1 OCCORD Policy Brief: Earnings, Poverty and Income in Orange County Analysis of Regional Data from the US Census Bureau 2007 American Community Survey August 26, 2008 I. Summary Summary of Census Data Indicator Number Percentage People living below 100% of the poverty line 263, % People living below 200% of the poverty line 737, % Families living in poverty 41, % Children living in poverty 86, % Income inequality index (Gini index) N/A Median Household Income $73,263 N/A 1. A significant percentage of Orange County individuals and families continue to live in poverty. Nearly half of individuals living in poverty worked full or part time jobs in ,300, or 8.9% of individual residents in Orange County, live below the federal poverty threshold. 737,344 or 24.9% of individual residents live in economic hardship, defined as twice (200%) the poverty threshold. 44.7% of adults living under the federal poverty threshold work full or part-time 2. The region is marked by significant gender and racial gaps in income and poverty. African Americans and Latinos experience a poverty rate significantly higher than Whites. Poverty rate for African Americans 10.5% Poverty rate for Hispanic/Latinos 14.6% Poverty rate for Whites 4.6% Median household income for African Americans in Orange County is $69,517. The median household income for Latinos in Orange County is $54,009. Both are significantly lower than $82,691 for White residents in Orange County.
2 For full-time year-round work, males earned $51,467 a year, whereas females earned $42,837. The overall gender gap in wages across all industries is 16%. 3. The industries with the most job openings in the County provide low-wage jobs. 20% of all workers over the age of 16 earn below $25,000/year. II. The Data The following data comes from the 2007 American Community Survey (ACS) which was released on August 26, 2008 by the US Census Bureau. ACS provides demographic, economic and social data for individuals and households. The data is made available for geographic areas with populations of 65,000 or more. Findings 1. A significant percentage of individuals and families in the region continue to live in poverty. In 2007, a total of 263,300 individuals (8.9%) lived in poverty according to Federal poverty measures. The federal poverty level (FPL) is set nationally according to family size (in 2007: $10,787 for a single adult under 65 years and $21,027 for a family of four with two children). The official measure significantly undercounts the region's poor. A more accurate measure based on recommendations of the National Academy of Sciences would reveal that thousands more persons face material deprivation. The national level is also widely acknowledged to be far less than the real poverty level based on the cost of living in high-cost areas. A more realistic measure of economic disadvantage is 200% of the Federal poverty threshold. A total of 737,344 individuals (24.9%) in the region were economically disadvantaged by this measure. A. Family & Child Poverty 41,931 families in the county live in poverty, with over 86,699 (11.6%) children in poverty. Households with income below federal poverty level: 73,166 o 41,931 families (defined by Census Bureau as a group of two or more people who reside together and who are related by birth, marriage, or adoption.) o 31,235 other households (defined by Census Bureau as including single adults and people living together that are not related by marriage, birth or adoption).
