The Cost of Living in Iowa — 2018 Edition
Backgrounder — Not Earning Enough to Get By
One in Six Working Households Fall Short

October 2018
Part 1 Basic Needs Budgets (or 21-page PDF)
Map to county-by-county tables
Part 2 Many Iowa Families Struggle to Meet Basic Needs (8-page PDF)
Read the news release for Parts 1-2

Part 3 Strengthening Pathways to the Middle Class: The Role of Work Supports (20-page PDF)
Read the news release for Part 3

This backgrounder in PDF
(2 pages)

Even with at least one full-time worker in the home, many Iowa working families struggle just to get by on a bare-bones, basic-needs budget. The latest Cost of Living in Iowa report from the Iowa Policy Project shows that nearly 100,000 Iowa working households earn too little for a basic standard of living without public supports beyond health insurance.

Cost of Living-Getting By chart

The basic-needs budgets constructed for this report represent a very frugal living standard; using costs as of 2017 (with the exception of health insurance), the budgets are based on what is needed to “survive” rather than “thrive.” We find that Iowa households would have to make the following wages in order to sustain the basic needs budget (assuming use of public insurance):

• A single-parent household with one child has to earn an hourly wage of $21.81.
• Two working-parent household with two children needs to earn $16.30 each.
• A two-parent household with a stay-at-home parent with two children must earn $13.29.

Seventeen percent of Iowa working households, or 227,000 Iowans are unable to meet the basic needs budget. This includes 61 percent of single-parent households, who on average face a $20,000 gap between their after-tax earnings and the basic needs budget.

Iowa families are working hard, but wages have not kept up with costs and productivity. Work support programs such as SNAP, Child Care Assistance, and the EITC are vitally important in bridging the gap between household income and basic needs expenses.

Disparities in self-sufficiency are apparent among population groups in Iowa. For example, 30.4 percent of working households headed by African-Americans had incomes below the self-sufficiency level compared to 16.3 percent of white working households. Those in the other non-white category include American Indian or Alaska native, Chinese, Japanese, other Asian or Pacific Islander, other race, two major races, and three or more major races.

African-American Iowans Have Greatest Share Below Basic Needs Incomes
Proportion of Iowa Working Households with Incomes below Self-Sufficiency Level, by Race

african american Iowans greatest share below basic needs

Similarly, a larger share of Hispanic-headed working households had incomes below the self-sufficiency level (27.5 percent) compared to non-Hispanic households (16.3 percent). The Hispanic category includes Mexican, Puerto Rican, Cuban, and other. More detailed analysis by race and Hispanic origin was not possible due to small sample sizes.

Larger Share of Hispanic than Non-Hispanic Households Below Basic Needs
Share of Iowa Working Household Incomes below Self-Sufficiency Level, by Hispanic Origin

larger share hispanic households below basic needs

These findings align with research on poverty and income inequality, which offers factors such as residential segregation, substandard housing in low-income areas, and discrimination as explanations for these disparities.[1] While there are racial disparities in the proportion of Iowa working households living below the self-sufficiency level, a large majority of those households are white and non-Hispanic (90 percent).

[1] Raj Chetty et al. “Race and economic opportunity in the United States: An intergenerational perspective.” March 2018. National Bureau of Economic Research. And John Iceland, “Poverty in America: A Handbook.” August 2013. University of California Press, Third Edition.

This backgrounder summarizes key points from the sixth edition of The Cost of Living in Iowa, which was published in three parts in 2018. Part 1 presents complete information on the basic family budgets for 10 family types and all geographic areas — 99 counties and 21 multi-county regions. Part 3 focuses on work supports (such as Child Care Assistance) and how they affect basic family budgets.