new research on family economic security: tools for advocacy celia hagert, senior policy analyst...

New Research on Family Economic Security: Tools for Advocacy

Celia Hagert, Senior Policy Analyst (hagert@cppp.org) Celia Hagert, Senior Policy Analyst (hagert@cppp.org)

Frances Deviney, Ph.D., Senior Research Associate Frances Deviney, Ph.D., Senior Research Associate (deviney@cppp.org)(deviney@cppp.org)

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

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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, hagert@cppp.org Frances Deviney, deviney@cppp.org

NCCP’s Family Resource Simulator Nancy K. Cauthen, nkc1@columbia.edu

Bridging the Gaps Project Heather Boushey, hboushey@cepr.net Deanna Schexnayder,

dschex@uts.cc.utexas.edu