The State of Wisconsin's (Working) Poor and How Policy Helps Pathways to Financial Success June 17, 2011 Julia Isaacs Joanna Marks Katherine Thornton Timothy 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 Overview Official (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 Ratio2009 Threshold (family of 4) NAS-Type Threshold for U.S. (2-adult, 2-child, no medical expenses) $26,778 WI COLA0.9177$24,575 Official Poverty Line (for comparison) $21,756

Adjust for Housing Tenure Source: Garner and Betson (2010) and authors’ calculations Housing Tenure Ratio2009 Threshold (family of 4) Base Rate--$24,575 Renter1.03$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 RegionRatio 2009 Threshold, 4-person, Renters Statewide -- $25, Inner Milwaukee1.00 $25, Outer Milwaukee and Waukesha1.05 $26, Dane County (Madison)1.04 $26, Other Metro areas0.99 $25, Rural 1 + Marathon0.92 $23, Rural $24,806 Source: IRP tabulations of ACS data.

Adjust for Out-of Pocket Medical Expenses Selected ExamplesAdjustment 2009 Threshold, 4-person, Renters in Inner Milwaukee Before medical expenses -- $25,312 Non-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 , and “2009” covers “ ” 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

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

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

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 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 & 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 (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:

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 --