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Poverty deeper than suggested in guidelines

June 15, 2012
Messenger News

"Staggering" numbers from a new study by the Iowa Policy Project suggest that, when it comes to determining eligibility for programs, it's time to come up with a new way to measure poverty.

The study, titled "Cost of Living in Iowa" and available at www.iowapolicyproject.org, found that 23 percent of the state's working households are earning incomes below what is needed to meet their basic needs.

"The results are frankly quite staggering," said Lily French, co-author of the report. "When you realize this many Iowans are working day in and day out but are unable to meet their basic needs, it's clear that something must be done to ensure that Iowans are able to both live and work in our communities."

The report found that statewide:

A single parent with two children would need to take home $42,540 annually after taxes to pay for basic needs.

A family of four with two working parents would need to make $50,288 after taxes for each parent.

In the Iowa City metropolitan statistical area - which includes Johnson and Washington counties - the report found those numbers change to:

$46,232 annually after taxes, or $26.69 an hour, for a single parent with two children.

$53,768 annually after taxes, or $15.33 an hour, for each parent in a family of four with two working parents.

Unfortunately those annual income figures already are more than twice the 2011 federal poverty threshold for families.

The numbers in the report were calculated using frugal, "survival" budgets - taking into account food, housing, utilities, child care, transportation, health care and clothing. Things such as education, travel, emergency savings and retirement were not included.

Federal poverty guidelines, however, were established in the 1960s - back when food, at about a third of a budget, was the biggest expense for a family. Today, families spend less than one-sixth of their income on food, while other costs have soared.

Plus federal guidelines not only underestimate today's costs of housing but they also fail to take into account child care.

"It's a very outdated measure," French said. "As long as child care, transportation and housing - which are the three largest portions of a family's budget today - as long as those keep growing over time, there's going be a continual disconnection between what families actually need to get by and what we use as a poverty definition and measurement."

Based on the data, Iowa Policy Project is recommending that government and other programs:

Raise income eligibility to 200 percent of the federal poverty guideline for child care assistance.

Increase the state earned income tax credit from 7 percent to 30 percent of the federal credit.

And increase Medicaid eligibility to 150 percent of the poverty-level income.

It's unlikely government and assistance programs can afford to make such a change any time soon. But it is clear that the poverty guidelines to be recalculated to better reflect the experience of struggling families.

- Iowa City Press-Citizen, June 3

 
 

 

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