Basic economic security?
This week, Wider Opportunities for Women issued their “Basic Economic Security Tables” for the Washington DC region. Not unpredictably, the Washington Post coverage led with the finding that a family of four needs $108,000 to be “economically secure” in Fairfax county. I sometimes work with folks from WOW, and I generally think they do good work, but I have to admit that I winced reading this — I worry that it feeds into the world view where people who earn six digits feel entitled to whine about how they can’t make ends meet.
And, I make less than $108,000 a year, and I don’t feel like we’re “just getting by.” So, I thought I’d take a look at their budget for a family of four: two workers, one preschooler, one school-age child, which is the one that is closest to our family type.
- Housing — $1546. This is based on HUD’s fair market rent and seems reasonable to me. I can’t think of where in Fairfax you could rent a three bedroom apartment or house for much less than $1500,.
- Utilities — $188. Sure. We pay a bit more, especially in the winter, but a smaller house would be cheaper.
- Food — $868. They get this from the USDA low-cost food plan, which is one step up from the thrifty food plan. I think we spend somewhat less than this on food, but as I’ve discussed before, we eat less meat and less prepared foods than the budget assumes. The thrifty food plan definitely means you need to pay attention to what you’re buying — if economic security means being able to buy ice cream and meat without worrying about the cost, the low-cost plan seems reasonable.
- Transportation — $652. They assume two cars, and a lot of this cost is depreciation. I think you could probably get away for less, if you bought used cars and kept them until they fell apart. It certainly feels like we spend a lot less on transportation, but because we don’t have car payments, but pay insurance 2x a year and repairs at irregular intervals, I may be undercounting the real cost of car ownership.
- Child care — $2,210. With two school age kids, I took this out of the budget. With no other changes, it brings the annual total bill down to$81,540.
- Personal and Household Items — $702. This is based on a statistical report that says that renters on average (nationally) spend 27% of a family’s housing, utility and food expenses in these categories. I think it’s too high — this is a very high cost of housing area, but I don’t think that should drive up personal and household costs correspondingly. Even with cable and netflix and occasionally eating out or going to the movies, we spend way less than this.
- Health care — $508 (assuming employer provided health insurance). This is based on an average of plans in the area — you can definitely spend less if you’re willing to go with a HMO like Kaiser. (I have Kaiser, and my premium is fully employer paid, so I spend less than $1000 a year on all health care, including glasses, etc.)
- Emergency savings — $345 and retirement savings — $320. I’m willing to buy that to be “secure” you should be saving this much.
- Taxes — $2007, and credits of $334. I’m sure WOW did the math correctly for their hypothetical family.
So, what do you think? Do WOW’s numbers seem reasonable to you? Is my reaction just a version of the recurrent survey finding that the overwhelming majority of Americans think they’re “middle class?”
October 14th, 2010 at 11:44 pm
Maybe “economically secure” and “just getting by” is the difference between being able to weather some rough storms. I’m not familiar with Fairfax County, but I agree that I’d hate for someone making over $100,000 to be complaining regardless of where they live. There are a lot of factors- is that 2 parents earning a combined $108,000 or one salary leaving the other available for child care, homework help, more household duties. The medical expenses seemed to be a minimum even for employer-subsidized care.
To me, a big factor in one’s perception of income is whether there is some capacity to earn more should circumstances call for it – could you find work in a more profitable field/employer, could you increase hours, could your spouse earn more money.
October 23rd, 2010 at 9:08 pm
I have to say – living in NYC – I am not horrified by people who make $100,000 complaining. Indeed I can’t imagine raising a family here on that little, without serious compromises (e.g. not living in an adequately good school district, having a commute so horrifyingly long that one parent never sees the kids). $150k here will give you the same quality of life that $50k would in Kansas City or Denver. It’s sort of like being on the pound while the rest of the country’s on the dollar.
A factor left out is how the adults in the family get to their income level. The $108k job – or even the $54k job – probably involved grad school, and grad school debt; it’s unrealistic not to put at least some educational debt into the young-family budget.
October 28th, 2010 at 8:49 am
Those numbers sound about right to me, although we pay less for health insurance and cars.
I agree with you that household items can be a lower percentage, although maybe if you average out the seasonal clothes shopping, that’s not true?
Once you ditch daycare costs, you have to add back extracurricular fees and summer camps. But those “necessities” barely existed in my world back in the late 1970s. (I mean, there was church camp, but that was cheap, and after-school classes at the school, but those were free. Then again, I still regret not having taken piano lessons.)
October 29th, 2010 at 11:13 am
“Once you ditch daycare costs, you have to add back extracurricular fees and summer camps. But those “necessities” barely existed in my world back in the late 1970s.”
That’s probably because there were far fewer two-income couples. Why the scare quotes around necessities? With two school aged children and both parents working, what do you propose to do with them between 3:30 and 6 every weekday and all day long all summer that’s going to be free?
November 7th, 2010 at 5:20 am
I’m with Sarah – I think you are undercounting child care – with 2 parents working we need to pay after-school program for our elementary kid. Or at least, you, with a stay-at-home parent, don’t have the cost, but many people get to $100000 by having both parents work.
Nothing here about eldercare – some of our peers are cobbling together $4-5 thousand a month for an aging parent. With siblings, that’s a lot more reachable than if you are an only child. It’s hugely variable, our parents saved enough to get them through their last illnesses. If your parents pulled every dime out of their house with HELOCs (think cute bumper sticker: “we’re spending our children’s inheritance” on a car with Florida plates) and went on cruises, and now they need you, that’s a kick in the butt.
Benefits are huge, as you know better than I – a real estate agent and a handyman, each self-employed, would be looking at over a thousand a month, and God help them if they have a special needs kid.
We’re later in the family life cycle than some – 2 of ours are in middle school, so aftercare has gone away, we bought our house a long time ago before the Great Run-up, student loans are a distant memory. And I have benefits, which cover our family (I tell my self-employed wife that she really NEEDS her ‘husband with benefits’…) So a hundred thousand looks plausible. One size definitely does not fit all, here.
December 14th, 2010 at 5:31 pm
Hi — I thought you stopped blogging but it was a problem with my feed reader! Hope you don’t mind my commenting on an old post.
I’m a technical contractor and my husband is management-level at a very small company (under 30 employees). We pay over $500/mo. for health insurance for a family of 4. That’s employer-provided health insurance.
Just as a single data point!
December 25th, 2010 at 4:08 pm
I have to say – living in NYC – I am not horrified by people who make $100,000 complaining. Indeed I can’t imagine raising a family here on that little, without serious compromises (e.g. not living in an adequately good school district, having a commute so horrifyingly long that one parent never sees the kids). $150k here will give you the same quality of life that $50k would in Kansas City or Denver. It’s sort of like being on the pound while the rest of the country’s on the dollar. A factor left out is how the adults in the family get to their income level. The $108k job – or even the $54k job – probably involved grad school, and grad school debt; it’s unrealistic not to put at least some educational debt into the young-family budget.