California’s minimum wage isn’t enough to keep pace with workers’ costs of living, report says
California’s $16-an-hour minimum wage may be much higher than a “poverty wage” by federal standards, but high housing costs still make it difficult for low-wage workers to live and make ends meet in the state, according to a new report by the state’s Legislative Analyst’s Office.
The report, published Monday, paints a picture of who low-wage workers are and whether the state’s minimum wage is sufficient to address poverty and inequality.
Many workers move on from low-wage work to higher-paying jobs as they transition from their 20s to their 30s, but that mobility slows significantly when workers enter their early 30s, according to the report.
“As a result, half of lowwage workers are over 35 and one-quarter are 50 or older,” the report states. “The state’s economic policies should reflect the fact that many workers hold relatively low-wage jobs through middle age and beyond.”
The majority of low-wage workers — defined as those who earn an hourly wage of $17.50 or less — are home health and personal care aides. Three-fourths of them are part of the state’s In-Home Supportive Services program, which provides care aides to low-income individuals.
Fast food workers make up the second largest low-wage occupation, but that likely won’t be the case once that industry’s $20-an-hour minimum wage kicks in next month. Other lowwage jobs include cashiers, retail salespeople, waiters, farmworkers and packagers.
Nearly 6 in 10 low-wage workers are Latino, and about half of those are immigrants. Most low-wage workers live with at least one other worker and have no young children.
“We suspect that low-wage workers’ high likelihood of living in three-earner (or more) households might be due largely to California’s high housing costs,” the Legislative Analyst’s Office said.
The office also analyzed housing affordability for minimum-wage earners of varying household sizes and in various regions and found that California’s major metropolitan areas and much of its Central Coast are unaffordable for minimum-wage workers, regardless of whether they are single-income households, double-low-income households or if they have children.
For minimum-wage workers with a more “favorable” ratio of income to expenses — for example those without children and those with two earners in a household — housing in some rural and midsize metro areas may be affordable.
But there are eight coastal counties in the state where even two minimum-wage workers in a household with one child would face housing costs exceeding half their gross income, according to the report.
For minimum-wage earners who are single parents and have at least one child, housing is unaffordable in all but three California counties, Modoc, Trinity and Colusa, according to the report. In all counties except Modoc, a single parent of three who earns minimum wage can expect housing costs that exceed half their gross income.
It’s even more challenging to afford housing in counties that don’t have local minimum wages.
The report analyzed wage differences across California regions. Average wages in Imperial County, Monterey County and most of the San Joaquin Valley are 20% lower than the state average. In the Bay Area, wages are 20% higher, and in some counties, 50% higher than the state average.
Many of the high-wage regions don’t have local minimum wages, which impacts low-wage workers’ ability to afford living there.
In five of the state’s most expensive counties — Marin, Monterey, Orange, Santa Barbara and Santa Cruz — only one city, Novato, has a local minimum wage higher than the state’s.
“Going forward, the Legislature may wish to consider taking a more active role — perhaps by setting different minimum wages in different regions or by helping local governments coordinate their minimum wage policies,” the Legislative Analyst’s Office said.