CGI News: 1 in 6 Iowa working families can't make it on earnings alone

FOR RELEASE TUESDAY, MARCH 12, 2024, at 10 a.m.

Cost of Living in Iowa report shows Iowans play catch-up even with higher wages

DES MOINES, Iowa (March 12, 2024) – Despite encouraging wage gains in the last couple of years, 1 in 6 working households in Iowa cannot meet basic needs on their earnings alone. Over half of single parents are falling short.

That key finding from the 9^th Edition of the Cost of Living in Iowa reflects the strong economic shift of 2021-2022.

“Despite the resilient economy and abundant resources of our state, far too many families work full time and still fall short of affording a basic needs budget,” said Sean Finn, lead author of the report for Common Good Iowa (CGI).

“Iowa needs to take steps to boost household resources for low- and moderate-income families. These include expansions of working family tax credits such as the Earned Income Tax Credit, creating a meaningful and refundable Child Tax Credit, raising reimbursement rates for child care and Medicaid providers, cracking down on wage theft, and of course raising the state’s minimum wage, which has been stuck at $7.25 since the dawn of 2008. It’s a long, and long-ignored, list.”

The report is the latest from CGI examining the challenges faced by working households, the impact of historical injustices, and the repercussions of the pandemic-era economy on household budgets.

Finn and CGI intern Samantha Tamborski calculated basic-needs household budgets for various family types statewide and county by county. They found:

·        A basic-needs wage statewide for single workers is over twice the $7.25 minimum wage and much higher for others. A single parent with one child needs to earn at least $24.64 per hour, while two working parents each need $19.55 or more per hour to support two children, and a single working person must earn at least $14.82 an hour.

·        A significant portion of working households struggle to meet basic needs. The 1 in 6 ratio struggling below basic needs income is up from the 1 in 7 ratio reported in the last Cost of Living in Iowa report, in 2021.

·        A third of Black and Hispanic workers’ families have insufficient incomes. Iowa’s economic disparities are further exacerbated by institutional racism, as evidenced by long-lasting effects of practices like redlining and exclusions from labor protections.

·        Household budgets are tighter while corporate profits have soared. This price legacy of the pandemic particularly affected child care, transportation and food.

·        Public support programs in their current forms help, but aren’t enough to lift households above the basic needs line. Existing policies such as the EITC, SNAP and Child Care Assistance are effective but challenged by bureaucratic complexity and low utilization rates. Stronger programs and long-term economic transformation are needed for an economy in which all can thrive.

Tamborski said the average gap between household income and a basic needs budget is substantial.

“Single-parent families are facing an annual deficit exceeding $20,000,” Tamborski said. “That is not a gap that is easily bridged.”

Anne Discher, executive director of CGI, noted the report acknowledges no one policy solution can resolve the gaps in Iowa economy that rewards the rich and often ignores others.

“Lawmakers have the tools to make the economy work for all Iowans, but that requires systemic changes. Many options have been shown in Iowa and other states to work, but Iowa lawmakers have to have the willingness to move on them,” Discher said.

“When 3 of 5 single-parent households make below basic needs, their elected leaders have a responsibility to acknowledge these realities and look for real solutions. They’re not coming from trickle-down economics and tax cuts that gut resources for important supports.”

The Cost of Living in Iowa is a long-recognized resource for the public, policy makers and the media to understand Iowa’s economic challenges from the perspective of a family budget reduced to the bare essentials. The report outlines household budgets that include essentials for a family with at least one full-time worker within the household. For many families the needs will be greater, as the budget doesn’t include savings, nor costs of student loan payments or other debt, and excludes entertainment.

Budgets for 10 household types in each of Iowa’s 99 counties can be found at www.commongoodiowa.org/data/cost-of-living-in-iowa. These budgets are based on primarily Iowa-specific data released in 2022.

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