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The State of Wisconsin's (Working) Poor and How Policy Helps
Pathways to Financial Success
June 17, 2011
Julia Isaacs Joanna MarksKatherine ThorntonTimothy Smeeding
Acknowledgements
Thanks to co-authors Support from ASPE/HHS and Census Bureau Assistance from experts in national and state
and local organizations working on new poverty measures
Input from stakeholders in the state Access to Wisconsin’s rich administrative data
housed at IRP
Objectives of Wisconsin Poverty Project and This Lecture
Develop an updated and more comprehensive measure of poverty that includes the effects of a wider range of federal and state policies on economic well-being than does the current federal only measure
Examine poverty at state and sub-state levels and among different demographic groups
Provide a transparent, straightforward model for other states and localities to emulate
Methods: An OverviewOfficial (Fed/State) Measure Our Wisconsin Measure
Official poverty line Developed in 1960s, based on food costs and expected share for food budget, since adjusted for prices only
Cash income (pre-tax)
Census “Family” Unit
NAS-Based, SPM-Like Threshold Basic expenses food, clothing, shelter, utilities (FCSU)Adjusted for Wisconsin cost of living, housing tenure & medical expenses
Cash income +/-- Taxes & tax credits+ Non-cash benefits -- Work expenses (incl childcare)
Family expanded to include unmarried partner & foster children
Building Thresholds: Adjust for Wisconsin Cost of Living
Ratio 2009 Threshold (family of 4)
NAS-Type Threshold for U.S. (2-adult, 2-child, no medical expenses)
$26,778
WI COLA 0.9177 $24,575Official Poverty Line (for comparison)
$21,756
Adjust for Housing Tenure
Source: Garner and Betson (2010) and authors’ calculations
Housing Tenure
Ratio 2009 Threshold (family of 4)
Base Rate -- $24,575
Renter 1.03 $25,587
Owner with mortgage
1.01 $25,312
Owner with no mortgage
0.78 $19,169
Adjust for Within-State Differences in Cost of Living
Region Ratio 2009 Threshold,
4-person,
Renters
Statewide -- $25,312
1. Inner Milwaukee 1.00 $25,312
2. Outer Milwaukee and Waukesha 1.05 $26,578
3. Dane County (Madison) 1.04 $26,324
4. Other Metro areas 0.99 $25,059
5. Rural 1 + Marathon 0.92 $23,287
6. Rural 2 0.98 $24,806
Source: IRP tabulations of ACS data.
Adjust for Out-of Pocket Medical Expenses
Selected Examples Adjustment 2009 Threshold,
4-person,
Renters in Inner
Milwaukee
Before medical expenses -- $25,312Non-elderly, private insurance, good health
+$1,946 $27,258
Non-elderly, public insurance, good health
+$58 $25,370
Elderly, public insurance, fair/poor health
+$1,965 $27,277
Official Poverty Line $21,756
Methods: Resources
Cash income
+/- Taxes & credits (federal, state, payroll)
+ Food stamps (SNAP)
+ Energy assistance (LIHEAP)
+ Public housing
- Work expenses (including child care)
= Resources
Methods: Imputing Resources
Data used for SPM (the CPS) do not produce reliable state-level estimates (unless pool 2 yrs)
American Community Survey (ACS) allows reliable state-level (and sub-state level) estimates but does not have all necessary data (e.g., taxes, non-cash benefits, work expenses)
Our estimates based on imputations of taxes, SNAP benefits, energy assistance, housing, work and child care expenses.
Results
Change in poverty 2008 to 2009 Child and elderly poverty Effects of public policies Poverty by geographic region Note: Because of the way ACS collects data,
“2008” covers 2007-2008, and “2009” covers “2008-2009.” So, we’re looking at early effects of recession here, more next year
Poverty Rates: 2008 & 2009
Official Poverty Rates in Wisconsin : 2008 & 2009
Note: All poverty rates measured with WPM thresholds and include adjustments for work expenses. Source: IRP tabulations of ACS 2008 and 2009 data (IPUMS)
Poverty Rates by Income Definition, 2008 and 2009
21.3
23.8
13.2
15.2
11.2 11.5
0
5
10
15
20
25
2008 2009
Market Income(Income fromearnings & privatesources)
Cash Income(includes SocialSecurity & othercash benefits)
Full WPMDisposable Income(includes non-cashbenefits & taxes)
Change in Poverty Rate, 2008 to 2009 (percentage points)
Child and Elderly Poverty Rates in Wisconsin : 2008 & 2009
Child and Elderly Poverty Rates In Wisconsin : 2008 & 2009
Child and Elderly Poverty Rates: 2008 & 2009
Child and Elderly Poverty Rates: 2008 & 2009
Note: All poverty rates measured with WPM thresholds and include adjustments for work expenses. Source: IRP tabulations of 2009 ACS data. (IPUMS)
Poverty Rates in 2009 by Income Definition and By Age, in 2009
25
18
51
21
1411
1311 10
0
10
20
30
40
50
60
Child <18 18-64 '65 and older
Market Income(Income fromearnings & privatesources)
Cash Income(Includes SocialSecurity and othercash benefits)
Full WPMDisposable Income(Includes non-cashbenefits & taxes)
Marginal Effects of Public Policies in Wisconsin
SNAP and EITC have big poverty reduction effects (in 2008, and bigger ones in 2009)
Work-related expenses and medical expenses tend to increase poverty
State and federal policies that either increase resources or reduce costs for basic needs are both important aspects of anti-poverty policy
Marginal Effects of Public Policies
Marginal Effects of Public Policies
Marginal Effects on Child Poverty
Marginal Effects on Elderly Poverty
Effects Within Wisconsin and Its Localities
The State picture—what stands out ? --The ‘white’ ring north of and almost surrounding
Milwaukee
--Poverty in the south and northwest
--Poverty highest in Milwaukee County, then Dane County.
Then look within Milwaukee county –WOW ! The economic segregation is very large
Source: IRP Tabulations of 2009 ACS Data (IPUMS-USA)
Milwaukee County--
Implications for Financial Security
The long run solution to poverty is a good job and some savings for a rainy day
Still, the safety net worked well in 2009 Wisconsin has to work on BOTH keeping
its safety net and on financial self sufficiency for families
BUT the jobs part will be a long time coming, I am afraid
Conclusions
Conventional – Official measure shows increase in Wisconsin poverty between 2008 & 2009.
WPM demonstrates that public policies offset the declines in earnings/cash income.
– Built-in responses to recession (e.g., rise in SNAP caseloads)
– Congressional action (e.g., ARRA’s expansion of tax credits)
– State’s actions (e.g., success in enrolling families on SNAP) Net effect was that poverty did not increase, under
our more comprehensive measure
Next Steps
Reports available at http://www.irp.wisc.edu (3 levels of detail)
Repeat in 2010 to see how things worked out We will share Wisconsin concepts and code
with any state so that anyone can benefit from our work to date – and we are continuing to work to model the SPM at the state level using ACS data
See: http://www.irp.wisc.edu/research/wipoverty.htm
Next Financial Steps for WPM
This is the ‘Wisconsin Idea’ in practice We need to find state funding (non-profits or
other) to continue on with the measure Ideas welcome
Questions and Comments?
THANKS for Listening --