One out of every five working families in Iowa earns too little money to meet their basic needs without public support programs, according to a new analysis of the state’s cost of living by the Iowa Policy Project. That adds up to about 120,000 households failing to earn a livable income, including nearly two-thirds of single-parent families in the state.
According to the report, a single parent of two children would need to earn $46,610 annually before taxes to cover all household costs, including health care premiums, rent, and child care but not entertainment, savings or paying down debt. The federal poverty rate for such a family would be only $20,420 which means federal support often ends for families long before they are self-sufficient.
“The federal poverty level is so outdated and the way it’s calculated isn’t really taking into account the rising cost of things like child care and transportation and housing,” said IPP researcher Natalie Veldhouse.
Families earning more than the current $7.25/hr minimum wage also have little chance to afford all their basic needs, the report said. A family of four with two working adults would need to earn a wage of $15.64, more than twice the minimum, to pay their bills.
“Even a single person. Even a young couple working full-time, 40 hours a week, needs way more than the minimum wage of $7.25,” said researcher Peter Fisher, who added that the cost of a family budget is far outpacing minimum wage thanks in part to rising costs for things like housing and health care.
The city of Des Moines had the highest share of families earning below a livable income (27.5 percent) while surrounding suburbs showed the lowest rate (14.6 percent). The analysis also identified a racial disparity within low-income families. Black and Hispanic families are more than twice as likely as white families to earn less than they need to get by.