|PDF of this backgrounder (2 pages)|
PDF of full report (53 pages) January 26, 2010 with county-by-county tables
Everyone knows the costs of certain necessities, such as gasoline, vary widely throughout the country. Even within Iowa, families can expect to pay different prices for basic necessities such as housing, transportation, food, clothing, health care and child care. Whatever the cost, though, families need enough income to cover these basic needs. The income needed to provide these basic needs varies within the state by family size, ages of children, number of working adults, and geographic area.
“The Cost of Living in Iowa” from IPP presents basic-needs budgets for seven family types; budgets are adjusted for each county and metropolitan area in Iowa.
The table below presents basic-needs budgets showing that a two-parent family with one parent working and one child needs a family-supporting wage of $15.05 to makes ends meet. This is nearly one dollar above Iowa’s median wage. With two children, the family-supporting wage rises to $16.56 – more than $2.40 above Iowa’s median wage. At least 24 percent of two-parent families with one full-time worker earn less than the family-supporting wage.
The report presents information on the cost of living for four different family types in each of Iowa’s Metropolitan Statistical Areas (MSAs) and non-metropolitan regions. Of the four family types included in these tables, the median wage is enough to support a family only in the last scenario of two full-time working parents. These tables demonstrate Iowans in every region of the state have a difficult time making ends meet for their families.
The appendix to the report presents basic-needs budgets and family-supporting wages for seven different family types for every county in Iowa.
Our basic needs budgets provide a realistic portrait of what it takes to support a family in Iowa. The family budgets represent a very frugal and modest living standard without luxuries and without government assistance. (See appendix of full report for a complete explanation of the methodology.) No money is included for debt payments or skill training; for entertainment, vacations or restaurant meals; or even for savings for retirement or a childs college education.
The family-supporting wages in this report are significantly higher than the federal poverty guidelines.
The reason is that the federal poverty guidelines are outdated and based on flawed assumptions. These guidelines assume that families spend one-third of their income on food and two-thirds on other basic needs. In reality, food now accounts for only one-sixth of the family budget.
Housing, transportation, child care and utilities are now much larger components of family spending than in the past.
The federal poverty calculation fails to properly account for these costs and totally excludes the cost of child care.
All income is earned; workers are employed full-time and year-round.
The family cooks and eats all meals at home, at the cost of the USDA Low-Cost family food plan.
The cost of rent and utilities is based on the HUD Fair Market Rent (FMR) at the 40th percentile level for a house of appropriate size in the local area.
Health care expenses include insurance costs as well as out-of-pocket costs. Insurance premium costs are divided between the employee share of employer-sponsored insurance and the costs of non-group or private insurance policies.
Workers drive to work, and families have other expenses for basic transportation needs, but social uses of transportation are not included.
All children are in child-care centers when not in school, except those in two-parent families with only one parent working.
Child-care costs are calculated using the regional average for a toddler of two years and a school-age child of six years based on data from Iowa Child Care Resource and Referral Networks.
Net taxes are figured by preparing federal and state income tax returns for each family using standard deductions from 2008 tax schedules, and by computing Social Security taxes, Earned Income Tax Credits, and federal and state child-care credits.
A basic needs budget must include expenses for clothing, telephone service, and other household maintenance items.