Archive for Monday, November 13, 2006

Families feel the squeeze

Higher fuel, health costs hit home

November 13, 2006

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Overall, Paul and Anne Kirk say things aren't too bad for them and their two sons on their 190-acre farm outside of Lawrence.

But the Kirks, like other middle-class families nationwide, have watched as rising fuel and health care costs have put a tighter squeeze on household finances.

"The main thing that bothers me the most is that I can't provide for my kids like my parents provided for us," Paul Kirk said. "There's always a sense of doubt that you're always going to have enough at the end of the month, but sometimes you don't. We just can't do things the way we'd like to."

$64,000 question

When he was asked recently why Americans aren't delighted by their strong economy, Treasury Secretary Henry Paulson called it the $64,000 question.

In fact, there's a $65,093-a-year answer. That's the median income of a family of four in fiscal 2006, according to the Census Bureau, and middle-class families are being squeezed between stagnant wages and skyrocketing energy and health care bills.

The combined income of Paul, 37, who works at Lawrence Automotive Diagnostics, his wife Anne, 38, who works as a bus driver for the Perry-Lecompton school district and does leather repair, and their farm with 75 head of Black Angus cattle last year was about $55,000.

For Douglas County's 102,000 residents, the median family income at last report was $57,572, with Lawrence at $55,537, according to the U.S. Census American Fact Finder survey, which does not set a standard for the number in a household.

Kansas' 2006 average of $64,215 is slightly below the national average.

Barely keeping up

Jeffery Kirk, 11, left, helps his family finish some evening chores by feeding their horses. In the background are, from left, Jeffery's mother, Anne; his brother, Steven, 8; and his father, Paul Kirk. The Kirks think they have a good life but, like other middle-class families nationwide, have watched as  factors like rising fuel and health care costs have managed to put them in a tighter financial squeeze. The Kirks live in rural Douglas County where the median family income is $57,572, with Lawrence just short of that at $55,537, according to the U.S. Census American Fact Finder.

Jeffery Kirk, 11, left, helps his family finish some evening chores by feeding their horses. In the background are, from left, Jeffery's mother, Anne; his brother, Steven, 8; and his father, Paul Kirk. The Kirks think they have a good life but, like other middle-class families nationwide, have watched as factors like rising fuel and health care costs have managed to put them in a tighter financial squeeze. The Kirks live in rural Douglas County where the median family income is $57,572, with Lawrence just short of that at $55,537, according to the U.S. Census American Fact Finder.

The U.S. economy is indeed strong. Although growth is slowing, it's essentially been steady since mid-2001. September's unemployment rate was a low 4.6 percent, and the Dow Jones industrial average reached record highs last month.

But through September, the growth in hourly wages was flat or negative for 27 of the previous 29 months, according to Labor Department data. Wages for blue collar and nonmanagerial workers - 80 percent of the work force - are growing at a 3.9 percent annual rate, the Labor Department reported in September. Consumer price inflation, however, is rising at the same rate. That means prices are rising as fast as wages.

Workers are barely keeping up. Health care, wages and energy prices are consumers' top three economic concerns, according to a Gallup poll in September.

"That has to do with things like stagnant wages, fears of jobs being outsourced, income security. These are on people's minds, particularly in lower- and middle-income areas," said Dennis Jacobe, chief economist in Charlotte, N.C., for Gallup.

"I think it's quite clear to people that their paychecks are being squeezed when they try to meet their family budgets," said Jared Bernstein, the chief economist for the liberal Economic Policy Institute in Washington, D.C. "There's a disconnect between overall economic performance and paychecks of working families."

Typical expenses

Here's how the hypothetical median-income family - half of four-member families earn less, half earn more - is being squeezed.

The typical family paid, on average from 1999 to 2004, about $865 a year to heat a home with heating oil or $586 with natural gas, according to the National Energy Assistance Directors' Assn.

Last winter, however, it cost $1,496 to heat a home with heating oil and $946 with natural gas. Those are increases of 73 percent and 61 percent.

But the Kirk family of Lawrence hasn't been affected by heating costs because its two-story 1890 farmhouse is heated by a wood-burning stove, using dead elm and walnut trees from the farm.

They pay about $100 a month for electricity.

But their water bill jumped during the drought from August through October as 63 head of Angus cows and calves drank a 900-gallon tank twice a day.

They haven't received the bill yet, but Anne dreads to see what it will be.

Fuel costs

Then there's gasoline. The nationwide average for a gallon of unleaded regular gasoline was $2.22 last month, according to AAA. That's 57 percent higher than $1.41, the average price for a gallon of gas during the second week of October from 2000 through 2003.

Anne Kirk not only has to get to Perry every day to drive a school bus, she then drives five days a week to classes at Washburn University in Topeka where she is working on earning a teaching degree. Her gas bill is about $45 a week.

