A recent study confirms what many working class families know from experience – the official Federal poverty level is inadequate to meet their bare minimum needs. Released by the Economic Policy Institute (EPI), it studies the real cost of living for working families and is based on 400 basic family budgets reflecting locations in the 50 states (including metropolitan, suburban, and rural areas in each state) for families ranging in size from one parent with one child to two parents with three children (under 12 years old).
The budgets itemize the costs for housing, food, childcare, transportation, health care, other expenses (clothing, personal care, household items, school supplies, and television – no restaurant meals, vacations, or movies), and taxes.
They explain that the official Federal Poverty level, which is issued each year by the Federal Department of Health and Human Services, is based on a 1960’s formula. It takes the cost of groceries according to the Department of Agriculture’s ‘thrifty food plan’ and multiplies this number by three to get a family budget, because, back then, groceries comprised about one third of total living costs. Today, food accounts for less than one fifth of total expenses, whereas the costs of housing and qualified child-care (not usually a factor in the sixties) are much larger.
Furthermore, the official poverty line is computed as a national figure with no accounting for the difference in cost by geographic location, and assumes a pre-tax level of income. Overall, the EPI basic budget averaged across the nation is at least twice the poverty level.
In rural North Dakota, you can just barely ‘make it’ on $17, 034 if you are a single parent with one child under 12 – the official poverty level for one parent and one child is $11,610.
On the other hand, if you are a family with two parents and three children under 12, you will need $67,151 to ‘make it’ in Nassau-Suffolk, New York. That is a long way from $20,670, the poverty level for a family of five!
One of the most glaring inequities sighted in the study is the racial/ethnic disparity in incomes: 52.1 percent of Afro-Americans fall below the basic budget as do 56.3 percent of Hispanics, compared to 20.3 percent of whites.
These figures are similarly skewed for those below the official poverty line: 22.3 percent, 21.5 percent and 6.2 percent respectively. The EPI study goes into considerable depth about the reality of the hardships that those falling below the basic budget in income experience: inadequate food for the family; housing – evictions, utilities disconnected, doubling up with friends or family, phone disconnected, behind on rent or utility payments; health care – not receiving necessary medical care, emergency room is main source for health care, no health insurance; child care – child cares for self, child not in after school or enrichment activities, inadequate adult-to-child ratio in child care facility. Slightly more than 41 percent of all families living below 200 percent of the poverty level (approximately the same as the basic budget) experience food insecurity. Thirty six percent of such families have no health insurance.
A recent book by Barbara Ehrenreich (Nickel and Dimed) is a compelling story of her attempt to live on minimum wage jobs. She concluded that low-wage workers don’t ‘get by,’ they live in acute distress.
‘The lunch that consists of Doritos or hot dog rolls, leading to faintness before the end of the shift. The ‘home’ that is also a car or a van. The illness or injury that must be ‘worked through,’ with gritted teeth, because there’s no sick pay or health insurance and the loss of one day’s pay will mean no groceries for the next. These experiences … are, by almost any standard of subsistence, emergency situations.’
The EPI study proposes policies to help working families meet basic needs such as: boost the minimum wage – now 24 percent lower than in 1979, it needs to be doubled to really make a dent; removing some of the barriers to workers joining a union; state funding in addition to the federal earned income tax credits for low wage workers; pay equity for women, migrant workers, etc.; economic and work force development to create better job opportunities; universal health care for all workers; universal child-care by qualified and licensed agencies for all workers; extending home ownership tax benefits to renters; improved public transit systems instead of more highways; increased availability of food stamps; and paid leave for illness and new babies for all working families.