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News from EPI EPI’s family budget calculator demonstrates that it is impossible for families living on minimum-wage jobs to make ends meet

The real costs for families to live modest, economically secure lives are much higher than conventional estimates show for all cities across the country. For minimum-wage workers, it is nearly impossible to meet basic family needs, a new EPI report finds.  In What Families Need to Get By: The 2013 Update of EPI’s Family Budget Calculator, Elise Gould, EPI director of health policy research, and EPI Research Assistants Natalie Sabadish, Hilary Wething, and Nicholas Finio explain that because poverty thresholds, generally set at the national level, were created to measure serious economic deprivation and do not account for community-specific costs, the dollar amount necessary for a family to attain a secure yet modest living is much higher than conventional estimates. Using EPI’s Family Budget Calculator—recently updated for 2013—the authors account for costs variations of housing, food, child care, transportation, health care, other necessities and taxes across the country and offer a broader, more comprehensive measure of economic welfare.

“Our family budget calculations show that the real costs for families to live modest, not even middle class, lives are much higher than conventional estimates show, and for families living on minimum-wage jobs, it is virtually impossible to make ends meet,” said Gould. “In fact, the actual amount of money a family needs to provide the most basic necessities exceeds the official poverty threshold, which stood at $23,283 for a two-parent, two-child family in 2012, for all six family types in all 615 family budget areas studied in this report.

EPI’s Family Budget Calculator illustrates the income required to afford an adequate standard of living for six family types living in 615 specific U.S. communities. Using geographical cost-of-living differences, EPI’s budget calculator accounts for regional, state, and local variations (depending on item). This geographic dimension of EPI’s family budget measurements offers a comparative advantage over using poverty thresholds that only use a national baseline in their measurements, such as the federal poverty threshold, and even the more comprehensive Supplemental Poverty Measure, which uses housing prices for its geographic variability.

Budgets vary widely across the U.S. by family size and by geographic area. The basic family budget for a two-parent, two-child family ranges from $48,144 in Marshall County, Miss. to $93,502 in New York City. In the median family budget area, Newaygo County, Mich., a two-parent, two-child family needs $63,238 to secure an adequate but modest living standard, well above the 2012 poverty threshold of $23,283 for this family type. For a two-parent, two-child household, housing ranges from 10.8 percent to 25.6 percent of a family’s budget, most expensive in Hilo, Hawaii ($1,833 per month), and least expensive in both Macon and Smith Counties, Tenn. ($570 per month). Across regions and family types, child care costs account for the greatest variability in family budgets. Monthly child care costs for a two-parent, one-child household range from $334 in rural Mississippi to $1,318 in Washington, D.C. In the latter, monthly child care costs for a two-parent, three-child household are $2,114—60 percent higher than for a two-parent, one-child household.

Finally, even in the best of economic times, many parents in low-wage jobs will not earn enough through work to meet basic family needs. Annual wages for one full-time, full-year minimum-wage worker total $15,080, far below what is necessary for a one-parent, one-child family to live in even the least expensive family budget area (which stands at $35,132 for that family type in Simpson County, Miss.).

“The fact that hardworking families are struggling to afford their basic needs  makes clear how critical government policies are to ensure that our families can afford such basic necessities like food, child care, housing, transportation, and health care,” said Gould.