What does it cost a family to live in Louisiana?
Everyone is familiar with the concept of the federal “poverty line,” the amount of income below which the federal government would classify a person or family as living in poverty.
Beginning with the basic question – how much does it cost for a family to live in Louisiana? – a study recently released by the Jesuit Social Research Institute (JSRI) takes a more realistic view of the income needed to achieve what it calls “family economic security.”
And it’s probably a lot more than you think.
Using conservative estimates – for example, two of the research’s assumptions were that the family did not have cable TV and cooked and ate all their meals at home rather than going out to eat – the study said achieving “economic security” would necessitate incomes of $45,840 for a single mother with one child and $55,428 for a family of two parents and one child.
That’s far above the federal poverty threshold of $16,057 for a family of two. The distinction, said Ali R. Bustamante, an economic policy specialist with JSRI, is that the federal income guidelines are used strictly to determine if families qualify for federal and state assistance programs such as supplemental food, housing, Medicaid and child care.
“The federal poverty threshold makes the unrealistic assumption that when a family earns an additional dollar above the poverty line, it is saved from the hardships of poverty,” Bustamante said. “We wanted to take a look at what kind of income would be needed to ensure a family a modest and dignified life. It really tells us that the families stuck between those two numbers are families that are really having a lot of economic hardships because they don’t necessarily have access to a lot of the resources they need.”
The impetus for the study – titled “Too Much for Too Many: What Does It Cost Families to Live in Louisiana?” – was the assumption that the cost of living in the greater New Orleans area had spiked after Hurricane Katrina, particularly because of a shrinking market for affordable housing.
“We had a general idea that perhaps the cost of living was much higher than people knew,” Bustamante said.
The study, which took into account what families pay for housing, food, transportation, health care, child care and taxes, analyzed the six largest cities in Louisiana as well as rural areas. Ranked from high to low, the income needed to achieve economic security for a married couple with one child was $62,040 (New Orleans), $56,616 (Baton Rouge), $56,352 (Lafayette), $55,908 (Shreveport), $55,128 (Lake Charles) and $53,760 (Houma-Thibodaux). The rural average was $52,884.
Other notes: larger families spend a greater percentage of their incomes on child care and food; smaller families with few children spend a disproportionately greater share of their incomes on health care and housing.
Rural areas tend to have higher transportation costs but overall lower living costs.
Expensive housing, high taxes
“New Orleans did have a considerably higher cost of living than the rest of Louisiana, but the rest of Louisiana wasn’t that far off,” Bustamante said. “The two main costs that we saw were disproportionately higher in the New Orleans metropolitan area were housing and taxes. New Orleans does have a much higher municipal tax rate, particularly when compared to the rest of Louisiana. Housing was considerably higher.”
Since Louisiana has the 12th-lowest median annual income in the U.S. among families with children, Bustamante said Louisiana families “tend to have a more difficult time achieving the kind of income necessary to achieve economic security.
“Once we compare actual family incomes to these (economic security) estimates, we see that about 52 percent of all families with children in Louisiana – more than 250,000 families – are currently under these estimates,” he said.
Raise minimum wage
The study suggests several possible solutions to helping working families, such as increasing the minimum wage from $7.25 to $10.10 an hour, which would benefit 359,000 workers; increasing the Louisiana Earned Income Tax Credit, which offsets payroll and income taxes, but is tied for the lowest in the country; and expanding Medicaid, which would have the potential of bringing medical coverage to 330,000 uninsured residents.
As for the minimum wage, a full-time, full-year, minimum-wage worker earns a salary of $15,080. The study suggests the hourly wage for a “modest but dignified” standard of living would have to be $22.04 for a single parent with one child and $13.32 for two parents with one child.
“Catholic social teaching and those of many other faiths tell us that society has a duty to assure that persons whose basic material needs are unmet have an established floor of material well-being on which all can stand,” Bustamante said. “Many recent studies have shown that while the U.S. worker has been increasingly productive over past decades, wages have not grown with that productivity. Today, many large employers are more profitable than ever and could compensate better. Better wages and benefits lead to an improved economy that helps everyone, including businesses.”
Peter Finney Jr.