Many Millions Above the Poverty Line Lack Basic Economic Security

Blogger Matt Bruenig has declared war on the notion that poor people are “a small, especially degenerate class.” I don’t think this view is as common as he implies, thought it’s hardly as marginal as one would wish.

I mentioned his campaign, however, because the salvo I’ve linked to focuses on the arbitrariness of the federal poverty line. Look, he says, at the 53 million people hovering just above it, according to the Census Bureau’s latest Supplemental Poverty report. That’s 4 million more than fall below it.

And look at the gradual upward slope of the income distribution from way below the poverty line up to 300% of it. We see no “especially large gap” that would justify putting poor people into one bucket and everyone else into another.

Besides, he reminds us, people cycle in and out of official poverty. During 2009-11, for example, 31.6% of the population lived in poverty for at least two months, but only 3.5% were poor for the entire three-year period.

It’s nevertheless hard to imagine doing away with a line of some sort or other — at least, so long as we have programs that set eligibility and/or benefit levels based on income.

At the same time, a line, wherever we set it, will be a crude measure of what should most concern us — material hardship. Do people have the wherewithal for food, shelter, heat during the winter, etc. For what they need to pay in order to work, e.g., transportation, perhaps child care?

As I wrote awhile ago, Molly Scott at the Urban Institute showed that a single mother working part time at the minimum wage could actually be better off than a single mother working 60 hours a week at the same wage. Public benefit help explain this, but so do work-related costs.

Yet having just the resources to get by day to day without material hardship seems a low bar to set in a country with as much wealth as ours. Wider Opportunities for Women proposes that we look instead at how much a family much have to be economically secure.

WOW has a very complex database — the BEST (Basic Economic Security Tables) Index. It’s made up of many hundreds of monthly budgets for different family configurations, with and without employment-based benefits, and each reflecting costs in diverse geographic locations.

The budgets include not only basic needs and work-related expenses, but some savings for retirement and for emergencies — enough to get along for nine weeks without earnings because that was the average time jobless workers remained unemployed when the index was created.

The budgets are strictly “no frills,” in the words of WOW’s Vice President for Policies and Programs. In other words, they don’t allow for entertainment, vacations or even electronics, except a phone. They do, however, include optional, below the line savings for higher education and home ownership.

Using the BEST Index, WOW finds that 44% of Americans didn’t have enough income for economic security two years ago. Children in the household raised the rate to nearly 50%.

Economic insecurity was much more common than this for single parents with children — 77% without enough income. The rate for single-mother families was an even higher 81% — more than two and a half times their high poverty rate.

These are national figures. Economic security requires far more income in some places than others, of course. Consider, for example, Scott’s single mother and her two elementary school-age children living in the District of Columbia.

She and her kids would have cleared the poverty threshold in 2012 if she earned $18,500 a year. But she’d have had to make well over four times as much — at least $79,932 — for her family to be economically secure.

“At least” because this formidable sum assumes she was eligible for unemployment insurance, e.g., not a contract worker, and that her employer provided both a health insurance and a retirement plan. Without these employed-related benefits, she’d have had to make $85,992.

In both cases, the biggest ticket items for her child care, taxes and rent. Child care was the second biggest, even though her children needed it only during after-school hours — nearly $1,300 a month. And the rent, as WOW computes it, is quite low for the District — $1,259 a month.

I’m not sure what we should make of all this. I suppose we could begin, as Professor Stephen Pimpare suggests, by recognizing the “widespread economic fragility” of households in our country — and the weakness of the safety net many are likely to need.

But there are other, more specific policy lessons in the enormous gap between what it takes to be officially not-poor and what it takes to have enough for health, safety and work-related costs, plus a modest stash to draw on so as not to fall into poverty.

Far too many lessons for this post. But the sobering figures surely support a wide range of proposals — and confirm objections to others that our recent “Republican wave” seems likely to toss onto our Congressional and state legislative agendas.

 

3 Responses to Many Millions Above the Poverty Line Lack Basic Economic Security

  1. […] we had economic security, which, as I noted yesterday, seems not all that common any more, especially for families with children. And I have […]

  2. zoom314 says:

    Hey Katherine did you know that there is a bill AB474(Brown and Thurmond) in the CA state legislature, the assembly to be precise, that would if enacted raise the SSP by $210 a month to those who get SSI and who live alone(from 90% of Poverty to 112% like Married SSI recipients get)?

    Here’s a link and so far in 2 committees the bill has had only Yes votes and that includes Republicans, those were unanimous votes too, are you in shock now?
    http://calbudgetcenter.org/blog/assembly-proposal-to-substantially-increase-ssissp-grants-is-set-for-first-committee-hearing/

  3. Kathryn Baer says:

    No, I didn’t know about the California bill. Sounds promising for you and others in your situation. Thanks for sharing the news.

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