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New Research on Family Economic Security: Tools for Advocacy
Celia Hagert, Senior Policy Analyst ([email protected]) Celia Hagert, Senior Policy Analyst ([email protected])
Frances Deviney, Ph.D., Senior Research Associate Frances Deviney, Ph.D., Senior Research Associate ([email protected])([email protected])
900 Lydia Street, Austin TX 78702 900 Lydia Street, Austin TX 78702 www.cppp.org 512.320.0222
Family Economic Security Tools How much earnings are enough?
Family Security Index Estimates the basic cost of living in TX
What happens when families don’t earn enough? Family Resource Simulator
Interactive tool showing relationship between family economic supports and family income
How do you fill in the gaps? Bridging the Gaps (research in progress)
Examines the gap between family’s resources and expenses across income levels
Examines the eligibility gap between the availability and actual use of public benefits
How much earnings do families need to make ends meet?
Family Security Index Toward an Alternative Poverty Measure
Center for Public Policy Priorities
www.cppp.org
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
Texas Children - Demographics 50% of Texas children live in low-income families
(200% of poverty level or ~ $40K for a family of 4) 24% live in poor families (~$20K for family of 4)
Low-Income
Poor
Employed parent 86% 76%
Single parent 43% 52%
Immigrant parents 33% 38%
Percent Latino 58% 70%Source: NCCP analysis of U.S. Current Population Survey Data (2003-05) with additional RMC calculations
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
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”
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 $596
Food$418Child Care $492
Medical$612Transportation $391
Other Necessities$321
Monthly Expenses $2,830
Monthly ExpensesMonthly Expenses
(For a family of two adults and two children in the San Antonio MSA)
FSI 2001
Payroll Tax $216
Income Tax $225
Earned Income Tax Credit
Child Tax Credit ($83)
Child & Dependent Care Credit($80)
Taxes and Tax Credits $278
Federal Taxes
(For a family of two adults and two children in the San Antonio MSA)
FSI 2001
Necessary Monthly Income $3,108Necessary Annual Income $37,300Household Hourly Wage $192000 Poverty Threshold $17,463
Percent Poverty Threshold 214%
What It Really Takes to Live in Austin
(For a family of two adults and two children in the San Antonio 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
What happens when families don’t make enough?
Family Resource Simulator
National Center for Children in Poverty
www.nccp.org
Family Resource Simulator (FRS)What is it?
A state-specific, interactive, web-based tool to help
policymakers determine:
How effective are work supports at helping low-wage
workers make ends meet?
How well do our existing policies—and combinations
of policies—encourage and reward employment?
Are there policy alternatives that would better support
work? If so, what would they cost to implement?
Family Resource SimulatorHow the FRS Works
The user creates a hypothetical family. Makes choices about:
City and state Family characteristics Child support income Assets Debts
Family Resource Simulator
What the FRS Does
It calculates the aggregate impact of federal, state, and local policies on family resources and expenses as earnings increase.
Family Resource Simulator
What the FRS Does (cont.)
Its calculations include these benefits:
Child care subsidies Food stamps Public health insurance Section 8 housing vouchers TANF cash assistance
Family Resource Simulator
What the FRS Does (cont.)
Its calculations include these tax policies:
Federal, state, and local income taxes Federal income tax credits (EITC, child/dependent
care credit, child tax credit) State and local income tax credits Federal payroll taxes
Family Resource Simulator
What the FRS Does (cont.)
Its calculations include these expenses:
Child care Food Health insurance Housing Transportation Other necessities
Family Resource Simulator
What the FRS Does (cont.)
The FRS results show the interaction of:
Earnings (from $0 to state median income) Public benefits (cash and in-kind) Taxes Basic living expenses
Family Resource Simulator
Family Resource Simulator
Family Resource Simulator
Houston, TX: Single-Parent Family of ThreeReceiving TANF, child care subsidies, food stamps, public health insurance, and income tax credits
NCCP’s Making Work Supports WorkWhat is it?
A collaborative project with state and national partners to improve state and federal policies to better support low-wage workers and their families.
Project Objectives Identify aspects of the current structure of work support
policies that lead to high marginal tax rates. Identify policy alternatives that would better support low-
wage workers and use NCCP’s FRS to simulate their effects.
Estimate the cost of policy alternatives.
Using the FRS
Complements the CPPP’s Family Security Index (How much is enough?)
The FRS shows what happens to families’ resources when earnings aren’t enough:
What resources are available at what income levels
How families’ budgets are affected as their incomes increase and they lose their work supports
The perverse effect of public benefits policies on families’ economic security
How do you fill in the gaps between earnings and need?
Bridging the Gaps (BTG)
Center for Economic and Policy Research, www.cepr.net
Ray Marshall Center for the Study of Human Resources, UT Austin, www.utexas.edu/research/cshr
Bridging the GapsWhat is it?
Research (in progress) for four Texas cities that
shows how much families need to earn to “break
even” – Houston, Dallas Laredo, San Antonio
“Take-up Rates” – Estimates the eligible
population for major public benefits and how
many actually use these benefits – Child Care,
Food Stamps, Medicaid, TANF, Housing
BTG Simulation Details Single parent with 2 children ages 3 & 8 Parent works 40 hours per week Receives all tax benefits (e.g., EITC, Child Tax Credit) Uses family homes for child care, regardless of
subsidy Assumes use of Medicaid and CHIP when eligible,
otherwise employer-based insurance Assumes no child support No savings, own car worth $2,000, no car debt
Notes: $11,000 = minimum wage of $5.15$26,000 = Texas median wage (Bureau of Labor Statistics)
BTG Simulation: Houston, TX
Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (www.nccp.org/modeler/modeler.cgi).
BTG Simulation: Laredo, TX
Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (www.nccp.org/modeler/modeler.cgi).
BTG Simulation: San Antonio, TX
Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (www.nccp.org/modeler/modeler.cgi).
BTG: First break-even point for different combinations of
earnings/benefits
Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (www.nccp.org/modeler/modeler.cgi).
BTG: First break-even point for different combinations of
earnings/benefits
Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004 (www.nccp.org/modeler/modeler.cgi).
Multiple Break-even Points: Houston, TX
For the following benefits: Tax Credits, Medicaid, FS, TANF, and CCDF
-$10,000
-$8,000
-$6,000
-$4,000
-$2,000
$0
$2,000
$4,000
$1
1,0
00
$1
2,0
00
$1
3,0
00
$1
4,0
00
$1
5,0
00
$1
6,0
00
$1
7,0
00
$1
8,0
00
$1
9,0
00
$2
0,0
00
$2
1,0
00
$2
2,0
00
$2
3,0
00
$2
4,0
00
$2
5,0
00
$2
6,0
00
$2
7,0
00
$2
8,0
00
$2
9,0
00
$3
0,0
00
$3
1,0
00
An
nu
al
Ne
t R
es
ou
rce
s
For the following benefits: Tax Credits, Medicaid, FS, TANF, and CCDF
Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (www.nccp.org/modeler/modeler.cgi).
How to use these tools Increase understanding of challenges facing
low-income Texans; barriers to family economic security
Illustrate how state policies encourage/discourage work
Describe potential consequences to families if public benefits are cut
Supports arguments/advocacy for: A living wage Stronger private sector commitments Better work supports/outreach to increase
participation Policies that reward work
Contact Information CPPP’s Family Security Index
Celia Hagert, [email protected] Frances Deviney, [email protected]
NCCP’s Family Resource Simulator Nancy K. Cauthen, [email protected]
Bridging the Gaps Project Heather Boushey, [email protected] Deanna Schexnayder,