Living on a Median Income Means
Worries for Oregon Family of Four

PORTLAND, Ore. -- At the end of long day teaching emotionally disturbed children, Michael Creighton's hair, three months away from its last cut, had achieved what he calls the "mad scientist look." The unruly mane sticks up at the top, out from the sides and curls up at the collar, but Mr. Creighton remains resolute about avoiding the barber for at least two more weeks.

The reason: to stretch the $15 he pays for a haircut just a little bit further.

LIFE IN THE MIDDLE This article is part three of the Stuck in the Middle series. Other installments: • Low Cost of Living Helps One Iowa Family Live Well1   • Life at Median Income Means Scrimping, Bargain Hunting2

This kind of penny-pinching has become a way of life for Mr. Creighton and his wife of seven years, Susan Koshy, as they try make ends meet with annual earnings just shy of the median household income for the West, $44,744. With two sons, ages 4 and 2, and a $795-a-month mortgage, the couple find themselves in a constant struggle to keep within a family budget that even the smallest unanticipated expense can throw out of kilter.

Nearly every stick of furniture in their home is secondhand, including a sideboard with chipped veneer that had been left in their last apartment by a previous tenant. They own one car: a 1994 Toyota Tercel, with two doors, 135,000 miles on the odometer, and, recently, an oil leak. Until January, when, after a year of saving, they managed to set aside enough to buy a $400 shelf stereo system, their entertainment center consisted of two cast-away boom boxes: one with a working compact disc player, but a broken radio, the other in the opposite condition. "The recession really hasn't really changed how we spend,'' says Ms. Koshy, "because we've always had to parsimoniously parcel things out.''

Still, Mr. Creighton, 35, and Ms. Koshy, 32, consider themselves lucky. Few places have been hit as hard by the downturn as Portland, a once high-flying technology center that over the past year has consistently posted one of the highest unemployment rates among major metropolitan areas, most recently 7.5%. It's also one of the more expensive urban areas. According to the U.S. Bureau of Labor Statistics, Portland has a higher cost of living than the metro areas of Atlanta, Chicago and Los Angeles, among others.

Michael Creighton and Susan Koshy in their yard in Portland with their son Akshay.

One of the couple's neighbors, a self-employed electrician who saw his work plunge with the local economy, recently had to sell his house because of mounting bills. Another is working three part-time jobs because her husband lost his. A friend recently had to cut short her maternity leave when her husband was laid off from a local tech company shortly after the birth of their first child.

But thanks to Mr. Creighton's job in the Portland public schools as a special-education teacher -- a specialty in great demand -- the family has largely avoided an economic downturn of its own. In fact, they're doing better than a few years ago, when, shortly after the birth of their first son in late 1997 they decided they would get by on Mr. Creighton's salary, then just $25,700, so Ms. Koshy, a former union organizer, could stay at home with the children. Ms. Koshy, who has a degree in literature, plans to eventually return to the work force, with the idea of going back to school in two years to update her work skills, although she's undecided about a possible career move.

Mr. Creighton today earns $42,500 from his teacher's salary, plus $2,000 more for teaching summer school. They've also been able to cut some expenses. Earlier this year, the couple spent $300 to appraise the home they bought five years ago in a poor but gentrifying neighborhood in north Portland. The result: The house had appreciated to $150,000 from $100,000, giving them enough equity to drop the private mortgage insurance the bank required them to carry. In addition, they spent $2,500 in 1999 to buy down their interest rate to 6.37% from 8%. All told, the two investments trimmed nearly $200 off their monthly mortgage payments.

"A lot of things are going well,'' says Ms. Koshy. "But I still wonder, when are we going to see the other side?'' such as an unexpected home repair bill or other setback.

Ms. Koshy attributes some of her anxiety to the struggles of her family, who emigrated from India when she was 14. Her parents, now divorced and near 70, worked low-paying clerical and health-care jobs and saw a business fail, and have little to fall back on.

Mr. Creighton, who grew up in Corvallis, Ore., as the son of a college professor and teacher, is more optimistic, in large part because he sees job security in the persistent shortage of special-education teachers. But he also sees reason for worry. They have little savings, except for the equity in their home and $3,500 in a college fund for their children. They also have retirement plans valued about $50,000.

The front porch of their bungalow-style home, built in 1914, had to be replaced this summer for about $5,000 and the aging furnace -- a cast-iron monstrosity, with tentacle-like, asbestos-covered ducts -- may not be far behind. Meantime, bills are also growing with their children. Just six months ago, the family's food budget topped out at $400 a month. Now, it's $500. Milk consumption alone has quadrupled to two gallons a week from a half-gallon just a few months ago.

"I'm beginning to measure them by the milk,'' says Mr. Creighton of his sons, Saleem and Akshay.

The downturn, too, may not entirely pass them by. Rising health-care costs and falling tax revenues forced Portland schools to slice $36 million in spending for the coming school year and school officials are pushing to cut teacher pay and pass on to them a bigger share of health insurance premiums. Both proposals, of course, would further pinch the family budget of Mr. Creighton and Ms. Koshy. But more immediately, they worry that teachers could strike over such issues once the contract expires in the coming school year.

This just adds to Ms. Koshy's anxiety. She says she doesn't have to go far to realize the fragility of her family's financial position. Recently, while driving to the store with her children strapped safely in the back seat, she saw another mother, with two kids and a heavy diaper bag slung across her shoulder, struggling to get on a bus. "The moment was so strong,'' recalls Ms. Koshy. "That could have been me. It's so close to where we are.''

Write to Robert Gavin at robert.gavin@wsj.com³

Updated August 21, 2002