Study: Families can’t afford basics

More than 200,000 working families in Wisconsin with one to three children under age 12 don’t earn enough to afford a basic family budget, the amount a family would need to afford food, housing, child care, health insurance, transportation and utilities.

One out of every five families in Wisconsin struggle to make ends meet. Nationally, 29 percent of working families in the United States fail to earn enough to afford a basic family budget.

“Hardships in America: The Real Story of Working Families,” analyzed by the Center on Wisconsin Strategy at UW–Madison, shows that the majority of these families are two parent families, often with one or more workers, and for the most part earning incomes above the official federal poverty level.

The report examines the cost of living in every community nationwide and determines separate basic family budgets for each community.

In Wisconsin, communities are near the national median of $33,511 for a basic family budget,which is roughly twice the official federal poverty line of $17,463 for a family that size.

“The official poverty line is a grossly outdated yardstick of what’s needed to keep a family afloat, as this report powerfully shows,” says Joel Rogers, a professor at UW–Madison and director of COWS. “It’s a long trek from the poverty line to even affording the basics in life.”

The authors describe two kinds of hardships faced by these low-income families:

• Critical hardships occur when families are unable to meet their basic needs.
• Serious hardships occur when families lack the tools to maintain employment and a healthy, stable home environment.

The report’s other key findings include:

• Nearly one-third of families with incomes below twice the poverty threshold faced at least one critical hardship, like going without food, getting evicted or having to “double up” in housing with another family, or not having access to medical care during an acute illness.

• Nearly three-quarters of families below twice the poverty threshold faced at least one serious hardship, like worrying about food, failing to pay rent, using the emergency room as their main source of health care, having the telephone disconnected, or having children in inadequate child care arrangements.

• Food insufficiency is the most common hardship. Eighteen percent of families below twice the poverty line missed meals involuntarily. Forty percent worried about having enough food to keep from going hungry.

• Of families with incomes below basic budget levels, half include a parent who works full-time. Nearly 60 percent are two-parent families. More than three-quarters are headed by a worker with a high school degree or more. And nearly half are headed by a worker over the age of 30. About one-third live in the suburbs, one-third live in cities, and one-third live in rural areas.

“Our safety net is full of holes,” says COWS research director Laura Dresser. “We’re quick to phase working families out of supports for health care, housing and other basic necessities well before they can afford them on their own.”

“Work alone doesn’t ensure a decent standard of living,” says Heather Boushey, an EPI economist and lead author of the study. “This report provides strong evidence of the need for policies that strengthen our social safety net and boost wages.”

The EPI report includes policy proposals for raising the earnings of low-income and poor families, including a minimum wage hike, an expanded Earned Income Tax Credit, more comprehensive job training programs, and stronger pay equity policies that help to ensure that women are paid as much as men.

Policies to boost income, however, are only part of a plan to ensure that all American families can afford a safe and decent standard of living, according to the report. Families that earn enough income to be ineligible for Medicaid, for example, are still often unable to afford private health insurance.

These experiences indicate that Americans at all income levels need a stronger social safety net,including universal health insurance, federally funded child care for children of all ages; affordable housing and economic development.