3 Number % Families in Poverty 41, % Married couples with children 15, % Married couples with no related children 6, % Single dads with children 2, % Single moms with children 14, % Single adults without children 2, % Other Households in Poverty 31, % Female Householder 18, % Male Householder 12, % B. Working Poverty Among those 16 years and older and in poverty, 81,589 (44.7%) individuals worked full or part-time. People in poverty who work (combine full time and part time): 81,589 working adults (i.e. population over 16 for whom poverty status is determined and worked either fulltime or part-time during the previous year). Percent of adults living in poverty who are workers: 44.7%
4 Individuals w/income below 200% poverty level (near poverty) 737,344 people (24.9%). According to the California Budget Project, the average income for a household to be self sufficient in Orange County is: A single adult with no children: o $30,262 ($14.55/hour) A single adult with two children: o $59,875 ($28.79/hour) Two-parent family with two children in which only one parent works: o $50,905 ($24.47/hour) Two-parent family with two children in which both parents work: o $72,696 ($17.48/hour) number of people in poverty 263,300, percent of the population 8.9%. 2. Racial disparities in income and poverty loom large over Orange County African Americans and Latinos are more likely to live in poverty than whites. African Americans in poverty 5,212 (10.5%) Latinos in poverty 143,469 (14.6%) Asians in poverty 46,593 (9.8%) Whites in poverty 63,120 (4.6%) African Americans only comprise 2% of the overall population in Orange County, yet they are 2 times more likely to be in poverty than their white counterparts. Latinos are three times as likely to be in poverty than white residents in Orange County. 63,120 whites, or 4.6% of the White population in Orange County, fall below the poverty line. At 4.6%, the poverty rate for whites is significantly lower than the county poverty rate of 8.9%. Full-Time Workers in the East Bay (2006) Race Poverty Rate White (non-hispanic) 4.6% Hispanic or Latino 14.6% Black or African American 10.5% Asian 9.8% Total Population 8.9%
5 A. Household incomes by race There are significant economic disparities between races. Racial disparity- A wide racial disparity exists for Latinos in the region. The median income for Latino households was 74% of the overall median. Race Median Household Income White (non-hispanic) $82,691 Hispanic or Latino $54,009 Black or African American $69,517 Asian $77,045 Total Population $73, The Economy The top 20% of households in Orange County accounted for 49% of the total wealth. There are 979,495 full-time year round workers over 16 years old earning a living in the region.
6 Median household income in the region was $73,263 and per capita income was $33, ,578 full time workers earned less than $25,000 a year. Among the region s households, 33.7% have an annual household income less than $50, % of the region s households have income greater than $150,000. The top fifth of all households with the highest income claimed 50% of all income in the region, while the bottom fifth of households got 4% sliver of the pie. The region s Gini index 1 of income inequality was The problem is not the workers, it s the jobs! The fastest growing, or most dominant industries, pay lower wages. 1 The Gini ratio, developed by Italian statistician Corrado Gini, assigns a higher number the more unequal the distribution. Within this index, a measurement of 0 is perfect equality and 1 or 100% is perfect inequality i.e. one person has all the income and the rest have none. The Gini index can be presented as a decimal (i.e ) or a percentage (i.e. 25.4%).
7 OCCUPATIONS WITH THE MOST JOB OPENINGS, ORANGE COUNTY, CA Occupational Title Number of Openings Median Hourly Wage Retail Salespersons 30,350 $9.89 Cashiers 19,730 $8.66 Waiters and Waitresss 19,490 $8.01 Combined Food Preparation and Serving Workers, Including Fast Food 13,810 $8.17 Office Clerks, General 12,180 $12.71 Laborers and Freight, Stock, and Material Movers, Hand 11,320 $9.38 Customer Service Representatives 11,030 $15.06 Landscaping and Groundskeeping Workers 10,300 $9.15 Janitors and Cleaners, Except Maids and Housekeeping Cleaners 9,660 $8.99 General and Operations Managers 9,490 $48.67 Source: California Employment Development Department, 2008 A. Gender Income inequality in the region is characterized by gender and racial gaps. For full-time year-round work, males earned $51,467 a year, whereas females earned $42,837. Thus the overall gender gap in wages across all industries is 16%.
