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Childcare is replacing housing as the top reason California is unaffordable

One in three California households is struggling to make ends meet. And childcare, in particular, is pushing expenses over the edge.

Childcare is replacing housing as the top reason California is unaffordable
[Source Image: MikhailMishchenko/iStock]
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When midwife Anjali Sardeshmukh landed a job in San Francisco in 2017, she moved across the country from Miami—and found costs of living staggeringly higher. The particularly large drains on her bank account were housing and childcare; she slept on a couch for the first two months in the Bay Area as she tried to find reasonable rent. When her son entered elementary education, a partially subsidized, “affordable” after-school program kept childcare costs down enough; then, the pandemic sent kids home and threatened to push her childcare budget out of manageability, as she worked two jobs with nontraditional hours. But, she innovated a temporary solution: setting up a childcare “pod” with three other Oakland School District families, allowing her to keep her budget in balance and not have to move out of the state—or pick up a third job.

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Sardeshmukh is not alone in struggling to make ends meet in the Golden State: One in three Californian households find it hard to pay for the essentials, according to a new report from the Insight Center, an national organization dedicated to economic security and justice, The Cost of Being Californian. It finds that childcare costs have surged to become the highest expense, outpacing housing in all but five of the state’s 58 counties. What’s more, households of color have more financial worries than white households, and, while the pandemic has exacerbated economic insecurity, inequities started long before COVID-19. The authors call for more public assistance programs, particularly direct payments, to help people pay their way.

Based on census data, the report is the Insight Center’s latest update on economic insecurity in California. It’s compiled with the help of a tool called the Family Needs Calculator (FNC), which the center runs with the University of Washington, to provide a more updated and accurate measure of insecurity than the federal government’s Official Poverty Measure, which the report calls “outmoded.” The FNC is an interactive, itemized breakdown of essential expenses for each county, landing at a minimum income needed to meet those needs. “If you’re falling short of that number,” says Aisa Villarosa, the center’s associate director of policy and advocacy, and one of the report’s authors, “you would be below that line of economic security.”

A third of California households are struggling to make ends meet, a figure that hasn’t improved since the last report, three years ago. “Families have been languishing for years,” Villarosa says. “Policymakers and employers have failed to move the needle for over 3.3 million households scrambling month to month.” Meanwhile, living costs have skyrocketed across the state since 2018: in Orange County, by 26%; Santa Barbara, by 40%; and Santa Cruz, by 45%.

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Most striking are the childcare costs, which overtook housing as the top household expense, representing more than half a household’s budget in many counties, and siphoning off funds from other everyday needs. Childcare in households with one preschooler and one school-age child costs, in Los Angeles County, $2,450, an increase of 45% since 2014; $2,989 and 68% in Alameda County, home to Oakland; and in San Francisco County, $3,293 and 81%. There, the minimum household income needed to meet basic needs doubles from zero children to one child, from $60,232 to $120,519.

Bay Area counties are the most expensive in the state, and the only ones where housing is still pricier than childcare. Housing is a top expense for Sardeshmukh, who works in San Francisco but lives in Oakland, where she pays $1,825 for a one-bedroom. Childcare is slightly less—but only because of the pod she co-created, in which four parents (and a babysitter) share responsibilities. Though the pod is still pricier than her previous arrangement, finding off-peak childcare would have been unmanageably expensive. “I do think that my pod helped me offset the cost had I had no community at all,” she says. “I wouldn’t have been able to pay for childcare.” As a midwife, she understands carers need to be paid fairly. “They’re dealing with the same economic situation in California as I am, so I understand why they have to charge what they do.” She laments that many women, like her, have had to balance work and childcare, and have felt economic pressures because of unequal wages. The report found that 72% of single moms are more likely to be paid salaries that don’t support basic cost of living, versus 57% of single dads.

Another key finding was that racial minorities are more prone to economic insecurity, to the point that even starting a family is hard: Black, Latinx, and Indigenous households with no children are more likely to be struggling than white households with two children. In Marin County, Black households struggling to cover expenses increased from 56% in 2018, to 95%. Much of this is due to “occupational segregation,” Villarosa says, whereby many people of color end up in hourly wage jobs—like essential workers during the pandemic—”where there really are not a lot of pathways to advancement.” This is all despite California’s reputation for progressive action, including passing the highest minimum wage in the country, now $14 an hour.

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Villarosa calls for bold reform that specifically targets those most affected by inequities; she commends Biden’s relief plans, which have had strong focuses on race and gender. On a state level, she praises well-targeted programs like San Francisco’s Abundant Birth Project, a first-in-the-nation pilot that gives $1,000 unconditional cash supplements to 150 Black and Pacific-Islander expecting mothers. On May 14, Governor Newsom announced he’d be dedicating $35 million to funding localized universal basic income pilot programs for the next five years. These initiatives can act as models for other expensive areas of the U.S. “California is unique in a lot of ways,” she says, “but California is also a bellwether for how the rest of the country will go.”

Sudeshmukh has experienced firsthand the potential for these kinds of direct-cash programs to help relieve financial woes: She spent a large part of her COVID stimulus check paying off childcare debts, and financing current childcare. She’s in favor of proposed universal childcare tax credits. “If this is one of the biggest costs that are impacting people, and their ability just to live,” she says, “then I do think that is something that needs to be considered by the government.” Now, she’s consoled by the prospect of in-person school returning fully next year—along with the cheaper after-school care. “There is some relief on the horizon in the fact that schools are opening up,” she says, “and that changes the outlook for the fall for me.”