As we recover from the great recession, the need to create jobs is foremost in the minds of the public and the promises of politicians. But if too many jobs don’t pay enough to cover the basic needs of a family, we may only dig ourselves further into a hole and cripple our ability to support the next generation of Americans.
So what is an adequate income to meet those basic needs? The question is important, as it determines how we set goals, determine eligibility for public support, and understand many problems in society. Yet the tool most commonly used to measure this, the federal poverty level (FPL), is long out of date. It considers only cash income and expenses of three times the cost for a 1950s diet. That was appropriate when the measure was created, as food took up a third of the typical household budget at the time. Today it is less than one-tenth. The measure also does not adjust for differences in the cost of living by region or family type.
Several attempts have been made to improve on the FPL. The most advanced tool for Oklahoma has been the self-sufficiency standard, which takes into account the cost of food, housing, health care, transportation, and other necessary expenses, including geographic variations and costs for children of different ages. The Obama administration has also begun releasing a Supplemental Poverty Measure alongside the traditional FPL, to incorporate a broader set of expenditures and income sources.
Now there’s another new tool to help us understand what workers need. Last week, Wider Opportunities for Women released their Basic Economic Security Tables (BEST) for the United States. BEST draws on numerous data sources to calculate the minimum income needed to pay for housing, utilities, food, transportation, child care, household items, and health care, with and without employment-based benefits. Most of these measures are in the self-sufficiency standard, but the BEST goes beyond that by including emergency and retirement savings, as well as asset building to save for higher education and homeownership.
BEST calculates the needs of over 400 different family types consisting of one or two workers and up to six children. The initial report includes six states and Washington DC, but WOW plans to release data for every state and metro area.
As Michael Sherraden, a consultant on the project, told the New York Times, “It’s an index that asks how can a family have a little grasp at the middle class. If we’re interested in families being able to be stable and not have their lives disrupted and have a little protection and backup and be able to educate their children, then this is the way we have to think.”
The standard is important to ensure that the benefits of economic growth are fairly shared. As the BEST report notes, an economic shift to lower-paying, lower-benefit jobs risks leaving even those who are employed trapped in poverty:
Fewer than 13% of jobs the US Department of Labor expects to be created by 2018 are likely to provide economic security to a single parent raising two or more children. A small majority of new jobs are expected to pay economic security wages for single workers without children, and approximately 43% of the new jobs will pay economic security wages for two workers raising two young children.
The BEST calculations show that even those who work hard can be unable to make ends meet. At a time when federal and state programs relied on by the poor and middle class are under serious threat, it’s a message we should take to heart.