More Earnings May Not Mean Less Hardship

Everyone with even a passing interest knows that the Census Bureau’s poverty thresholds are far too low — in part because they’re based on a long-outdated spending pattern.

The Urban Institute’s Molly Scott has a more fundamental objection. “All our national poverty statistics,” she says, “reflect economic poverty.” In other words, they measure total household income — both earnings and payments from programs like unemployment insurance and SSI.

The Census Bureau’s Supplemental Poverty Measure also includes the value of some near-cash benefits, e.g., SNAP (food stamps), housing subsidies, home energy assistance.

But Scott has something quite different in mind than a better version of our poverty measure. “The problem,” she says, is that “the arbitrary poverty line is a bad measure of material poverty, the amount of hardship people experience meeting their basic needs.”

People both above and below the poverty line often struggle to get through the month. The only difference between them is “the mix of resources they use and the costs associated with work,” Scott says.

She gives us two hypothetical single mothers in the District of Columbia. Both have two school-age children. They live next door to each other, so the rent on their apartments is the same. They both have minimum wage jobs. The difference is that one works part time, the other 60 hours a week.

The part-time mom’s family gets a larger SNAP benefit because the household’s income is lower. She’s somehow managed to get a housing voucher — again because her income is extremely low.

At the same time, her transportation costs are lower, presumably because she doesn’t work every day. And she doesn’t have to pay for child care because she works only while her kids are in school.

The end result is that her gross income is much lower, but her family is actually somewhat better off. Probably still facing struggles, but not actually in the hole, like the family headed by the other mom, whose earnings put them nearly $10,000 above the federal poverty line.

The moral of this story is that policymakers — and others — who champion work requirements and other strategies “to get people to work more” are often actually looking for more ways to minimize spending on programs that help poor people make ends meet.

We may spend less, but achieve little or nothing to alleviate hardship, as Scott’s time-and-a-half working mom’s situation shows.

Scott’s conclusion is more cautionary than prescriptive. “[W]e need to make sure our policies and programs do more than swap out subsidies for low-income wages that won’t change people’s quality of life.”

She refers to “real ladders of opportunity and supports along the way.” Which is all very well and good, but we need to do something about those low-wage jobs as well — and about supports for people who, for various reasons, can’t climb a ladder into a genuine living wage job.

For our single mothers in the District, that would be a job paying $32.95 an hour, assuming full-time, year round work. This would give them an annual income nearly three and a half times higher than the poverty line for their families — and about $1,950 more than the median for all households in D.C.

We’ve got bills in Congress that would raise the floor the “ladders of opportunity” rest on. There’s the long-stalled minimum wage increase, of course, but also a pair of bills that would, among other things, ensure that workers don’t get shorted if they’re sent home early or required to work for awhile and then again later because their employers go in for “just-in-time” scheduling.

We’ve got bills that would guarantee most workers some time off with pay so they could stay home when they were sick or for other compelling reasons, e.g., childbirth, an ill family member who needs care.

We’ve even now got a bill that would help ensure that some of the 26 million or so workers employed by federal contractors get paid what they earn.

And, of course, President Obama has used his pen — or as some Republicans say, disregarded the Constitution — to both raise their wage floor and better protect them against wage theft, as well as some other prohibited labor practices.

But the mighty pen can’t boost federal funding for child care — the second largest item in the living wage budget for our D.C. single-mother families. It can’t do anything about the cost of housing, which, as you might expect, is the largest.

And it’s highly doubtful Congress will either — any more than it will raise the minimum wage or pass all the other bills that would somewhat improve the financial circumstances of low-wage workers.

What’s more frustrating, in a way, is that there is no silver bullet — or round of silver bullets — ready for policymakers to fire, if they choose. Material poverty seems to me even more complex than plain vanilla economic poverty.

Which isn’t an argument for doing nothing. There’s a lot that can be done, much of which we already know. It is an argument, however, as Scott implies, for rejecting out of hand solutions that rely solely on getting more people into the workforce.

 

 

One Response to More Earnings May Not Mean Less Hardship

  1. […] I wrote awhile ago, Molly Scott at the Urban Institute showed that a single mother working part time at the […]

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