More than half of Chicago family households do not earn a living wage - Metropolitan Planning Council

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More than half of Chicago family households do not earn a living wage

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Starting this month, the city’s minimum wage increased by one dollar an hour, giving hundreds of thousands of Chicagoans some extra help to make ends meet.

But that bump is still not enough to ensure that minimum-wage earners can meet their basic expenses—an unfortunate reality for most Chicagoans, including some earning well above the minimum wage, according to a Metropolitan Planning Council (MPC) analysis of data from the U.S. Census Bureau and the Massachusetts Institute of Technology (MIT).

On July 1st, the city’s minimum wage increased from $11 an hour to $12 an hour, per the city’s 2014 Minimum Wage Ordinance. But that’s still far less than the hourly rate necessary to pay for the rent or mortgage, child care, transportation, taxes, food, medical and other typical costs in metro Chicago.

In 2016, this “living wage” was an hourly rate of $13.05 for an individual living alone, $26.72 for one adult and one child, and a whopping $38.29 for one adult and three children, according to MIT.

MPC’s analysis shows that close to 52 percent of the city’s family households did not earn a living wage in 2016.

The struggles to earn a living wage result from the combined pressures of the cost of living—with housing, child care, transportation and taxes as the leading costs—and a sluggish, inequitable job market providing too few jobs and inadequate wages, particularly for African Americans, Latinos and individuals without a college education.

African-American family households struggled the most. In Chicago, more than 70 percent of black-led households did not earn a living wage.

Employment is key.

Simply put, you can’t earn a living wage, if you don’t earn any wages at all. And African Americans, by far, were the group most disconnected from the job market in metro Chicago.

In 2016, there were no working adults in a staggering 37 percent of black-led family households in the city. And the black unemployment rate was close to 11 percent, according to MPC’s analysis.

MPC’s analysis shows that close to 52 percent of the city’s family households did not earn a living wage in 2016.

Latino family households fared only slightly better with nearly 64 percent of them not earning a living wage in 2016. However, the numbers were much lower for Asian and white family households—most who did earn a living wage.

Job industry and education level were also important.

In Chicago, individuals without a college degree were two-and-a-half times more likely than their counterparts with a college degree to earn below the living wage standard (71 percent to 28 percent, respectively). MPC’s analysis shows that less than a third of African Americans and less than a fifth of Latinos, among individuals 25 years and older, had a college degree in 2016.

Furthermore, African Americans and Latinos were more likely than Asians and whites to work in industries where workers without a college degree typically earned far less. About 60 percent of workers without a college degree in both the healthcare/social assistance and leisure/hospitality industries did not earn a living wage.

Healthcare/social assistance is the leading job industry for African Americans in metro Chicago. Leisure/hospitality is the second-leading industry for Latinos.

Things were only slightly better for the broader Chicago metro area, which includes 14 counties (nine in northeast Illinois, four in northwest Indiana and one in southeast Wisconsin). Almost half of the family households in metro Chicago did not earn a living wage in 2016.

The analysis showed that the grind to earn a decent living is a nationwide battle.

Family households in some other large cities and metros had an even tougher time earning a living wage in 2016 than did those in the city and in metro Chicago. For instance, 61 percent of family households did not earn a living wage in Philadelphia. That mark was 60 percent in metro Miami.

But metro Chicago stood out among its peers for its level of inequity and the particular troubles experienced by African Americans. Metro Chicago had the highest levels of black unemployment and the widest gaps in unemployment between whites and African Americans. Furthermore, metro Chicago had the lowest levels of African-American family households earning a living wage and the lowest levels of African-American households with two working adults.

Housing costs and wages play a role in explaining why a greater percentage of family households in the metros of Atlanta, Boston, Dallas, Houston and Washington, D.C. earned a living wage than those in metro Chicago.

Though the cost of living was higher—primarily due to housing costs—in the metros of Boston and Washington, D.C., those metros featured much higher wages per household than metro Chicago. And while the wages per household were comparable in the metros of Atlanta, Dallas and Houston, they all featured significantly lower housing costs than metro Chicago.

Note: MPC’s analysis was based on MIT’s living wage standards for each of the nation’s 10 largest metro areas (the metros of New York City; Los Angeles; Chicago; Dallas; Houston; Washington, D.C.; Miami; Philadelphia; Atlanta; and Boston). MIT provided living wage standards for families with 1 or 2 adults and anywhere from no children to three children. Using Census microdata provided by the University of Minnesota, MPC compared the living wage standards with the wages earned by family households, which are households comprised of a single family, to more clearly identify households where the wages earned were used to pay for the expenses of individual families.

 

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