A family getting by on $117,400 (£87,970) in one US city can now be
considered 'low income', according to government figures. How can that
be the case?
That workers with six-figure salaries could be considered "poor" is
something that might surprise many people.
But taking into account income and housing costs that is the reality for
some families - who may be eligible for housing assistance - according
to a recent report from the US Department of Housing and Urban
Development.
In San Francisco and nearby San Mateo and Marin Counties it said
$117,400 for a family of four was "low income", while $73,300 (£54,900)
was "very low income" - the highest figures anywhere in the country.
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A look at how earnings vary across the US and between jobs illustrates
what is going in the city and the country as a whole - factors explored
by a new study and interactive website by The Hamilton Project at the
Brookings Institution.
Below the poverty line
Nearly two thirds of American families of four live on less than San
Francisco's "low-income" threshold of $117,400.
Across the US, the median (middle) household income for a family of four
is $91,000 (£68,170). For a family of any size, the figure is $59,000
(£44,180). (Median incomes are used throughout this piece).
And, in a country of 326m, more than 40m people in families of all sizes
live below the poverty line, which is $25,100 (£18,800) for a family of
four.
Looking at all jobs, earnings are much higher in some large cities than
they are in the rest of the country.
San Francisco in particular stands out.
The city has become a hub for IT and other high-tech industry - leading
to an economic boom which has seen it become home to many of the
country's highest-paid workers.
Between 2008 and 2016, individual earnings for full-time workers aged 25
to 64 in the San Francisco metro area, which also includes Alameda and
Contra Costa counties, grew by 26% - far faster than in many other large
metro areas. By 2016, earnings had risen to $63,000 (£47,200)
Of course, there are other areas of the US with high wages.
Among 25 to 64-year-olds, typical earnings for full-time workers in
recent years were $65,000 (£48,670) in San Jose, $60,600 (£45,400) in
Washington DC and $55,700 (£41,700) in Boston.
In high-earning places like these there are many jobs that pay well.
In San Francisco, doctors - the highest-paid occupation - can expect to
earn $193,400 (£144,800). The typical chief executive or public
administrator is paid $167,300 (£125,260), while software developers can
expect $117,100 (£87,670).
But there are plenty of people earning much less.
The lowest-paid people in San Francisco are farm workers, who typically
earn $18,500 (£13,850), while childcare workers earn $22,300 (£16,700).
Wages in other big US cities are noticeably lower.
In Detroit, for example, a doctor typically earns $144,300 (£108,000),
while childcare workers receive only $15,000 (£11,230).
However, the wide variation in earnings is only part of the equation.
Living costs, particularly for housing, play a significant role in
determining how far workers can stretch their earnings.
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In fact, living costs in general for the San Francisco area are 25%
higher than the national average.
However, as earnings are 45% higher than for the nation as a whole, many
people in San Francisco are still coming out ahead.
It is when we look at housing costs specifically that the comparison is
less favourable.
In many large cities, the problems of high rents and home prices have
been exacerbated by strict building rules and growing income inequality.
It is high rents in San Francisco that are behind the decision to label
some six-figure earning families as "low income".
For example, a fair market rent for a two-bedroom apartment in the San
Francisco area is considered to be $3,121 (£2,340) per month - nearly
twice the 2008 figure of $1,592 (£1,190). In Cincinnati, Ohio, the
figure is $845 (£632). This difference (270%) is much larger than the
difference in median family incomes (50%).
As such, affordability is a significant challenge for many people in San
Francisco.
Across the US, the government typically defines a low-income family as
one that earns less than 80% of the median income for families of the
same size, in the same area.
But in places with unusually high housing costs the threshold can be
higher.
In San Francisco, high rents have driven the government's "low income"
threshold of $117,400 (£87,970) almost as high as the median income for
a family of four in the area - $118,400 (£88,630).
While falling below this mark does not automatically entitle families to
government housing assistance such as subsidies and public housing, it
is a factor that is considered.
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More important than money
But it is of course worth considering that, for many people, high prices
are something that they are willing to put up with for a good quality of
life.
San Francisco is certainly an expensive place to live, but good weather
and a rich cultural life attract many residents.
Across the US, it is often the case that the places rated most highly
for quality of life - like San Francisco and Santa Barbara in California
and Honolulu in Hawaii - tend to have a high cost of living.
While families with six-figure earnings may not be "low-income" in the
broadest sense, the challenge remains for expensive cities across the US
to find ways to offer a good quality of life to all of their residents.
A critical look at how to make more affordable housing available might
be an obvious place to start.
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