Living on the Edge

Maggie, who has lived in Cold Spring and Garrison for more than two decades, was a well-paid health care professional until a disability struck and left her unable to work.

She now rents a house, sharing the cost with a roommate, and says she struggles to afford to stay in the area.

“I never, ever, thought I would see the day that where I couldn’t go into Foodtown and purchase what I needed, as opposed to only what I have budgeted and saved for,” she said during a Saturday morning visit to the Philipstown Food Pantry at the First Presbyterian Church in Cold Spring.

Maggie agreed to share details of her financial struggles only if her real name was not used. However, she is far from alone. According to calculations by the United Way, more than 40 percent of the households in Beacon and Cold Spring live in poverty or on a “survival” budget that does not allow them to save for emergencies or goals such as college or retirement. In Nelsonville, the figure is about 35 percent, and in Philipstown, 30 percent.

These households earn more than the federal poverty level but less than the basic costs of living. “These are people who if they got a sudden bill for some repair couldn’t [easily] pay it,” said Melissa Clark, director of community impact at the United Way of the Dutchess-Orange Region in Poughkeepsie.

The local figures reflect those in surveys done nationally. A study released in May by the Federal Reserve, for example, found that 27 percent of respondents would need to borrow or sell something to pay an unexpected $400 expense, and 12 percent said they would have no way to pay.

In Cold Spring, Maggie said her life is a “constant push-and-pull over what is going to be paid each month. It’s not having the extra income for meat or fish, to eat in a healthy manner. That’s what had to be cut out immediately to economize.”

She said she began to visit the food pantry in October. “It’s helped considerably, but you have to have a thick skin.” She said it feels like she is admitting failure.

For people who are living week to week, simple pleasures — HBO, a new car, a family vacation, an espresso machine, a laptop — are beyond reach. And in many cases, life’s necessities are also unaffordable: child care, dental visits, college tuition, retirement savings.

In Dutchess County, Lorianne Mann, 56, works for minimum wage ($11.10 an hour in New York) as a cashier at a Stop&Shop. Her husband works at AutoZone. They rent an apartment and share a car, which he usually drives to work. She takes the bus.

The couple have about $30 in savings, she said, adding: “I’m glad we’re both working, and I’m grateful to have this job.”

When the couple were raising their three grandchildren, she didn’t work outside the home. “We struggled, but we never went on food stamps.”

Those living on the financial edge make too much to qualify for government aid but not enough to save. It’s a group that the United Way has dubbed “asset-limited, income-constrained, employed,” or ALICE. It’s not poverty, but it’s not painless.

The cost of living

In a relatively high-cost area such as the Highlands, it takes a lot of income to get by. For a couple raising an infant and a preschooler, a “survival budget” (with no money saved) requires an annual salary of $88,524 in Putnam County and $80,016 in Dutchess, according to the United Way.

The United Way noted that only three of the top 20 occupations in New York State — general and operations managers, accountants and auditors, and registered nurses — earn enough to support a survival budget for a family of four, which requires a worker to make at least $34.40 per hour.

Compare that to the median salary for someone working in the tourism industry in Putnam: A male food service or hotel worker here makes less than $30,000 a year, or $14.42 per hour, according to the U.S. Census bureau. For women, the median is $20,000.

In recreation, entertainment and the arts, which also support the Hudson Valley economy, the figure is even lower. A full-time, minimum-wage job in that category pays around $23,000 a year here.

Most people in retail work, as well as people like mechanics, security guards, bus drivers, nurse’s aides, warehouse workers, bartenders and school teachers, if early in their careers or a single parent, find themselves in this situation. They are our clerks, cashiers and cleaners.

“It’s the people that we count on every day,” noted Joseph Czajka, senior vice president of Hudson Valley Pattern for Progress, a Newburgh-based nonprofit that promotes stable growth in the region. “They’re our neighbors.”

Raising the children

Affordable housing in Beacon and Cold Spring has been a hot-button policy. But child care can cost a family even more, according to Clark at the United Way, “and we’re not talking about five-star care.”

