Recession Pushing More Local Families Into Poverty
Thursday, September 30, 2010
How many families with children live below the federal poverty threshold? What impact has the recession had on the median income for the county? We analyze the latest U.S. Census Bureau stats on poverty in San Diego.
Maureen Cavanaugh: The median household income has gone down and the poverty rate for families in San Diego County has gone up. Those are just two of the sobering statistics from new data released by the U.S. Census Bureau. The numbers paint a picture of the recession in San Diego, where more working people are losing their grip on a middle-class lifestyle. To help us understand the many numbers released by the government about incomes in San Diego, I’d like to welcome my guest. Murtaza Baxamusa is director of Research and Policy for the Center on Policy Initiatives. And, Murtaza, welcome to These Days.
MURTAZA BAXAMUSA (Director of Research and Policy, Center on Policy Initiatives): Good morning, Maureen. Thank you for having me again.
CAVANAUGH: Now where does all this data come from? Is this information the result of the 2010 Census or is this something different?
BAXAMUSA: Maureen, this data was collected by the Census Bureau in 2009 from a sample of about 37,000 in the region. It is not the 2010 Census. We will get that data later, 2011.
CAVANAUGH: Okay, so we get that perhaps even starting in December of this year?
BAXAMUSA: The data that comes on December will be based on a five-year sample of – Yeah. So it is not the 2010 Census data. It’ll come out – The 2010 Census data will come out next year.
CAVANAUGH: So this is a yearly look at where we are in terms of poverty statistics and incomes. So let’s go into this. How much did we see incomes fall last year here in San Diego?
BAXAMUSA: Well, there’s two key indicators, one is poverty and the other is income. And in terms of poverty, to give you a brief overview, the federal poverty rate is $11,000 for an individual and $22,000 for a family of four. There were 374,000 San Diegans in poverty last year. This is 12.6%. It is 1.5 percentage points higher than the previous session levels in 2007. So it is a significant increase in poverty. The second, which is a very stark indicator of the depth of this recession is that of income. Income at every level fell last year. People are working hard but still falling behind. And what we see is gains in the previous economic expansion being wiped out by this recession. The median household income fell 4% to $60,000 in one year and it’s a $4,000 hit in the pocketbooks of every single household since the previous session time. So it is struggling to make ends meet and a difficult time for San Diegans.
CAVANAUGH: And as I said, that decrease in the income level last year is actually higher than the nationwide decrease that people saw in their incomes in 2009.
BAXAMUSA: Right. It was – it is significantly higher. It is – And it fell for per capita income and it fell for every single income range from the top to the bottom.
CAVANAUGH: Now, I see in these statistics that the overall poverty rate for San Diego County held steady at about 12.6% but as you pointed out, there was a change for families with children. Why – How do we see – How does one part of that increase without seeing an overall increase?
BAXAMUSA: Oh, the families with children, the poverty rate increased to 17%. We see this as part of a national trend where 1 in 5 children are living in poverty. We are fortunate, though, there is a silver lining here that it wasn’t as bad as the national statistic in every measure of poverty. We are – we’re still not at 14.3%, which is the national poverty rate, so thankfully our region has been buffered from severe crash of the economy. We are not in poverty at the extent as the rest of the nation.
CAVANAUGH: Well, that is a silver lining, as you say. However, the numbers do reveal that there are pockets of higher poverty levels around the county, the city of San Diego, for instance.
BAXAMUSA: Correct. The city of San Diego had a poverty rate of 14.3%, a new record for the city. Now I must bookmark that by saying the federal poverty rate is not a good measure for the high cost of living for San Diego. We have looked at what it costs to make ends meet and I was here last time, Maureen, talking about it. The 200% of the federal poverty rate is more of the economic hardship threshold for San Diegans. We see that this last year, 890,000 San Diegans were struggling to make ends meet, were below that 200% federal poverty level threshold.
BAXAMUSA: That’s an increase of 100,000 people.
CAVANAUGH: That’s amazing. Now remind us how those federal poverty guidelines have been set up. We had a show not – recently about statistics having to do with the seniors in poverty here in San Diego and we learned a lot about the fact that those guidelines for setting the numbers for federal poverty statistics haven’t changed in quite some time.
BAXAMUSA: Yeah, the federal poverty guidelines were established in the early sixties to measure what it costs to put food on the table for a family to survive. Since the sixties, the share of food as a percentage of the budget has decreased significantly. Now, the cost of housing and healthcare are eating up a lot of our budget. Food has stayed constant. So, therefore, food has become less and less important in terms of the overall family budget. The other important limitation of the federal poverty rate is that it does not take into consideration the geographic radiation and the cost of living. So, therefore, even if food costs differently in different areas, that is not incorporated into the federal poverty rate. It is $11,000 flat, regardless of where you live.
CAVANAUGH: I see. So what does your research Center for Policy Initiatives (sic) here in San Diego County, how does it differ in marking those people and families who are in economic hardship? What kind of incomes are we talking about here? And how does that compare with the federal poverty guidelines?
