living.
More than 30 percent of the workers in the North Bay do not earn wages sufficient to enable two parents working full-time to support two children. Adjusting for the cost of living in each county, the self-sufficiency or living wage for two parents working full-time to support two children is $9.75 in Mendocino, $11.48 in Napa, $12.46 in Sonoma and $15.05 in Marin.
Most alarmingly, job growth projections for the North Bay indicate that the base of the hourglass is continuing to widen. Service sector jobs such as janitors, child-care and home-care workers, security guards and retail sales will account for much of the the 62 percent of new jobs paying an entry wage of less than $12 an hour.
Latinos, who are clustered in industries that offer the least pay, training and job security, are twice as likely to be poor as whites. More than 43 percent of the Latino working family population in Sonoma and 60 percent in Mendocino do not earn a living wage. The California Budget Project suggests that Latinos will constitute over 43 percent of the state's population by 2020 and low levels of educational achievement for Latinos will limit upward mobility and could choke off future economic growth.
The NEWS report warns of dangerous consequences if the hourglass economy persists:
+A mismatch between jobs and housing will mean longer commutes for low and middle-income workers who cannot find affordable housing.
The authors conclude with a set of recommendations to address the deepening income inequality. They advocate for a higher state minimum wage indexed to inflation, more protections for workers seeking to form unions, increased access to affordable housing and health care, and ensuring that good jobs with benefits are created when public funds are provided for new commercial development.
Ultimately, the report suggests that shared prosperity, which enables all income brackets to grow together, is the basis for a healthy and sustainable regional economy.
Martin Bennett teaches American history at Santa Rosa Junior College and is the board chair of New Economy, Working Solutions.
LIVING WAGE COALITION OF SONOMA COUNTY
PO Box 427
Santa Rosa, CA 95402