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More in News
Poverty Report: families struggle with massive price increases
OXFORD COUNTY — A study of poverty released by the state finds that sharp increases in housing, medical care, and fuel costs are making it more and more difficult for people to escape poverty.
"It’s no news that living expenses claim an increasing percentage of income for many Maine households," said Ruth Pease, of the Maine Department of Labor.
Worse, incomes in Oxford County are declining or remaining flat, making it difficult or impossible for some families to stay ahead of the mounting costs.
The median income in the state has gone up by 22 percent over the last 10 years and while that may sound like a good number, it's far behind the increases in basic living expenses.
In fact, over the last 10 years, medical care costs have gone up by 60 percent, rent has increased by 29 percent, gasoline and heating oil prices have doubled, and the cost to buy a home has gone up by 44 percent, according to the study.
Faced with these mounting costs, the number of people in poverty has increased by more than 10 percent in just the last four years.
The escalated costs mean that working for minimum wage isn't always a possibility, said Lisa McGee, an associate director at Community Concepts, a social service agency.
"You figure, anything in this area at the gas station, McDonalds, Burger King, anything like that, it is a minimum wage job," said McGee. "To be able to feed a family, put fuel in your vehicle, have somebody in daycare, and pay your rent, there's just not a sufficient wage to stay independently living."
The report cites the cost of heating fuel and gasoline as a contributing cause of poverty. Rural areas in Maine, like much of Oxford County, are especially hard-hit by cost increases.
The report states that energy is a cost that "can unexpectedly strain household budgets. In a rural state such as Maine, where most houses are oil-heated, many residents are sensitive to the price fluctuations of the global energy market."
Heating oil prices hit an all-time high in March 2008, at a cost of $3.70 per gallon. Prices dropped after that, to $2.18 later in 2008, but they have since risen again. December 2010 showed prices of $3.23 per gallon.
Gasoline prices have also been a big problem for people in poverty.
In the third quarter of 2010, the average price of a gallon of gasoline soared to $3.14, the highest prices since the immediate aftermath of Hurricane Katrina in 2005.
The study cited an estimate that the average US family spent $2,000 on gasoline. This was up from $1,342 only three years before, an increase of 45 percent.
"The cost of gasoline disproportionately impacts families with low incomes and those living in rural areas," reads the report. "CFA estimates that families with incomes under $15,000 spent more than one-tenth of total income on gasoline in 2005. Also, rural households tended to spend more than $2,000, compared with $1,705 for urban households."
Another factor affecting poverty is the high cost of medical care.
Between 2008 and 2009, the cost of health care went up by 13 percent in New England, while the median income in Oxford County actually declined, according to US Census data.
Most of those living in poverty are a part of the state MaineCare program, said McGee, which means that they aren't actually paying out-of-pocket for their medical expenses.
However, the rising health care costs put pressure on middle-class working families which would otherwise be flourishing, and are instead in danger of being dragged down to poverty themselves.
Further, medical costs can discourage those on MaineCare from working, because, once they cross a certain income threshold, they risk losing access to health care.
"It's sad but true," said McGee.
There is a sliver of good news to be found in the poverty report, and that is that housing, particularly in Oxford County, is becoming more affordable in the wake of the housing market crash.
The average person still can't afford an average home, but they are getting closer, reports the study.
Historically, there has been a significant gap between increases in income and increases in housing costs. In 2008, income had gone up 22 percent since 2000, as compared to a 31-percent increase in rent costs and a 62-percent increase in home prices.
In 2009, the gap is still large, but it has improved. By one measure, income increases are at 25 percent, as compared to 29 percent in rent increases and 44 percent in home prices.
In Oxford County, the news is even better. For the first time in years, the median home price in 2009 fell to the extent that it is considered "affordable" by a person earning a median income.
Rent prices tell a similar story. While not yet affordable, the gap has closed to just a fraction of what it once was, and Oxford County outperforms the state.
On an affordability index, where a score of one or higher means that rent is considered affordable, Oxford scores a .95, higher than the statewide average of .89, and far higher than some of the poorest counties, such as Washington (.61), or Franklin (.76).
The annual poverty report was released by the Maine State Planning Office, Economics, and Development Team.