Working Towards SelfSufficiency: A New Look at Work, Welfare

1
Working Towards Self-Sufficiency A New Look at
Work, Welfare Poverty

• By Diana M. Pearce
• School of Social Work, University of Washington
• ACF 10th Annual Welfare Research and Evaluation
  Conference
• June 3, 2007

2
Working Towards Self-SufficiencyA New Look at
Work, Welfare Poverty

• Four topics today
• 1. The Self-Sufficiency Standard, why it is
  used in this study
• 2. Methodology
• Findings for 5 states
• Implications for Welfare Policy anti-poverty
  programs

3
Defining Poverty Two Perspectives

• America now engages in a bifurcated discussion
  and analysis of poverty
• 1 We all know what we mean by poverty it
  is not having enough to meet your needs.
• Most debate revolves around how to measure either
  needs, or resources/ capabilities, or both.
• Popular newspaper articles and qualitative
  research uses the instinctive or self-reported
  definition, e.g., hardships.

4
Defining Poverty Two Perspectives

• 2 At same time, while acknowledging its
  inadequacies, most researchers and government
  programs use the FPL
• Result We reference one thing in our head when
  we say poverty, and another when we measure it.
• This study addresses this inconsistency between
  what we mean and what we measure by using a more
  realistic measure of income adequacy

5
This study uses the SSS rather than the FPL

• It does not use the federal poverty level to
  determine who these families are, for two
  reasons
• 1 Federal poverty level is too low many
  families above the poverty line still have too
  little to meet the basics of rent, food, etc.
• 2 Federal poverty level is the same
  everywhere, does not take into account different
  family compositions, or different costs in
  different places

6
Why use the Self-Sufficiency Standard ?

• The Self-Sufficiency Standard is a measure of
  income adequacy that
• varies by place
• varies by family type
• is based on a bare bones budget that accounts for
  the basics for families with working age
  adultsincluding work costs such as child care,
  transportation, and taxes
• Uses Government figures for costs, whenever
  possible, such as FMRs, Child care subsidies
• Now found in 35 states, it is being widely used
  in workforce development, online calculators, etc.

7
Study Methods

• Using Census data, we coded households with their
  appropriate SSSs, based on family composition and
  where they live in each state (usually county).
• We excluded elderly and disabled, their
  households and their income, as the SSS is meant
  to be used for working age adults and their
  families, reflecting their work-related costs,
  including transportation, taxes, child care.

8
Study Sample includes 5 states California,
Washington, Colorado, New Jersey Connecticut
9
Findings 1 - Overall

• Except in California, about one in 5 households
  has income below their Self-Sufficiency Standard.
  In California, it is about 3 out of ten
  households.
• This is about 2.5-3 times as many people who are
  below the federal poverty level level in each
  state 20 vs. 7-8, except California, where it
  is 30 vs. 10.
• Most of these households below the Standard live
  in a policy gap with incomes too high to
  qualify for programs, but too low to meet their
  needs.

10
Findings 2 - Geography

• Geographically, income inadequacy is concentrated
  in different areas in different states
• In WA CO CA, in rural counties, especially
  Eastern WA, SE Colorado, the valley in CA.
• In Connecticut, it is concentrated in urban areas
  Hartford, New Haven, Bridgeport
• In New Jersey, counties with the highest levels
  include both rural and urban Cumberland, Ocean,
  but also Passaic, Hudson, Essex
• In spite of higher costs, high cost places, e.g,
  Seattle San Francisco, nevertheless have lower
  numbers below the SSS.

11
Findings 3 Race/Ethnicity

• In terms of race/ethnicity, Latino households
  have the highest proportion below the Standard
  42 NJ-55 CA, followed by Black 34-39,
  Native American -27-35, Asian-Pacific Islander
  -17 NJ-28, and White -13-19.

12
Findings 3 Race-Ethnicity Citizenship

• However, foreign birth and citizenship status
  affect income adequacy, particularly for Latinos
  - for example, in Colorado
• If native born, 36 have inadequate income
• If foreign born, but naturalized citizen, 47
• If foreign born, but not a citizen, 61
• For non-Latinos, these numbers are 17, 20 and
  31 - much less difference by citizenship
• On the East Coast, however, in CT, 86 of
  Latinos are Puerto Rican, more than half of
  native-born, Hispanics, are below the SSS

13
Findings 4 - Gender

• If we compare households by the gender of the
  householder, those with women householders are
  more 1.5 to 2 times as likely to have incomes
  below the Standard than those maintained by men.
  
• Why? This is complex, and could be due to any
  one, or all three of three factors
• 1 - Gender of the household head e.g., women
  earn less
• 2 Parental Status women-maintained households
  more likely to have children
• 3 - Number of workers women-maintained
  households likely to have only one worker

14
Findings 4 Gender cont.

• 1 Gender First looked at pure gender, by
  comparing non-family households, mostly singles,
  men vs. women.
• Not much difference, with 18-22 of women
  householders compared to 17-18 of men
  householders being below the Standard.
• Perhaps small differences due to most of these
  single person households are young, so less pay
  difference.
• But still gender (womens pay gap, etc.,) by
  itself does not explain the large householder
  difference by gender.

15
Findings 4 Gender cont.

• 2 -Parental Status. Children do increase the
  likelihood of being below the Standard, roughly
  doubling the odds only about 12-14 of
  households with no children lack adequate income,
  compared to 27-29 for one or more children
  (except CA 42).
• This is especially true if any children are under
  the age of six about one-third to 40 of
  households with one or more children under age
  six have incomes below the Standard, compared to
  about one-fifth of those with children, but none
  below age six. (CA 52)

16
Findings 4 Gender cont.

• When we divide families with children by both
  gender and parental status, we find that
• married couples with children have the lowest
  rate of income inadequacy, 18-23, while single
  mothers have the highest, 54-65.
• The relatively small number of single father
  households have rates that fall in-between,
  35-38, closer to the married couple than the
  single mother rate.

