Report Shows San Diego Economy Recovering, But Many Children Still Living In Poverty
September 19, 2013 1:27 p.m.
Peter Brownell, Research Director, Center on Policy Initiatives
Murtaza Baxamusa, Ph.D., San Diego Middle Class Taxpayers Association
CAVANAUGH: Despite headlines about the nation's economic recovery, the latest census data revealed people at the bottom of the economic ladder are not feeling much relief. The U.S. census bureau reports the percentage of poor in America is stagnant at 15%, and here in California the percentage is slightly higher. Nearly 16% of the population is living in poverty. Here to break down the poverty numbers in San Diego and discuss how they affect our community are my guests, Peter Brownell is research director at the center on policy initiatives. Welcome to the program.
BROWNELL: Thank you, it's a pleasure to be here.
CAVANAUGH: And Murtaza Baxamusa is San Diego national taxpayer association treasurer. Welcome back.
BAXAMUSA: Thanks Maureen.
CAVANAUGH: The center for policy initiatives has issued a new report on poverty in San Diego. Where did you get the statistics that you use?
BROWNELL: So the data all comes from the census bureau's American community survey. And all that data, people can look at these figures and other figures on the census bureau's American fact-finder website, which is where all the data originates.
CAVANAUGH: And what your group does is just pull that data is actually look at it and try to have it make sense. And also you have statistics on the percentage of children here in San Diego living in poverty.
BROWNELL: That's at 19.8%. It's a -- what was at this time 19.1% last year. Statistically, it's hard to say that that's an increase. But overall the trend just suggests that it's been getting worse and worse since the recession started. So it's considerably worse than it was before the recession, and it seems to be inching upward year to year. Although it's hard to say.
CAVANAUGH: What are the federal guidelines for determining poverty? What are the income levels they use to determine who is actually living in poverty?
BROWNELL: The federal government sets its -- a whole set of income standards in the poverty level. These don't vary by region. So they don't take into account the higher cost of living in places like
CAVANAUGH: What are the factors that are keeping poverty levels unchanged or even slightly higher in San Diego?
BAXAMUSA: So, Maureen, we're stuck in neutral at the bottom of a hill. When I was on this program in June, we discussed the united way report where they were interviewing families having a difficult time trying to pay their medical bills, priced out of San Diego. The fact is, we live in a high-cost state. If you factor in, we heard 15.9% poverty rate inical will ca, about the national rate. But if you factor in the cost of living, the census data shows that we have the highest, 23.5%, poverty rate in the nation. When you factor in child care, medical costs, and taxes in California. So there is -- the underlying factor is it costs a lot to live in San Diego. At the same time, what is important here is our incomes, our wages are not keeping up with what it costs to make ends meet. Just last year, the cost of housing went up 19%. But incomes stayed flat. So for a middle income family, you are trying to catch up, but you're not able to make ends meet and pay the bills.
CAVANAUGH: What are the effects on the community as a whole? As people move from the middle class, hovering near the poverty line, what impact does that have on San Diego?
BAXAMUSA: Well, are it's quite devastating in terms of lifestyles, but it's also -- it destabilizes families. If you think about it, when we are going back to school, we have basic needs to provide to our children; being sure they have a roof over their head for the school year, to be sure that you have a job for security. All of those are underlying tenants of a strong middle class. We are now having questioned in this new economy, which I would say has not recovered for the middle class in San Diego.
CAVANAUGH: Many of the reports on the latest figures say these numbers show that income disparity in this country is getting worse. Do your numbers reflect that here in San Diego?
BROWNELL: It's a little bit hard to say from the American community survey data just because it doesn't completely break things down to look at sort of the highest income of the high, and that's where a lot of the growing inequality is really the incomes of the richest rich. But we do see that a couple things have happened, we've hit a point where it's almost half. It's literally if you round it up, it's half of all income in the region is 49.8% of all income in the region is going to the top 20% of households. So to the extent we can see it with this data, and this isn't necessarily the best data to address these questions of inequality, but we've seen the genie index, which is a metric of inequality, so all the signs are, yeah, that inequality is growing. At the same time, median household incomes have been steadily declining in real terms since the recession.
CAVANAUGH: I want to ask both of you, anybody who listens to the news has heard that the stock market has rallied, Wall Street has come back, and everybody on Wall Street seems to be very happy. The business sector to a moderate degree is also coming back. Why is that not trickling down to average American incomes?