In Putnam County, the average monthly cost of day care for two children comes to $2,375 a month, which is far more than housing ($1,571) and more than federal and state income taxes ($1,169), according to the United Way calculations. In Dutchess, the top expenses for a family of four are child care ($1,771), housing ($1,271) and taxes ($988).

“I can make it through the month if nothing goes wrong.”

~participant in a focus group organized by the National Endowment for Financial Education

By contrast, the monthly median income at a retail job in Putnam is $1,267 for a woman and $2,853 for a man.

As with Lorianne Mann, the cost of child care could make a parent or guardian decide that it’s cheaper to stay home than to take a minimum-wage job.

Medical expenses

For others, unexpected medical problems break the bank.

A couple living in eastern Dutchess County say they were blindsided by the mental health issues of their two sons.

“We were just kind of going along through life, and then, boom,” said “Leslie,” 55, who asked that her name not be used for privacy reasons. “It paralyzes an entire family.”

She works several part-time jobs, and her husband is self-employed. Last year, they made $54,000, she said. The major expenses include a $945 mortgage payment for their three-bedroom home plus $900 a month for health insurance with a $6,000 deductible.

“The way we survive is we live a very simple life and don’t have any debt,” she said. “We’re workers.”

What Causes Fragility?

LACK OF ASSETS
Financially fragile households tend to lack assets that non-fragile households take for granted.

House
Renting means no equity is being gained and the family is at the mercy of the rental market.

Car
Reliable transportation is crucial to getting and keeping a job, as well as for daily activities such as grocery shopping and doctor appointments.

Insurance
Inadequate health insurance means higher out-of-pocket costs. Lack of car and home insurance can mean huge bills for repairs and maintenance.

Bank Accounts
Lack of access to traditional financial products can lead to use of services that charge higher interest, fees and penalties.

Retirement Accounts
Without a 401(k) or IRA in which to grow it, cash that could have been invested loses buying power, thanks to inflation.

Credit Cards
Low borrowing capacity means fewer options to pay for large unexpected expenses. There is no credit safety net.

DEBT

Medical
Unpaid bills make respondents more likely to be financially fragile.

Education
Nearly 50 percent of people with education debt have difficulty dealing with a $400 emergency expense, versus 39 percent of those without education debt.

Credit Card
Financially fragile people tend to have limited access to credit. They are more likely to be denied credit or to receive less than they ask for.

Source: National Endowment for Financial Education (nefe.org)

Housing

In Putnam County, a resident needs an annual salary of at least $125,000 to afford a home priced at the median of $336,000, assuming a 5 percent down payment, said Czajka at Pattern for Progress.

That’s partially based on a rule of thumb that no more than 30 percent of gross income should go toward housing. If applied to a person working full time at a minimum wage of $11.10 per hour, he or she should pay no more than $577 a month for housing; for a couple, that would be $1,154.

Yet the fair market rent for a one-bedroom apartment is $1,057 in the area that includes Beacon and $1,558 in the area that includes Philipstown, according to figures from the National Low-Income Housing Coalition, which advocates affordable housing.

In fact, more than 30 percent of renters in the 18th Congressional District, which includes the Highlands, are paying more than 50 percent of their income on housing and utilities, the coalition calculates, putting them in the category of what it calls “severely burdened.”

 

When a working family is strapped, it’s not just the household that suffers. It has a spiraling effect that can strain public resources and boost tax rates.

A family that’s working most of the time trying to make ends meet may be shopping at the nearest grocery to the bus route, for instance, even if it’s more expensive, because they have no car and little free time. Or they’re making processed foods at home or stopping for fast food. Longer term, that has an effect on health.

People living on the edge “can’t afford to take care of themselves,” Czajka said, which leads to greater public health costs.

Coming Up Short

A study by researchers at George Washington University funded by the National Endowment for Financial Education calculated that 41 percent of American working adults ages 25 to 60 could not come up with $400 immediately for an unexpected expense and 36 percent could not find $2,000 within 30 days.

“A broad cross-section of Americans of all ages are financially fragile, but middle-aged and middle-income families are surprisingly vulnerable,” it noted.

The study found that women are more vulnerable than men, that it becomes less common as incomes rise (e.g., only 20 percent of households that earn at least $75,000 annually are considered fragile, versus 43 percent of those making less than $50,000) and that fragility is spread equally among age groups.

