Struggling to Stay Afloat: Challenges for California’s Working Families

Our 2019 study of the financial hardship for working families just been released. The topline finding is that over 1 in 3 (37%) households in California struggle to meet basic living costs, which is roughly three times as many as federal poverty statistics would indicate.

We are troubled to see that the rate of households living with incomes below the Real Cost Measure is increasing, even while the economy is claimed to be growing and official unemployment low. Households living below the Real Cost Measure are overwhelmingly working families. They are doing their part, but as our data make clear, hard work alone is not enough to get ahead. We hope our results will be useful to community, business, civic, nonprofit and philanthropic leaders working to help struggling families move up.

The Real Cost Measure determines what it costs to meet a decent standard of living in every county in California, and analyzes how many families struggle to meet those costs, at the county and neighborhood levels. The table below illustrates the gap between what it costs for a decent standard of living and the average income and sources of income of those households earning below the Real Cost Measure, for San Diego County in this example:

Key findings from Struggling to Stay Afloat: The Real Cost Measure in California 2019 include:

• More than one in three California households — over 3.8 million families (37%) — do not earn sufficient income to meet basic needs
• Workers: Of the estimated 3.8 million households in California that fall below the Real Cost Measure, 9 in 10 have at least one working adult
• 6 in 10 Young Children Live in Struggling Households: 60% of households in California with children aged between 0 and 5 fall below the Real Cost Measure
• Housing Burden: Nearly 4 in 10 households in California (38%) pay more than 30% of their income on housing. Households living below the Federal Poverty Level spend up to a staggering 76% of their income on housing.
• Households of all Ethnicities Struggle, but Rate is Higher for Latino and African Americans: Over 1.8 million Latino households are estimated to fall below the Real Cost Measure compared to over 1.2 million white households, 524,000 Asian American households, and 269,000 African-American households
• Single Mothers: Over 7 in 10 households led by single mothers in California (74%) fall below the Real Cost Measure
• As Education Increases, Rate of Struggling Households Falls: Nearly three-fourths of California householders without a high school diploma or equivalent (74%) fall below the Real Cost Measure, compared to those with at least a high school diploma (53%), those with at least some college education (38%), and those with at least a bachelor’s degree (18%)
• Foreign-Born Householders Struggle More: Nearly one-third (30%) of California households led by a person born in the United States earn income below the Real Cost Measure. By contrast, 40% of households led by a person born outside the U.S. are below the Real Cost Measure, and that number rises to 62% when the householder is not a citizen.

If we truly want to help struggling families move up, we need to point the way to meeting a decent standard of living. Unlike the official federal poverty level, which does not accurately account for local costs of living, the Real Cost Measure factors the actual local costs of housing, food, health care, child care, transportation and other basic needs to determine what it really costs to live in every county in California. The Real Cost Measure provides us the ability to better understand the challenges facing struggling households in our community, and to engage local community partners, civic leaders, the business sector and our elected officials in addressing their everyday hardships.

The full study results and resources are available at https://www.unitedwaysca.org/realcost, and include data at the county and neighborhood level, with county dashboards, interactive maps, interactive household budgets built in Tableau, downloadable county one-pagers and data set, and more.