Month: April 2018

Not Quite Self-Sufficient

April 17, 2018

In my almost three years of working in the Downtown Job Center, I have lost count of the number of times people have told me that they did not want to earn too much money on their current job or at a new job because they could not afford to have their rent increase.  Others have expressed a concern with making more money because they received assistance for things like childcare, health insurance and food. An increase in income would make them ineligible for those benefits. I’ve sat down with some of these individuals and helped them create budgets based on potential earnings and seen for myself how they couldn’t “afford to make more money.” A wage increase, coupled with a loss of benefits, puts these folks into a tighter financial bind, and for some, their household budget would be in the red every month.

According to the Massachusetts Institute for Technology (MIT), the living wage for a single adult in the Charlottesville area is a little over $12 per hour or $25,008 annually. After taxes, this individual would bring home about $20,950 per year which works out to $1,745 per month. This figure is for an individual with no children or childcare expenses. The Charlottesville Works Initiative’s “Orange Dot Report,” which was written in 2011, estimates rent for a single household with two children in Charlottesville is approximately $927 per month. MIT estimates a lower annual rental expense in Charlottesville of roughly $714 per month, which in this case, would mean that the individual still would be spending roughly 45% of his/her income on housing. These are interesting figures considering that the average for a one bedroom apartment in the City is closer to $1,100 per month. Most financial planning professionals say that you should spend no more than 25% to 30% of your income on rent or a mortgage; yet low wage earners in Charlottesville can easily spend half of their income on rent alone.

While these facts and figures may be surprising, the real shock comes when you look at the increase that MIT estimates is needed for a household consisting of one adult and one child. Instead of only needing to make $15, or $17, or even $20 per hour, MIT calculates that this type of household needs to earn a little over $27 per hour to continue to earn a ‘living wage.’  If this person has two children, the living wage jumps to almost $31 per hour. This reflects a huge challenge for those with little work experience, education, or skills training that would allow them to obtain a job earning this amount of money.

Challenges to self-sufficiency continue to mount when you consider that many low wage workers get subsidies for childcare, and when their income increases above a certain amount, so does their childcare expense. They could go from paying very little every month with subsidies, to their childcare expenses taking up a huge chunk of their resources. MIT estimates that the average payment for childcare is $697 per month for one child or $998 per month for two children.

Considering MIT’s estimate for rent at $714 per month and childcare for one child at $697 per month, and subtracting these expenses from the monthly after-tax income of $1,745 (assuming that the individual makes a little over $12 an hour), that would leave this individual with $336. That means this person would only have $336 to pay for utilities, healthcare expenses, transportation, auto insurance (if s/he owns a car), and of course food. This doesn’t include putting money aside for savings, or other educational expenses. This simple calculation tells us that an individual in this situation would be financially strapped on a regular basis unless something drastic changes.

It is daunting to think about having to juggle all of these necessities with such limited resources. Yet, people in our community do it every day. While there are new businesses popping up all over resulting in an abundance of job openings, many of these positions don’t pay enough for people to be self-sufficient in Charlottesville.

The OED is aware of these struggles and has developed programs to assist and alleviate these problems. Specifically,  the Growing Opportunities , or GO programs provide individuals with the tools and training they may not get anywhere else to develop skills that they can use to get their GED, or a certification that would enable them to get a job that is more rewarding, and perhaps has higher pay and benefits than their previous one.

There is growth all over Charlottesville and it’s exciting to see. From the challenges and complexities of multi-million dollar developments, to the single parent working two jobs who is trying to decide whether s/he can afford daycare or auto insurance for the month, we all have growing pains. As our community continues to grow, I hope we don’t see too many people left behind or forced to move because they can’t afford to live here anymore.

-Matthew Murphy, Community Outreach Specialist

OED Updates:

  • The Charlottesville Community Job Fair will be held on Wednesday, May 9th from 10am to 3pm at John Paul Jones Arena. This is the 10th anniversary of the Job Fair, which has grown significantly over the years. Given the low unemployment rate, it is anticipated that up to 100 employers from all industries will be in attendance. For more information, visit www.charlottesville.org/jobfair.
  • The Charlottesville Economic Development Authority (CEDA) has commissioned a comprehensive commercial real estate analysis for the city. The in-depth market analysis will allow the City to have full understanding of historic market trends and future market potential as it relates specifically to the office and retail sectors. HR&A Advisors, Inc., a leading real estate and economic development consulting firm, will complete the study.
  • GO Cook is a six-week training program that will equip City residents with basic level culinary skills in order to prepare them for employment with area restaurants. Participants will receive ServSafe certification, a Certified Cook certification through the American Hotel and Lodging Educational Institute, and workplace essential skills. The program, which will begin in late May, will be conducted in partnership with Antwon Brinson of Culinary Concepts AB and the Charlottesville Albemarle Technical Education Center.