BROWNELL: Well, I think there's a couple different things. Right now, there's -- businesses have been reluctant to hire people. But the work is still getting done, so you've got people working harder, working for less. Unemployment is still over 7% in San Diego. So people are happy just to have a job. In many cases. So we really need to create a situation where people are getting paid what they're worth despite the economy. And that will help not only those people but to the extent that people have more money to spend, they're going to spend it regionally, and that will help bring the whole economy out of the recession. It's not a recession in a technical sense, but what we're saying is that it really hasn't recovered for most of the people. And that's what we need is to get money in people's pockets so they can spend it and stimulate the local economy.
CAVANAUGH: And Murtaza, Wall Street has been seen for decades as a real engine for the U.S. economy. So why isn't the average working American seeing some fallout from the boom that's going on on Wall Street?
BAXAMUSA: The boom is a result of increased productivity of the American labor force. As productivity increases, there is more that gets consumed. However, what's happening is the share of the fruit of that labor is not being balanced between wages in Wall Street are and the wages of an average American worker. So there is a stagnation here that needs to be addressed underlying. At the same time, we're producing large number of low-wage jobs. That is quite pertinent to what we're discussing because that erodes the middle class lifestyle. And if I may address one of the solutions that is in assembly bill 10, when I came on the show last time, you asked me what was one of the solutions, and I said increase the minimum wage in California. If the minimum wage were to increase in California to $10 today, are I estimate 160,000 San Diegans would get a raise. This would wipe out about half of working poverty in San Diego. Now, it'll go into 2016 fully, phased in by January first, 2016 to $10 an hour. People will get a raise. However, we will still have an increasing cost of living. So some of those gains are going to be wiped off by increased cost of living. I want to caution that, but I want to say this is a significant step toward California trying to eliminate some of this poverty that we're talking about today.
CAVANAUGH: And yet opponents of the increase in the minimum wage say it stops employers from creating jobs. Do we know that that actually does happen? That's a significant increase in California's minimum wage, going up to $10 an hour by 2016. Will that shrink the job market?
BAXAMUSA: There is not evidence of that. However, what is proven is that when you put $10 in the pockets of a low-wage San Diegan, be it in retail, in a restaurant, they're going to go out in the community and spend it. They're going to go back to school to provide supplies for their children, and rent, and the grocery store. That money is critical in stimulating the economy. It's about $200 million for every dollar increase in the bottom minimum wage. So this is a significant impact to San Diego's economy, and I feel that's going to be a big stimulus in the future.
CAVANAUGH: Getting back to the report, the numbers on your report find that 28% of people working full-time in San Diego earn $30,000 or less. And I'm wondering how far does an income like that go in San Diego?
BROWNELL: Well, we particularly highlighted that number because it's very close to what we would refer to as the self-sufficiency wage for an individual adult in the San Diego County area. So that's essentially a calculation that reflects all the costs that someone would have to pay to not be relying on either public benefits, on charity, on their families, so when you take into account the full cost of living here in San Diego, that's basically about the annual earnings that you need or income that you need to really stand on your own and not -- to really fully support yourself in the cost of living that we have here.
CAVANAUGH: So basically that minimum that you calculate is $30,000 for an individual, and any other family or criteria would be way more than that.
>> Basically. Once you bring into the equation people raising kids and the costs that are incurred there, you're looking at obviously an increase in the cost that people experience.
CAVANAUGH: Murtissa, the people who are earning $30,000 a year are earning more than the minimum wage. What other policies might California and San Diego develop to boost income so they are more in line with what it costs to live in this city and state?
BAXAMUSA: Good jobs, careers. It is important to understand depending on your family size how much you need to make. Self-sufficiency is about 200% of the poverty rate. So you're out of poverty, but you still cannot afford to make ends meet if you are below that. That is about 1/3 of all households in San Diego. Just imagine that. It's our neighbors, entire neighborhoods sometimes struggling to make ends meet.
Why? Because they do not have access to good jobs with stable careers. If we can incident vise those good jobs, that's a strategic approach to lifting everybody and to ensuper that the middle wages, $50,000 jobs, incident vise those jobs.
CAVANAUGH: What are your hopes for this new report that you're releasing? What do you -- do you hope policy makers read? What are you hoping happens?
BROWNELL: We certainly hope that policy makers and for that matter everyone reads it. And just to highlight the tough situation that people face and the failure of the so-called economic recovery to reach people. And as we've been discussing here, just to really take a good hard look at the kind of policies that would be needed and to take some action to improve things for the folks that so far things really haven't been getting better for.
CAVANAUGH: Once again it is from the center on policy initiatives. And where can people find that report, Peter?
BROWNELL: They can find it on our website, onlineCPI.org.
CAVANAUGH: Okay then.