New Research on Family Economic Security: Tools for Advocacy Celia Hagert, Senior Policy Analyst Frances Deviney, Ph.D., Senior Research Associate 900 Lydia Street, Austin TX

Family Economic Security Tools How much earnings are enough?  Family Security Index Estimates the basic cost of living in TX What happens when families don’t earn enough?  Family Resource Simulator Interactive tool showing relationship between family economic supports and family income How do you fill in the gaps?  Bridging the Gaps (research in progress) Examines the gap between family’s resources and expenses across income levels Examines the eligibility gap between the availability and actual use of public benefits

How much earnings do families need to make ends meet?

Family Security Index Toward an Alternative Poverty Measure Center for Public Policy Priorities

What is Poverty? The Idea of Poverty - a condition of economic hardship Quantifying Poverty - technical meaning to define who is poor – “federal poverty level” to measure how many people are officially poor – “poverty thresholds”

What is Poverty? The “federal poverty level” (FPL) - Individuals in families with income below the federal poverty level are considered poor Guidelines reflect the minimum amount of income that American households need to subsist Federal poverty “guidelines” are used to determine eligibility for many federal, state, and local programs Private organizations also use these guidelines to target their services to low-income families

Texas Children - Demographics  50% of Texas children live in low-income families (200% of poverty level or ~ $40K for a family of 4)  24% live in poor families (~$20K for family of 4) Low- Income Poor Employed parent86%76% Single parent43%52% Immigrant parents33%38% Percent Latino58%70% Source: NCCP analysis of U.S. Current Population Survey Data ( ) with additional RMC calculations

What is Poverty? SOURCE: Federal Register, Vol. 71, No. 15, January 24, 2006

What is Poverty?

What’s Wrong With the Poverty Measure? Conventional Thinking About Poverty No Longer Works  Established in the 1960s based on assumption that cost of food accounted for one-third of household spending  Significant shifts in household expenses since then  No measurement of other household costs  Varying rates of inflation for specific expenditures  Taxes and benefits not included  No provision for geographic variation  No accounting for change in standard of living

From Poverty to Family Economic Security  What’s acceptable? - Poverty defined as safe and decent standard of living, not a measure of deprivation  Poverty as a measure of costs, not income  In 2001, CPPP published Making It: What it Really Takes to Live in Texas,” featuring the “Family Security Index” and the “Family Security Portfolio”

What is the Family Security Index? A “market-basket” approach to determine how much income working families require to meet their basic needs Provides a realistic, yet conservative, estimate of the income needed to support working families in Texas Uses most current available data to estimate the specific costs faced by families of various size and composition Documents variation in costs across different regions of the state

Criteria  Geographically specific  27 “metropolitan statistical areas” (MSAs) in Texas  Variety of family types  Two-parent, single-parent, children of different ages, and adult households without children  Most conservative, yet realistic estimates – the “austerity check”

The “Austerity Check”  Does not include the cost of video rentals, movies, cable television, eating out, other entertainment, or long distance telephone.  Omits expenditures for birthday and holiday gifts.  Does not include any expenses for credit card debt, or for saving to cover education, retirement, or family emergencies.  Does not include cushion for emergency or unanticipated expenses (e.g., car repair)

Family Security Index Budget Items  Housing Cost of rent and utilities with exception of phone  Food Monthly cost of food prepared at home  Child Care Monthly cost of child care specific to age of child(ren)  Medical Costs of total health care premium plus monthly out-of-pocket  Transportation Gas, registration fees, taxes, routine maintenance, and loan payments  Other Necessities Local phone, clothing, personal care, housekeeping, and reading supplies  Payroll and Federal Income Tax  EITC, Child Tax Credit, and Dependent Tax Credit

Housing$596 Food$418 Child Care$492 Medical$612 Transportation$391 Other Necessities$321 Monthly Expenses$2,830 Monthly Expenses (For a family of two adults and two children in the San Antonio MSA) FSI 2001

Payroll Tax$216 Income Tax$225 Earned Income Tax Credit Child Tax Credit($83) Child & Dependent Care Credit($80) Taxes and Tax Credits$278 Federal Taxes (For a family of two adults and two children in the San Antonio MSA) FSI 2001

Necessary Monthly Income $3,108 Necessary Annual Income $37,300 Household Hourly Wage $ Poverty Threshold $17,463 Percent Poverty Threshold 214% What It Really Takes to Live in Austin (For a family of two adults and two children in the San Antonio MSA) FSI 2001

What It Really Takes To Live in Texas El Paso $35,131 Laredo $35,530 San Antonio $37,300 Brownsville $37,558 Lubbock $38,288 Houston $40,669 Dallas $43,461 Austin $44,044 (For a family of two adults and two children) FSI 2001

The Family Security Portfolio  Community-specific and comprehensive approach to help families meet basic needs and build economic security  Comprehensive set of services and programs to ensure the well-being of all working families in Texas, anchored by both private and public commitments  Improved wages and benefits a key component of the Family Security Portfolio  Family-based coordination of services from state and local government, non-profit service providers, faith- based organizations

