# Presentation: 149123

## 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

## Working Towards Self-Sufficiency:A 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

## 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.

## 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

## 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

##  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 adults—including 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.

## 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.

## Study Sample  includes 5 states:  California, Washington, Colorado, New Jersey & Connecticut

##  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.

##  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.

## 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%.**

##   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

##   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

##  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 (women’s pay gap, etc.,) by itself does not explain the large householder difference by gender.*

## 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%)

## 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.

##  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.

## 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**.

## 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.

##  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.

## 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.

## 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.

## 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

## 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

## 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**

## 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**

## 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

## 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.

## 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).

## 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.

## 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.