8 III. Solutions: Where Do We Go From Here? The fact that over 737,000 people in Orange County (nearly 25% of the population), are living in economic hardship, lacking the income to meet their basic needs, presents a serious challenge for our entire region. It impacts our schools, our business climate, our health system and our civic life. While it s clear that education is highly correlated with economic success in the 21 st century, it is also the case that better education alone will not address poverty. We need a strategy to improve the quality of the jobs that are available to residents and to address other problems that create economic insecurity, such as a lack of affordable housing and health care. Business, community and labor groups as well as governments leaders have key roles to play in creating shared prosperity. A. WHAT GOVERNMENT SHOULD DO 1. Raise the floor: Government needs to set wage standards that reflect the cost of living. Living wage laws in San Diego, Los Angeles and around the nation have helped raise the wage floor for tens of thousands of underpaid service workers and should be expanded to cover more employees; Orange County needs to follow suit. The state should follow the lead of ten other states and index the minimum wage to inflation so it reflects increases in the cost of living. [i] As shown in the data, nearly 45% of all individuals in poverty are working. 2. Link public investment to good jobs: Government officials should tie public investment in infrastructure, private development, incentives and other subsidies to the creation of good jobs. Those jobs should be made available to communities most in need. Otherwise, taxpayers must pay twice for government subsidies and the cost of lowwage, no benefit employment through expenditures for food stamps, school lunches and public health insurance. Public investment in private development should target industries that are tied to the region and that provide quality jobs or the opportunity to raise job standards. 3. Provide access to quality education: Education levels are highly correlated to economic success, and yet Santa Ana and Anaheim have staggering high school dropout rates. Of the 50 states, California ranks 34 th in K through 12 education spending. [iii] The state should address the fiscal barriers to increasing education spending, and also recognize that addressing poverty is essential to ensuring educational success. 4. Ensure economic security: Our social safety net should enable those who are able to
9 work to participate fully in the economy and enjoy a secure retirement. Children and those who are unable to work should be protected from economic privation. A functioning social safety net is particularly important during economic downturns, when workers lose jobs and see their hours cut. B. WHAT BUSINESS SHOULD DO 1. Take the high road: Orange County s businesses should recognize that their future is tied to the success of the region, and strive to provide good jobs and decent benefits. Fortunately, many business leaders have seen the wisdom of the high road approach, and are providing good, family-sustaining jobs. Business leaders should support policies to improve job quality, such as living wage laws and project labor agreements. Such policies make good business sense by allowing firms to compete on the basis of quality and service rather than by lowering standards and helping them to increase the productivity of their workforce. Likewise, developers who build mixed-income housing are tapping into an important market and ensuring that Orange County s workforce has a place to live. 2. Support smart public investment: A healthy business climate requires a wellmaintained infrastructure, a world-class education system and a health care system that works. Business leaders should take leadership in supporting smart public investment in schools, public transportation and health care and should insist that the benefits of those programs are broadly shared. C. WHAT COMMUNITY AND LABOR SHOULD DO 1. Develop innovative policy and programs: Labor and community organizations cannot wait for government leaders to propose policies to address the poverty and inequality that affect their neighborhoods. They need to be at the forefront of crafting new initiatives, such as the Green Jobs Program, an initiative of the Los Angeles Apollo Alliance, which aims to prepare residents from low-income communities for careers in the green manufacturing and green building sectors. 2. Organize to raise standards: Labor unions have a responsibility to organize unorganized workers and improve and maintain standards in the industries where workers are represented. The passage of the Employee Free Choice Act at the federal level should facilitate organizing workers into unions by eliminating many of the barriers that now exist. Unions representing janitors, security officers, health care workers, hotel workers and others have shown that much can be done even in the absence of such legislation.
10 For more information, please contact: Robert Nothoff Policy Analyst Orange County Communities Organized for Responsible Development Garden Grove Blvd, Suite 204 Garden Grove, CA (714) (714) , fax
11 [i] See Alissa Anderson Garcia, Policy Points: California s Two-Step Minimum Wage Increase Provides an Important Boost to Low-Wage Workers Earnings. California Budget Project, December [ii] See Cohen, Larry, and Hurd, Richard, "Fear, Conflict, and Union Organizing" in Bronfenbrenner, Kate, Friedman, Sheldon, Hurd, Richard, and Oswald, Rudolph, ORGANIZING TO WIN: NEW RESEARCH ON UNION STRATEGIES, (ITHACA, CORNELL UNIVERSITY PRESS, 1998) pp Also see Smith, Robert Michael, From Blackjacks to Briefcases: A History of Commercialized Strike-Breaking and Union-Busting, (Athens, Ohio University Press, 2003). [iii] Jean Ross, School Finance Facts: How Does California Compare?: Funding California s Public Schools. California Budget Project, October The figure listed is for per student spending for