And the $1,000 they use to buy wholesale fuel to run their tractors and equipment hasn't gone as far this year.

"We've kind of had to resort to hauling 10 gallons at a time from the local Casey's store to keep the tractors and farm trucks rolling," Anne said. "It's hard to shell out $1,000 to $1,500 at a time when you don't have that for the fuel."

Health insurance

Health insurance costs have climbed even faster. The premiums workers pay for employer-provided health insurance rose an average of 7.7 percent this year and have increased 84 percent since 2000, according to the Kaiser Family Foundation, a health issues research center.

Average employer-paid family health coverage now is estimated to cost $11,480 annually, and workers pay about $2,973 of that in premiums, Kaiser said. That's $1,354 more per year than workers paid six years ago.

"Health care costs outpace the cost of just about everything in our economy," said James Klein, the president of the American Benefits Council in Washington, D.C. "Most of that cost burden is increasingly shared with workers."

Some 66 percent of the nation's employers have higher employee co-pays this year; 56 percent raised premiums and 56 percent increased deductibles for participants, according to a recent survey by The Society of Human Resource Management.

The Kirk family, too, has felt the effects of health insurance and medical costs.

"Outside of my mortgage, it's the second-biggest expense overall," said Paul Kirk.

Before his wife Anne got health care with the school district, Paul estimated his health care premiums were $132 a week.

When his youngest son was diagnosed with pneumonia last winter, the Kirks had to pay $1,100 out of pocket, which was still only about half of what they paid several years earlier for Anne's broken arm.

Now, they pay through Paul's small-business insurance plan about $63 a week to insure their two sons, Jeffery, 11, a sixth-grader at Prairie Middle School, and Steven, 8, a third-grader at Lecompton Elementary School.

The percentage of Americans with employer-provided health insurance dropped by 5 percentage points from 2000 to 2005, to 59.5 percent.

As insurance grows more expensive, the number of Americans without it keeps growing. Some 14.2 percent had no health insurance in 2000; last year, 15.9 percent lacked it.

Comments

Todd 8 years, 5 months ago

Middle income doesn't mean middle class.

don_burgess 8 years, 5 months ago

I say mandatory paycuts to lawmakers saleries today.

bmwjhawk 8 years, 5 months ago

They should sell their walnut trees. I heard they were worth a lot. That's some good flooring material they are heating their home with.

Kontum1972 8 years, 5 months ago

bmwjhawk....yeah right....then they would be taxed on the money they made for selling the trees....screw that....better off heating their home and quit making the gas company richer.

Wilbur_Nether 8 years, 5 months ago

crazyks mentioned that "It also didn't used to take a college degree and a huge loan to start a business." Which caused me to think about the fact that it also didn't used to take a loan to get a college degree....

Richard Heckler 8 years, 5 months ago

National Health Insurance is where were headed.

Sigmund 8 years, 5 months ago

Why does this and similar articles NEVER mention the amount of federal, state, and local taxes taken out of "working families" budgets? The last I checked all these taxes combined was 35-50%, which each year is by far their largest expense.

The 50 cent per gallon of gasoline tax alone takes a huge hit out of families budgets, not to mention Social Security and other payroll taxes, Income taxes, real estate taxes (general, special, school district), personal property, and sales taxes are just the big ones and only begins to scratch the surface.

Jamesaust 8 years, 5 months ago

Economists are divided on why productivity increases over the last decade are not being fully passed onto workers at rates expected. The really scary part though is that productivity growth has slowed considerably in recent years thereby lowering the maximum growth potential of the economy and so wages. That makes existing problems more difficult to solve (think unfunded prescription drug benefit) and makes other problems more likely (think inflation but no economic growth).

Note: the "fuel" section of this article is laughable. Picking the lowest period of energy costs and then a subsequently higher period to measure cost increases is like demonstrating global warming by measuring the increase in temperatures from the coldest day of the year to the warmest!

samsnewplace 8 years, 5 months ago

Great story LJW but what is the answer? Everyone I know (and they are not wealthy folks) are barely scrapping by, the ole paycheck to paycheck thing that i've had my entire life. I make more now than I ever have, but everything costs more now than it ever has, so basically i'm still back on square one. I liked the comment from Sigmund on all the taxes and why are they always never mentioned? Texas is a basically tax free state, none of this pay yearly on your personal property just for the right to own it chit Kansas has. So what is low income these days, anything above poverty/welfare level? I guess that would be where I would fall.

samsnewplace 8 years, 5 months ago

bowhunter99 if you are aiming at me, let me set you straight. My last raise went to buy back my first year of retirement, so yes I guess it is going into my savings account. I am not a spender, never have been. Fact is, just necessities of life cost more everytime you buy them. Cost of living wage is so far behind the actual cost of living it is ridiculious. I do my best, maybe not everyone does.

