The State of Wisconsin's (Working) Poor and
How Policy Helps
Julia Isaacs
Joanna Marks
Katherine Thornton
Timothy Smeeding
Pathways to Financial
Success
June 17, 2011
Acknowledgements
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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
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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
NAS-Based, SPM-Like
Threshold
Developed in 1960s, based on
food costs and expected share
for food budget, since adjusted
for prices only
Basic expenses food, clothing,
shelter, utilities (FCSU)
Adjusted for Wisconsin cost of
living, housing tenure & medical
expenses
Cash income (pre-tax)
Cash income
Census “Family” Unit
Family expanded to include
unmarried partner & foster
children
+/-- Taxes & tax credits
+ Non-cash benefits
-- Work expenses (incl childcare)
Building Thresholds: Adjust for
Wisconsin Cost of Living
Ratio
NAS-Type
Threshold for U.S.
2009 Threshold
(family of 4)
$26,778
(2-adult, 2-child, no
medical expenses)
WI COLA
Official Poverty Line
(for comparison)
0.9177
$24,575
$21,756
Adjust for Housing Tenure
Housing
Tenure
Base Rate
Ratio
2009 Threshold
(family of 4)
--
$24,575
Renter
1.03
$25,587
Owner with
mortgage
1.01
$25,312
Owner with no
mortgage
0.78
$19,169
Source: Garner and Betson (2010) and authors’ calculations
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
Non-elderly, private insurance,
good health
Non-elderly, public insurance,
good health
Elderly, public insurance,
fair/poor health
Official Poverty Line
+$1,946
$25,312
$27,258
+$58
$25,370
+$1,965
$27,277
--
$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
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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
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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
Poverty Rates by Income Definition,
2008 and 2009
23.8
25
21.3
20
15.2
15
13.2
11.5
11.2
10
5
Market Income
(Income from
earnings & private
sources)
Cash Income
(includes Social
Security & other
cash benefits)
Full WPM
Disposable Income
(includes non-cash
benefits & taxes)
0
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)
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
Poverty Rates in 2009 by Income
Definition and By Age, in 2009
60
51
50
40
30
25
21
18
20
13
14
11
10
11
10
Market Income
(Income from
earnings & private
sources)
Cash Income
(Includes Social
Security and other
cash benefits)
Full WPM
Disposable Income
(Includes non-cash
benefits & taxes)
0
Child <18
18-64
'65 and older
Note: All poverty rates measured with WPM thresholds and include
adjustments for work expenses. Source: IRP tabulations of 2009 ACS
data. (IPUMS)
Marginal Effects of Public Policies
in Wisconsin
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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
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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.
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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
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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
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Conventional – Official measure shows increase in
Wisconsin poverty between 2008 & 2009.
WPM demonstrates that public policies offset the
declines in earnings/cash income.
–
–
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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
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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
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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
smeeding@lafollette.wisc.edu
Questions and Comments?
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THANKS for Listening --