It also found financial fragility to be more likely among people whose formal education ended with a high school degree or some college, those who are not married, and families with three or more children. The researchers organized focus groups in Baltimore, Cincinnati and Austin, Texas, asking participants how they would cope with an unexpected expense (below):

Click to enlarge.

This population is also living in the cheapest rental housing, which may not get a lot of care from the property owner, so they may have old, broken or missing appliances, for instance. Or, if they own a home, expenses such as painting, landscaping and upgrading are unlikely to be priorities, potentially affecting their own and neighbors’ home values.

“The more you have to work, the less time you have for family, friends, community,” Czajka said.

The situation also has an effect on the labor market. Jodi McCredo, a Beacon City Council member, has focused recently on the amount of affordable housing in the city. But she is also a boss.

“As a small-business owner, I know it’s difficult to be able to pay the rent [for her business] and pay a fair wage to my employees,” McCredo said.

“The mental energy that goes into figuring out how to make it all work is incredible. There’s so much stress involved in looking at every dollar.”

~Melissa Clark, director of community impact at United Way

Yet if people can’t afford to live here on a minimum-wage job, businesses with low-paying jobs may find it harder to find reliable employees. At the same time, the area’s population is flat or declining, meaning a smaller workforce bears more of the tax burden, Czajka noted.

In 2017, New York had the third-highest number of people leaving the state, according to U.S. Census figures.

It’s a problem without an obvious solution.

“It’s tough to say what the role of local government is,” McCredo said. Affordable housing — including redefining what “affordable” means here — is one way. “We could do more on the state level, like rent stabilization, both residential and commercial,” she added.

Maggie, the once well-paid Cold Spring resident who frequents the Philipstown Food Pantry, says she hasn’t given up. But she also struggles to stay optimistic.

She has added her name to lists for subsidized housing, though her disability payments price her out of lower-income categories. She also has applied for various housing lotteries in the region.

Where is ‘The Edge’?

Single Adult

$12,490
This is what a person needs to earn annually to make more than the federal poverty level. It equates to $6 per hour.

$25,764
This is what a person in Dutchess County needs to earn to survive, according to the United Way. It equates to $13.88 per hour.

$30,432
This is what a person in Putnam County needs to survive, according to the United Way. It equates to $15.22 per hour.

Family of Four

$25,750
This is what a household of four needs to earn annually to make more than the federal poverty level.

$80,016
This is what a family of four in Dutchess needs to survive, according to the United Way.

$88,524
This is what a family of four in Putnam County needs to survive.

She knows there is more affordable housing in eastern Putnam. But she has built her life in the Highlands.

“It would help if developments in Philipstown included affordable housing for artists and government employees like they’re doing in Beacon and Peekskill,” she said.

“It’s about the community deciding not only to keep senior citizens here, but to provide a base for younger people to afford it. We need affordable housing that’s not Section 8,” a federal government program for impoverished households.

She keeps looking, although many apartments she sees “are shoddy for the money they’re asking. We’re not talking about granite countertops and stainless steel appliances. Level floors and windows that open and close would be nice.”

She also believes that more bartering services and resources like the Philipstown Freecycle group on Facebook can help people like her.

“I work out a payment plan for car service locally because I’ve been going there so many years,” Maggie said. “You do what you can. Sometimes if you pay cash, you’ll get a lower rate.”

Up Next

Beacon is experiencing rapid growth, with new development expected to bring up to 2,000 new residents to the city by 2022. Will it be possible for these people to reside where they work without living on the edge? What steps can a municipality take to attract businesses that pay at least a survival wage? Jeff Simms spoke with local and regional officials and economic development professionals to investigate the nuts and bolts of job creation.

Czajka sees an educated public as the first step. “Individuals need to make time to understand the issues, educate their neighbors, be part of the community,” he said.

“If you want to build a community where people want to live and work and grow and build something, you have to find a way for them to afford it,” McCredo said. “It’s tricky because developers aren’t going to come if they’re not making money.”

In the meantime, three out of every 10 households are straining just to keep up with the cost of living in Putnam and Dutchess.

