A recent report on NPR mentioned a new survey on self-sufficiency. It claimed that a single mother with two young children needed over $40,000 per year to survive, making the federal poverty levels grossly outdated and low. This survey came from the Self Sufficiency Standard, and they provided a website. Of course, I decided to do a little more research on my own.
The website (selfsufficiencystandard.org) links to a group called: The Center for Women’s Welfare. From the website:
The Center for Women’s Welfare (CWW) is dedicated to research that influences contemporary policy issues of income inequality and economic opportunity. Through its primary project, The Self-Sufficiency Standard, CWW researches and develops effective tools to measure poverty and income inadequacy by calculating the real cost of living.
And what is the Self-Sufficiency Standard?
The Self-Sufficiency Standard defines the amount of income necessary to meet basic needs (including taxes) without public subsidies (e.g., public housing, food stamps, Medicaid or child care) and without private/informal assistance (e.g., free babysitting by a relative or friend, food provided by churches or local food banks, or shared housing). The family types for which a Standard is calculated range from one adult with no children, to one adult with one infant, one adult with one preschooler, and so forth, up to two-adult families with three teenagers.
It does seem like a much more comprehensive measure than the federal poverty standards which focus on the cost of food; the self-sufficiency standard calculates the cost of food, housing, childcare, taxes, and all other expenses that a family with full time working adults would face. Full details of what they calculate, and how can be found here.
There is a new (for 2010) report regarding the state of New York. They use a lot of census data, so the last one for New York was published in 2000.
The results are a little staggering…
For a single parent with a school aged child and a pre-schooler in Monroe County to survive without any government assistance the family would need to earn over $47,000. Gross monthly that is ~$3,900, or about 3x the federal poverty line.
Minimum wage pays $16,100 each year (NYS it’s $7.25/hr), that is not even close to enough to cover a family! To cover one adult and two children in Rochester a family would need to earn $22.44 per hour, 3x the minimum wage – and we are considered one of the more affordable areas to live.
Its no wonder New York needs so many Nanny Programs… according to the sufficiency calculation too many residents would be below water without them.
The report lists several aid programs available in New York:
- Child Care assistance: Your costs are reduced to a co-pay that is decided by the local social services. Eligibility lasts until income of 200% the federal poverty level.
- Housing: Section 8, vouchers, public buildings. Housing is set to 30% of the adjusted gross income. Households are eligible if they make 80% of the median income of the neighborhood, although lately funding has been low and new applicants must make only 30% of the median income of the area.
- Medicaid: fully subsidized healthcare for incomes up to 87% of the federal poverty level for adults, or 133% for families with 1-5 children, and 200% FPL for pregnant women.
- Children’s Health Insurance Plus (CHIP): children under 18 pay a reduced healthcare premium, qualifying incomes are up to 400% of the FPL.
- Family Health Plus: if you don’t qualify for medicaid but earn up to 100% (no children) or 150% (children) of the federal poverty level income you pay reduced premiums.
- Supplemental Nutrition Assistance Program (SNAP): Food stamps. If you have a dependent you can earn up to 200% of the federal poverty level and qualify.
- Special Supplemental Nutrition Program for Women, Infants, and Children: WIC food stamps. you get $49 each month to buy “nutritious foods” and learn about breast feeding. Qualifying incomes are up to 185% FPL.
- Child Support: there is no income limit here, all that is required is a divorce. Average payment is $290 per month in New York.
- New York State EITC: same qualifications as federal, you can get back 30% of what you would federally.
- NY CCTC: same qualifications as federal program gives you 20% – 110% of the benefits, depending on the number of qualifying children.
- Empire State Tax Credit (CTC): either $100 or 33% of the federal amount – whichever is higher.
- New York State Household Credit: a credit of $75 for single tax payers plus a little bit for filed exemptions, if you earn up to $28,000 single or $32,000 married.
And that’s just New York’s Programs… what about the Fed?
- Federal Earned Income Tax Credit (EITC): a one parent family with 2 children can earn up to $40,363 and receive a maximum benefit of $5,036 per year per a tax calculator and estimator
- Federal Child and Dependent Care Tax Credit (CCTC): there is no income requirement, and you can get back between $3,000 and $6,000 a year.
- Federal Child Tax Credit (CTC): Up to $1,000 per child as long as you don’t make over $110,000 married, or $55,000 married filing separately, or $75,000 single.
- Making Work Pay Tax Credit: Single adults earning $75,000 or less can earn $400 each year, married couples under $150,000 can get back $800.
If you take advantage of all these handouts and rebates you can really reduce the income required to cover basic expenses. Taking advantage of housing subsidies, child care subsidies, WIC/SNAP, CHIP and other rebates can reduce a requirement of $1,000 per month in housing to $410. Childcare goes from $1,400 to $40. Total expenses including taxes drops from $4,845 per month all the way down to $1,386, which drops the self-sufficiency wage to $16,627.
Suddenly minimum wage begins to meet the self-sufficiency standard. Does this mean that government programs are structured in an effective manner?
Another thought….there would seem to be a half donut hole around minimum wage workers where, to a point, an increase in salary would only disqualify benefits, providing a net gain of zero. Does this dampen the motivation of some workers to seek higher incomes?