Dorothy Hoyt-Reed 8 years, 5 months ago

In the 70's I escaped an abusive druggie husband and was able to make a fine living with a job that started at $6/hour and eventually went up to $10/hour. I didn't get any help, except the paltry $75/month child support. We were able to rent a house (not apartment), keep a good car running, and have extra for concerts, vacations, trips to the zoo, savings, etc. Since then child care has quadrupled, gas has at least doubled, food has at least doubled, utilities have tripled. To live as a single mom now in the style I dd then, I would need to be making at least $18-30/hour. How many jobs pay that? I might have been tempted to stay with an abusive husband for the financial stability. Even now, I make more money than I ever have, with a husband who earns a lot. Yes, we own a home now, but we still have a struggle to make ends meet.

Linda Endicott 8 years, 5 months ago

It also didn't used to take a college degree and a huge loan to start a business.

Perhaps part of the problem now is that families are not like they used to be back when. Before, people saved money to get the things they wanted, and maybe the kids shared a bedroom. Now, everyone wants a house big enough that all the kids can have their own room, and they want the car, dishwasher, freezer, etc., etc., from the very beginning...instead of saving up and getting it later.

This is probably why most high school kids drive better cars than their parents anymore.

I remember the days when a kid's first car was some old klunker...but even those cost an arm and a leg now.

Dorothy Hoyt-Reed 8 years, 5 months ago

Bowhunter, It was the 70's when I made $6 an hour. What I was saying is that the basics have gone up, but the wages haven't. Sorry, but I worked really hard at that job. I saved money, but actually tried to enjoy life too. I worked full time, and went to college and got a degree, so now I make good money. I wasn't and am not a deadbeat. I am thankful for what I have, but wonder how someone in my situation now could make it.

Dorothy Hoyt-Reed 8 years, 5 months ago

Bowhunter, Oh by the way, it seems you would score below the 80% on reading comprehension required by NCLB. Read more closely before you make a response next time. I haven't boxed myself into any pay range. What message were you reading anyway. I make almost 40,000/ year now, but can hardly afford a vacation. I do own a house now, which takes a lot of money. My factory job was really high paying in the 70's. That's the 1970's. The factory is not there anymore either, just like many the rich investors have taken out of the country. And don't start about unions. This was a non-uninon factory. I was earning $10 an hour there when I left in 1990 to move to Lawrence, work full time at a grocery store while I earned my teaching certificate. Don't even tell me I'm a deadbeat.

mommy3 8 years, 5 months ago

I am totally behind dorothyhr! We are a family of five, and make WAY below the median($30,000.00). We are fighting tooth and nail to survive. YES, before I get jumped all over...I am going to school. However, as of now it is hard to even pay bills. No credit cards, no car payment, low rent, half price on cable/internet. it takes almost half of my husbands paycheck to buy food/Gas/misc. the other half is spent on bills. I used to think $40,000.00 a year was a great goal for a years earnings. Now, it is not enough just to survive on. I don't know what I would do if I was a single mom trying to survive in todays society. It is more than material "wants" that are involved. Food, clothes, health care, the basics....all of it is way out of reach for most families I know. I can't afford to buy the best clothes for my kids, and what do they get for it?? Snobby people, poor service, and shotty oportunities. The price of beef is more exspensive than Shrimp! I remember when I was a kid, Shrimp was a treat. Now we can't afford more than ground beef. With three kids, we go through a gallon of milk a day, Do the math! If I was to give any advice to my little brother it would be, go to school,stay single, and don't have kids. It's the only way to keep your cost down. Having a family is way too risky.

bambam 8 years, 5 months ago

Looks like every day is bringing them middle class closer to the low-income. For one they coould sell their horses that would pay for the utilities for quite a while and the money for feed would pay for something else. Before its over a lot of families are going to be like a lot of the low income both husband and wife working and still dont make enough to pay the necessities. So you have to get help from social service agencies to help get you by. But those agencies are feeling the crunch also with less and less money to help with.

mommy3 8 years, 5 months ago

The system is screwed up. I knew a family where the husband worked union, and was laid off most of the year. However, when he was laid off they received food stamps worth $600.00 a month, and unemployment. They had to use the food stamps, but it was more than they could use so they bought KC strip for family, and friends. They were better off being unemployed than if he was working. Of course he prefered to work, but here we are working very hard, and have to keep our food bill below $300.00 a month. We have Kansas medicaid for the kids, but if my husband gets even a $2.00/hour raise, we could lose that. then we would have to pay over $650.00 for insurance a month. So where is the upside? Beleive me, we would much rather make more money, but then we pay more. It is too easy for people to get stuck in the system. And too hard to live outside the system unless you make $55,000.00 a year.

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