More than one in three California households struggles to afford basic needs, and about four in 10 are “housing burdened,” spending more than 30 percent of their incomes on housing, according to a new report from the United Way’s United Ways of California chapter.
The United Way created a Real Cost Measure, taking into account the cost of housing, food, healthcare, childcare, and transportation in each county in California. About 3.3 million households across the state do not earn enough to meet the Real Cost Measure and are struggling to meet their basic needs, according to “Struggling to Stay Afloat: The Real Cost Measure in California 2018.”
Economic struggles impact all races and ethnicities across the state of California. More than 1.5 million Latino households, more than 1 million white households, about 429,000 Asian households, and 269,000 African-American households earn below the Real Cost Measure and qualify as housing burdened, according to the United Way. Also, seven out of 10 single mothers fall below the Real Cost Measure.
Nine out of 10 households that do not meet the Real Cost Measure are employed, leading the United Way to suggest, “the challenge is raising pay rather than finding a job.”
For those who fall below the Real Cost Measure in California, housing is a particular burden.
“The comparison between what families report spending on housing and their overall incomes can be sobering,” the United Way report states.
While California families who earn above the Real Cost Measure spend about 22 percent of their incomes on housing, those living in poverty spend an average of 79 percent of their incomes just on housing.
Those who earn above the national poverty line but below the Real Cost Measure spend an average of 46 percent of their incomes on housing. Households that spend more than 30 percent of their incomes on housing are consistently considered “housing burdened” by economists. In total, about 72 percent of households below the Real Cost Measure fall into this category, according to the United Way.
“A severe shortage of affordable housing is a brute fact in most California communities,” the United Way report stated.
Tax credits and other subsidies for low-income housing fall short in California. First, many of the low-income units built are geared toward households earning 60 or 80 percent of the median income. Many households fall below this threshold. Secondly, a lack of funding for federal rent vouchers has made them unavailable to about three-fourths of eligible households.
With an estimated 3.5 million additional low-income housing units needed to meet existing demand, “it should be clear that we cannot build our way out of the affordability problem,” according to the United Way.
While housing issues facing California’s working, low-income residents are complex, the United Way does offer at least a couple solutions to ease the housing burden for lower-income Americans.
First, the United Way points out that more than 60 percent of subsidies for homeownership go to households with income over $100,000. Also, for every $1 in taxpayer money that goes to rental support, $3 is spent to support homeownership, which is out of reach for many low-income Americans.
The United Way suggests increasing support for lower-income renters in two ways. The first is fully funding federal housing vouchers so that all eligible families can obtain them. The second is to implement refundable federal renters’ credit, which the United Way says “would be an effective way to improve prospects for struggling households at scale, as well as to rebalance some of the tilt in federal housing subsidies that have grown to increasingly favor upper-income households.”
The report states that housing has a greater impact than just a family’s monthly budget. “Housing plays a central role in the fate of struggling households,” according to the report. “The quality and location of housing for struggling households affects virtually every aspect of their lives, so improvements here can have impact well beyond reducing financial stress.”