The “Austerity Check”  Families often remain on Section 8 waiting lists for several years before receiving housing assistance  The Thrifty Food Plan assumes that families never purchase fast food or restaurant meals  5.5 million Texans, one-quarter of the population, were uninsured in Only 52 percent of Texans receive health insurance through their employers (9 percent below national average).  In all but one state, the yearly cost of full time child care exceeds annual public college tuition

How to Use the Family Security Index  Education - To create public understanding of the real constraints faced by families with limited income, even at what’s often considered a “moderate level” of income  Planning - To establish a more realistic benchmark for program planning and evaluation, especially welfare and workforce  Advocacy - To guide the coordination of joint state and local efforts to support low- and moderate-income working families

What happens when families don’t make enough?

Family Resource Simulator National Center for Children in Poverty

Family Resource Simulator (FRS) What is it? A state-specific, interactive, web-based tool to help policymakers determine:  How effective are work supports at helping low- wage workers make ends meet?  How well do our existing policies—and combinations of policies—encourage and reward employment?  Are there policy alternatives that would better support work? If so, what would they cost to implement?

Family Resource Simulator How the FRS Works The user creates a hypothetical family. Makes choices about:  City and state  Family characteristics  Child support income  Assets  Debts

Family Resource Simulator What the FRS Does  It calculates the aggregate impact of federal, state, and local policies on family resources and expenses as earnings increase.

Family Resource Simulator What the FRS Does (cont.) Its calculations include these benefits:  Child care subsidies  Food stamps  Public health insurance  Section 8 housing vouchers  TANF cash assistance

Family Resource Simulator What the FRS Does (cont.) Its calculations include these tax policies:  Federal, state, and local income taxes  Federal income tax credits (EITC, child/dependent care credit, child tax credit)  State and local income tax credits  Federal payroll taxes

Family Resource Simulator What the FRS Does (cont.) Its calculations include these expenses:  Child care  Food  Health insurance  Housing  Transportation  Other necessities

Family Resource Simulator What the FRS Does (cont.) The FRS results show the interaction of:  Earnings (from $0 to state median income)  Public benefits (cash and in-kind)  Taxes  Basic living expenses

Family Resource Simulator

Houston, TX: Single-Parent Family of Three Receiving TANF, child care subsidies, food stamps, public health insurance, and income tax credits

NCCP’s Making Work Supports Work What is it?  A collaborative project with state and national partners to improve state and federal policies to better support low-wage workers and their families. Project Objectives  Identify aspects of the current structure of work support policies that lead to high marginal tax rates.  Identify policy alternatives that would better support low-wage workers and use NCCP’s FRS to simulate their effects.  Estimate the cost of policy alternatives.

Using the FRS Complements the CPPP’s Family Security Index (How much is enough?) The FRS shows what happens to families’ resources when earnings aren’t enough:  What resources are available at what income levels  How families’ budgets are affected as their incomes increase and they lose their work supports  The perverse effect of public benefits policies on families’ economic security

How do you fill in the gaps between earnings and need?

Bridging the Gaps (BTG) Center for Economic and Policy Research, Ray Marshall Center for the Study of Human Resources, UT Austin,

Bridging the Gaps What is it?  Research (in progress) for four Texas cities that shows how much families need to earn to “break even” – Houston, Dallas Laredo, San Antonio  “Take-up Rates” – Estimates the eligible population for major public benefits and how many actually use these benefits – Child Care, Food Stamps, Medicaid, TANF, Housing

BTG Simulation Details Single parent with 2 children ages 3 & 8 Parent works 40 hours per week Receives all tax benefits (e.g., EITC, Child Tax Credit) Uses family homes for child care, regardless of subsidy Assumes use of Medicaid and CHIP when eligible, otherwise employer-based insurance Assumes no child support No savings, own car worth $2,000, no car debt Notes: $11,000 = minimum wage of $5.15 $26,000 = Texas median wage (Bureau of Labor Statistics)

BTG Simulation: Houston, TX Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (

BTG Simulation: Laredo, TX Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (

BTG Simulation: San Antonio, TX Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (

BTG: First break-even point for different combinations of earnings/benefits Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (

BTG: First break-even point for different combinations of earnings/benefits Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004 (

Multiple Break-even Points: Houston, TX For the following benefits: Tax Credits, Medicaid, FS, TANF, and CCDF Data Source: National Center for Children in Poverty, Family Resource Simulator: Texas 2004, (

How to use these tools Increase understanding of challenges facing low- income Texans; barriers to family economic security Illustrate how state policies encourage/discourage work Describe potential consequences to families if public benefits are cut Supports arguments/advocacy for:  A living wage  Stronger private sector commitments  Better work supports/outreach to increase participation  Policies that reward work

Contact Information CPPP’s Family Security Index  Celia Hagert,  Frances Deviney, NCCP’s Family Resource Simulator  Nancy K. Cauthen, Bridging the Gaps Project  Heather Boushey,  Deanna Schexnayder,