“The mental energy that goes into figuring out how to make it all work is incredible,” Clark said. “There’s so much stress involved in looking at every dollar.”

Feeling Lost About Money?

The National Endowment for Financial Education (nefe.org), founded in 1984 and funded by an endowment from the proceeds of the sale of the College of Financial Planning in 1997, argues that teaching people how to handle money can help every group that is financially fragile. It provides free courses at smartaboutmoney.org on financial basics such as spending and saving, credit and debt and employment strategies. It also has a site for younger adults at onyourown.org.

This series was made possible by donors to our Special Projects Fund. Thank you.

Click here to read Part 2 of the series.

Logo illustration by Tim Teebken

5 thoughts on “Living on the Edge

  1. Thank you for the excellent, detailed reporting on a complex national problem. I’ve always felt that the divide between those lucky enough to earn an annual salary with benefits and those working for an hourly wage is as important, if not more so, as the one dividing red and blue states.

    I’ve surmised that the living wage is about $40/hour — a guess roughly borne out by the United Way’s calculation of $34.40 as a survival wage for a family of four. And yet the U.S. House just passed a bill raising the minimum wage to $15 per hour to be phased in over six years. We are miles from where we need to be to solve our hourly wage crisis, as monthly costs go up and as automation and globalization of the labor market provide no incentive whatsoever for low- and semi-skilled wage increases.

    If we ever get to that happy day when everyone can feed his or her family working one job, how will we control the astronomical rates of inflation likely to be triggered by such a boom in national wealth? These are complicated, tenacious, if not intractable problems that this country has never thought seriously about how to fix.
    Thanks again to The Current for the serious thinking on this matter — I’m a proud supporter of your Special Projects initiative, and I urge everyone who enjoys this terrific weekly publication to support it, as well.

  2. This problem is hardly isolated to the Highlands and is indicative of many issues plaguing the nation. Small businesses can’t afford to offer health care, the minimum wage hasn’t kept up with inflation and large corporations soak up tax breaks with no major investment back to their communities. The increasing income gap is eliminating the middle class.

  3. Huh. The article is long and looks comprehensive. However I see no mention of the effect of taxation on the cost of living, and the ability to afford it, for a majority of residents in Putnam and Dutchess counties.

    Today a household income of $100,000 is taxed roughly $11,000 to $15,000 each year in federal income taxes, roughly $4400 to $5900 in New York State income taxes. (I am assuming here this income is adjusted to $80,000 which is “taxable”.) There is another $1000 or so in taxes on sales and from fees, licenses, fines from moving violations and parking, etc. Income taxes are marginally lower but property taxes are significantly higher for those owning their residence. I do not include the tax for Social Security and Medicare, a subject suitable for an entirely different analysis. The tax rates are of course lower for those with lower incomes – but once a household income is too low to afford the local cost of living, as indicated in the article, it becomes irrelevant as people in that category will either be moving away or accumulating more and more difficult-to-pay debt. (An insignificant few will win the lottery, will inherit, or will become professional politicians.)

    All that tax money could be used to help cover the expenses of those who work and try to live here.

    One hundred and ten years ago in the US there was no tax on incomes, very little taxation of real property – homes, and the like. Most of what little taxation that existed came indirectly in the form of licenses, fees, and tariffs on overseas imports as they were passed on to consumers.

    Prices (and, of course, wages) were much lower – about 1% or even less compared to equivalent items, or work, today. At that time money, coins, were in the from of “hard currency” – these coins contained mostly precious and semi-precious metals: silver and gold, nickel and copper, and it was worth more. There was very little paper money. The great inflation which started with World War One had yet to commence. After that war ended inflation started anew when manufactures noticed their potential customer base could not afford to pay cash for their products (incomes were too low relative to the high prices of the many new and professionally marketed products), and they started to offer them on installment plans. This system eventually evolved into the consumer debt of today, and the interest on this debt has effectively become yet one more tax.

  4. I am not surprised at all to read that so many people in Beacon are struggling. I took a 50 percent pay cut moving from the city to Dutchess, with the same job title, and our living expenses have gone up. A recent study showed younger workers in the Hudson Valley are seeing wages stagnate while locally employed boomer incomes are on the rise. This is deeply concerning. [via Instagram]