an alternative poverty measure: the family security index and portfolio frances deviney, ph.d.,...
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An Alternative Poverty Measure:
The Family Security Index and Portfolio
Frances Deviney, Ph.D., Senior Research Associate ([email protected])Frances Deviney, Ph.D., Senior Research Associate ([email protected])Celia Hagert, Senior Policy Analyst ([email protected])Celia Hagert, Senior Policy Analyst ([email protected])
900 Lydia Street, Austin TX 78702 900 Lydia Street, Austin TX 78702 www.cppp.org 512.320.0222
What is Poverty?
The Idea of Poverty - a condition of economic hardship
Quantifying Poverty - technical meaning to define who is poor – “federal poverty level” to measure how many people are officially
poor – “poverty thresholds”
What is Poverty?
The “federal poverty level” (FPL) - Individuals in families with income below the federal poverty level are considered poor
Guidelines reflect the minimum amount of income that American households need to subsist
Federal poverty “guidelines” are used to determine eligibility for many federal, state, and local programs
Private organizations also use these guidelines to target their services to low-income families
What is Poverty?
2006 Federal Poverty Guidelines
Family Size
Annual Income* Monthly Hourly**
1 $ 9,800 $816 $4.71
2 13,200 1,100 6.34
3 16,600 1,383 7.98
4 20,000 1,666 9.61
5 23,400 1,950 11.25
6 26,800 2,233 12.88
*For each additional person, add $3,400 **Calculation based on 52 weeks at 40 hours per week
SOURCE: Federal Register, Vol. 71, No. 15, January 24, 2006
What is Poverty?
Eligibility for Family Support Programs, 2005
185% 185% 130% 250% 150% 14%0%
50%
100%
150%
200%
250%
300%
WIC Reduced-PriceSchool Meals
Food Stamps &Free School Meals
Max. Child Care Typical Child Care TANF CashAssistance*
Dollar Amounts: Annual income levels for a family of three
$29,767
eff. 7/1/05
$20,376
$40,182
$23,505
$2,256
Full-time minimum wage: $10,712 per year(67% of poverty)
$29,767
eff. 4/1/05
* Income limit shown is for applicants. Once on TANF, some families with earnings disregards and other allowances for work-related expenses can have higher incomes yet continue to receive some cash assistance.
What is Poverty?
Income Caps for Texas Medicaid & CHIP, 2005
133
133
100
133
200
73
73
24
14
221
185
185
0 50 100 150 200 250
Newborns
Ages 1 to 5
Ages 6 to 18
CHIP
Pregnant Women
TANF Parent of 2,
Working Parent of 2
SSI (aged or disabled)
Long-Term Care
Federal Mandate State Option
Percent of federal poverty line:
Annual Incom
e Limit*
$29,767
$21,400
$16,090
$32,180
$29,767
$2,256
$3,696
$6,948
$20,844
* Annual income limit is for a family of 3 in child & parent categories. For SSI and Long-Term Care, income cap is for one person.
No Income
What’s Wrong With the Poverty Measure? Conventional Thinking About Poverty No Longer
Works
Established in the 1960s based on assumption that cost of food accounted for one-third of household spending
Significant shifts in household expenses since then No measurement of other household costs Varying rates of inflation for specific expenditures Taxes and benefits not included No provision for geographic variation No accounting for change in standard of living
From Poverty to Family Economic Security
Toward an Alternative Poverty Measure
What’s acceptable? - Poverty defined as safe and decent standard of living, not a measure of deprivation
Poverty as a measure of costs, not income In 2001, CPPP published Making It: What it
Really Takes to Live in Texas,” featuring the “Family Security Index” and the “Family Security Portfolio”
As Americans, we generally believe that economic opportunity is available to anyone willing to work hard. But when families with two parents working three jobs still cannot meet basic needs, something additional is required. We must make good on our common belief that hard work brings prosperity—or at least sustenance. We must put together the portfolio of wages, employee benefits, nonprofit and faith-based services that will create family economic security. Let us exclude no one from the land of opportunity.
--From Making It: What It Really Takes to Live in Texas
What is the Family Security Index?
What is the Family Security Index?
A “market-basket” approach to determine how much income working families require to meet their basic needs
Provides a realistic, yet conservative, estimate of the income needed to support working families in Texas
Uses most current available data to estimate the specific costs faced by families of various size and composition
Documents variation in costs across different regions of the state
Criteria
Geographically specific 27 “metropolitan statistical areas” (MSAs) in Texas
Variety of family types Two-parent, single-parent, children of different ages, and
adult households without children
Most conservative, yet realistic estimates – the “austerity check”
The “Austerity Check”
Does not include the cost of video rentals, movies, cable television, eating out, other entertainment, or long distance telephone.
Omits expenditures for birthday and holiday gifts.
Does not include any expenses for credit card debt, or for saving to cover education, retirement, or family emergencies.
Does not include cushion for emergency or unanticipated expenses (e.g., car repair)
Family Security Index Budget Items Housing
Cost of rent and utilities with exception of phone Food
Monthly cost of food prepared at home Child Care
Monthly cost of child care specific to age of child(ren) Medical
Costs of total health care premium plus monthly out-of-pocket
TransportationGas, registration fees, taxes, routine maintenance, and
loan payments Other Necessities
Local phone, clothing, personal care, housekeeping, and reading supplies
Payroll and Federal Income Tax EITC, Child Tax Credit, and Dependent Tax Credit
Housing $858
Food$418Child Care $569
Medical$727Transportation $391
Other Necessities$321
Monthly Expenses $3,284
Monthly ExpensesMonthly Expenses
(For a family of two adults and two children in the Austin-San Marcos MSA)
FSI 2001
Payroll Tax $251
Income Tax $298
Earned Income Tax Credit
Child Tax Credit ($83)
Child & Dependent Care Credit($80)
Taxes and Tax Credits $386
Federal Taxes
(For a family of two adults and two children in the Austin-San Marcos MSA)
FSI 2001
Necessary Monthly Income $3,670Necessary Annual Income $44,044Household Hourly Wage $22Poverty Threshold $17,463
Percent Poverty Threshold 252%
What It Really Takes to Live in Austin
(For a family of two adults and two children in the Austin-San Marcos MSA)
FSI 2001
What It Really Takes To Live in Texas
El Paso $35,131
Laredo $35,530
San Antonio $37,300Brownsville $37,558
Lubbock $38,288
Houston Houston $40,669$40,669
Dallas $43,461
Austin $44,044
(For a family of two adults and two children)
FSI 2001
The Family Security Portfolio
Community-specific and comprehensive approach to help families meet basic needs and build economic security
Comprehensive set of services and programs to ensure the well-being of all working families in Texas, anchored by both private and public commitments
Improved wages and benefits a key component of the Family Security Portfolio
Family-based coordination of services from state and local government, non-profit service providers, faith-based organizations
The “Austerity Check”
Families often remain on Section 8 waiting lists for several years before receiving housing assistance
The Thrifty Food Plan assumes that families never purchase fast food or restaurant meals
5.5 million Texans, one-quarter of the population, were uninsured in 2003. Only 52 percent of Texans receive health insurance through their employers (9 percent below national average).
In all but one state, the yearly cost of full time child care exceeds annual public college tuition
How to Use the Family Security Index
Education - To create public understanding of the real constraints faced by families with limited income, even at what’s often considered a “moderate level” of income
Planning - To establish a more realistic benchmark for program planning and evaluation, especially welfare and workforce
Advocacy - To guide the coordination of joint state and local efforts to support low- and moderate-income working families