BAXAMUSA: The Census also releases information understanding that 100% of the federal poverty level is not the ideal threshold at different federal poverty levels that includes 200% of the federal poverty level. That’s how we got yesterday, the information from Census that 890,000 residents in San Diego live below 200% of the federal poverty level. This is an increase of 100,000 residents from the previous session levels. So it is a significant increase in San Diegans below economic hardship threshold so the idea of poverty’s not just that it is concentrated in extreme poverty below us, a pretty low income, but rather it is across the board. It is our middle class that is shrinking and it’s pushing down into the low income.
CAVANAUGH: I’m speaking with Murtaza Baxamusa. He’s director of Research and Policy for the Center on Policy Initiatives. And we’re talking about Census data that’s been released for San Diego County about household incomes and poverty rates. One of the – you mentioned it just a moment ago but one of the really sobering statistics is the level – the number of children in San Diego County who are now living in poverty. Tell us a little bit more about that.
BAXAMUSA: Yeah. The problem that we are seeing pervasive across the economy is that children are at the forefront, if you will, the raw bones of this poverty. And it is – there are 123,000 children in poverty, 17% poverty rate amongst children. This is increasing starkly over the period – over the last few years, may have been buffered to some extent by nutrition programs. I do want to say one of the limitations of this poverty report is that food – the income from food stamps is not considered in it. So possible that the child poverty could be decreased if there was more participation in food stamps. Unfortunately, the data shows that our participation of households in food stamps in the region stayed constant at 3.4% of households participating in that program.
CAVANAUGH: Now as you said a moment ago, the idea – What we’re seeing here is that there’s been a squeeze on all income levels but a real squeeze on many families who thought they were part – firmly part of the middle class and now see themselves being pushed out of that. What does that – what does your center look at in terms of the longterm future of San Diego if a trend like that would continue?
BAXAMUSA: Right. There’s still two key components of income. One is earnings from jobs and the second is other supplemental earnings including social security and investment income. In terms of both of them, we see the pie – our middle income families suffering significantly. In terms of wages and hours, we see that gradually eroding. The number of hours has fallen to 38 for a full time week, which means that it hits the pocketbooks of working families immediately. Wages are falling and at the same time retirement security is eroding gradually. So there are multiple crises that are facing our working families. In terms of housing, the biggest problem is that even though there was a recession, a housing crash, housing costs increased from 2008 to 2009. For a renter it’s $1,224. It was – There has been significant increases over the last few years. There is no real savings in terms of benefits of the housing crash in terms of actual pocketbook in terms of how much we pay in terms of our mortgage and rent. So the cost of housing continues to eat into our pocketbooks.
CAVANAUGH: While the actual value of the house declines.
CAVANAUGH: I want – There’s one more statistic and I do want to get into the silver lining that you were talking about because I think we need it. But there’s one statistic in your report that really sort of stood out for me in addition to the childhood poverty rate, is that the top fifth of households with the highest income claimed 49% of all income in the region while the bottom fifth of households only got 4% of that pie. And we keep hearing that, that the upper incomes keep taking more of the overall pie that we would hope would be distributed a little bit more evenly.
BAXAMUSA: The structure of the income inequality in San Diego is a systemic one. We’ve seen this over the past decade, that the top fifth takes half of all income that is generated in the region and the bottom fifth gets between 3 and 4%. So we see that there is a squish. Well the reason why that is important is because of income mobility. It means that families at the bottom of the ladder have greater and greater difficulty in finding that upper rung so that they can get out of the biggest problem is financial insecurity because that affects your ability to educate your children, it impacts your health, impacts your financial standing, getting a house as well as it impacts your ability to be able to invest in yourself an education to get a career and move up. So that is why income inequality is important. San Diego has had a structural income inequality for a decade. The rest of the nation is catching up with it or at a national level our income inequality is virtually now the same as what we have in San Diego. And across the nations of the world this statistic stands between the industrialized world and the developing world. So it is not a – it’s not a very happy state.
CAVANAUGH: Let me close by asking you what is the good news in this new Census report?
BAXAMUSA: Well, there’s – the really interesting thing is that we did not – even though our income fell, we’re still higher than the rest of the nation. Even though our poverty increased, we’re still better off than the rest of the country and the rest of the state. We’re a resilient economy. We’re looking at the dawn of a new economy where we can restructure our workforce, the way in which we work. Just to give you a key statistic of why we’re restructuring, since the peak of employment, it was in the middle of 2008, to January 2010, this year, when we crashed, we had an unemployment rate of 11.1%, the highest on record. We lost 90,000 jobs between this period. 90,000 jobs is equivalent to the labor force in the second largest city, Chula Vista or Oceanside. This kind of large impact off the recession on our economy means that as we rebound from it, we’re going to emerge with a new kind of labor force with new contract agreements, wages, standards, benefits, and an expectation from our workforce of a longterm stability so that we are not impacted by these kinds of booms and busts.
CAVANAUGH: I want to thank you for giving us such wide-ranging information. Thanks. Murtaza Baxamusa is director of Research and Policy for the Center for Policy Initiatives. Thanks for coming in.
BAXAMUSA: Thank you, Maureen.
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