17
Findings 4 Gender cont.

• The rates are even higher for families of color,
  and highest for single mothers of color.
• Moreover, for single mothers, especially single
  mothers of color, a higher proportion are not
  only below the Standard, but are also below the
  federal poverty line, about one-third to almost
  one-half, depending on the race-ethnic group.

18
Findings 4 Gender cont.

• 3 Number of Workers
• It is certainly the case that not having any
  workers results in high levels of income
  inadequacy two-thirds to over 80 of these
  households lack adequate income.
• But households with zero workers are only 4-6 of
  all households, and 78-85 of households without
  adequate income, have at least one worker in
  them, and 50-70 of these have a full-time
  year-round worker.

19
Findings 4 Gender cont.

• The number of workers in a household does make a
  difference 25-35 of households with just one
  worker have inadequate income compared to 10-20
  with two (or more) workers.
• At the same time, there are ways of reducing
  poverty for the one worker household, mainly via
  work patterns
• When we do so, we find much bigger differences by
  work patterns than simply number of workers.

20
Findings 4 Gender cont.

• In the one worker households, if the one worker
  works full-time year-round, then only about one
  in eight of such households lacks adequate
  income.
• In the two (or more not many of these) worker
  households, if some adults do not work, or all
  work only part-time and/or part-year, then the
  rate jumps to about 27 to one-third. But if
  both workers work, and at least one is full-time
  or full-year, then income inadequacy drops to
  about one in eight or nine households.

21
Findings 4 Gender cont.

• While gender alone does not account for income
  inadequacy, it is clear that the combination of
  gender, parental status, and work pattern results
  in high levels of income inadequacy. In short,
  being a single mother who works less than
  full-time year-round results in high levels of
  income inadequacy.

22
Findings 5 - Occupations

• One of the sources of income inadequacy could be
  that householders with inadequate income are in
  low-wage occupations.
• To test this, we compared the top ten
  occupations for all householders, to those held
  by householders who are below the Standard. In
  all but California, 7 or 8 of these 10
  occupations are shared by these 2 groups 10 of
  10 in NJ, but only 5 out of 10 in CA.

23
Findings 5 - Occupations

• Likewise, there is not much difference by gender
  or race in terms of the occupations held by those
  with incomes below the Standard.
• Seven of the top ten occupations held by male
  householders with incomes below the Standard, are
  also held by female householders below the
  Standard.
• And, of the top ten occupations held by white
  householders, at least seven are shared with each
  nonwhite racial group

24
Findings 6-Hours vs. Earnings

• As with occupations, there is not a large
  difference in hours worked between householders
  above and below the Standard those above work
  about 19-36 more hours than those below.
• However, the wages of those below the Standard
  average 7.83-11.76 p/hr, while those above
  average about 22-32 p/hr, 2.5 3 times more
  than the wages of those below the Standard

25
Findings 6-Hours vs. Earnings

• In short, increasing hours of work for those
  below the Standard would only close 12-17 of the
  gap, while raising wages would close 83-88 of
  the gap

26
Findings 7-A Profile

• What are the characteristics of those below the
  Standard?
• While some groups have much higher rates of
  income adequacy, at the same time, households
  below the Standard look a lot like all of us
• 60-70 are white (CA-34, NJ-40), while Latino
  percentages range from 12 in WA to 46 in
  California
• 8 out of 9 are US citizens (CA 2 out of 3)
• 3 out of 5 have children

27
Findings 7-A Profile

• 3 of 5 family households are married-couple
  households, and only about 1 in 16 is headed by a
  never married mother
• Only about 1 in 5 has less than a high school
  degree (CA-31), 1/4th have a high school degree
  (CT-31,NJ-36), and at least one-third have at
  least some college.
• 85 have at least one worker, half of these being
  full-time year-round
• Only 6-11 receive public assistance

28
Working towards Self-Sufficiency Conclusions

• 1 - Lacking adequate income characterizes 1 in
  5 households, and as a group, this 1/5th looks a
  lot like everyone else in terms of race,
  education, family structure.
• Thus, the problem of income inadequacy is not
  about individual characteristics, it is
  structural.

29
Working towards Self-Sufficiency Conclusions

• 2. The problem of income inadequacy is not
  about the lack of work either. Most households
  below the Standard have at least one worker,
  working substantial number of hours. Most are
  working, many almost to the max, yet not
  earning enough.
• (Not at all like what people thought 10 years
  ago, in the run up to welfare reform).

30
Working towards Self-Sufficiency Conclusions

• 3.Because the majority of these families have
  incomes above the federal poverty level, but
  below the Standard, they are in a policy gap,
  earning too much to qualify for help, but too
  little to meet their needs.
• Thus expanding safety net programs especially
  the high cost items of housing, child care,
  health care, etc. and tax credits can lower
  costs and raise income.

31
Working towards Self-Sufficiency Conclusions

• A final note this is really good news. As a
  group, households below the Standard are part of
  the mainstream workforce, and are not locked out
  of self-sufficiency by geographical isolation,
  lack of education, or other differences.
• At the same time, this data calls for a serious
  consideration of how to raise wages and reduce
  costs, particularly for families with children,
  households maintained by women and/or people of
  color--especially Latinos, who are the groups
  most vulnerable to income inadequacy.