Economic Self Sufficiency vs. Living on the Financial Edge

By Elizabeth Krueger, Summer Fellow (@elizlk)

A recent PBS Need to Know episode paints a vivid portrait of what it means to be “Living on the Financial Edge.” Watch it and see how a working-but-poor family makes difficult trade-offs every day and month, living on $35,000 a year - well above the federal poverty line of less than $20,000 a year for a family of 3. The mother spreads out her medication rather than taking it as prescribed, the older son works all day without lunch, with a paycheck spoken for before it’s even earned. They have no savings and can’t look to the future, needing to devote all their energies to daily juggling.

Women’s Initiative seeks to help low-income women achieve financial self-sufficiency, but what exactly does that mean?

“To be truly economically secure, and leave poverty behind for good, people need enough money to be able to pay for the basics like rent, food, child care, health care, transportation, and taxes, and enough money to develop savings and assets.” Insight Center for Community Economic Development

In considering the situation portrayed on Need to Know, the family income wasn't enough to cover all its food or health care costs, much less the ability to save – and that’s at an income level nearly double that of the federal poverty guidelines. As the Insight Center describes, the federal poverty guidelines don’t reflect a meaningful measure of what it actually costs to live. The calculations don’t consider the costs of rent, child care, transportation or health care. The calculation is based only on the cost of food, which is assumed to be 1/3 of a family’s total cost of living, with no variation by region. Do you think milk, bread and eggs cost the same at a grocery store in San Francisco and Indianapolis? Neither do I.

The Insight Center has an online Self Sufficiency Calculator for California on its website, which paints a better picture of what income would be required for economic self-sufficiency. For San Francisco County, the annual income is around $48,000 for a family of 3 adults – more than $13,000 more than the family in Newark, NJ. And food costs are estimated at less than 1/5 of monthly income, unlike in the federal guidelines. According to the US Census Bureau, which uses the federal poverty guidelines, there were 46.2 million Americans living in poverty in 2010. Imagine how many people live below the much higher standard of true economic self-sufficiency.

For women driven to own their own businesses, Women’s Initiative can help. In addition to teaching women the necessary business skills, Women’s Initiative training covers personal financial literacy skills, similar to some of what was described in the Need to Know program. Women need to know how to avoid the pitfalls of the financial system, generate income and start to build savings to achieve self-sufficiency. 

The Fight for Food: SNAP Benefits & Spending Cuts

By Kelly Baker, Regional Evaluation Associate VISTA

"It is hard to believe that in 2012 we are debating feeding people.”

The hard-hitting final words of Congresswoman Barbara Lee truly strike a chord, considering that the amount of people living under the poverty line has risen to an all-time high, with 46.2 million people living in poverty in 2010.

Last week, the congresswoman said these words arguing against the proposed new farm bill in the House of Representatives, which proposes $35 billion in spending cuts, including $16.5 billion from the Supplemental Nutritional Assistance Program (SNAP or, more informally, food stamps). By eliminating “categorical eligibility”, 2 to 3 million people would no longer qualify for the program.

Unquestionably, SNAP benefits are critical in keeping millions of our citizens out of extreme poverty. In a two-part blog post on the outcomes of the SNAP program, Stacy Dean cites a study from the National Poverty Center: “Counting SNAP benefits as income reduces the number of households in extreme poverty in 2011 from 1.46 million to nearly 800,000, the study found (see graph).  And it reduces the number of children in extreme poverty in 2011 by half — from 2.8 million to 1.4 million.”
 


About 14% of Women’s Initiative clients first come through our doors dependent upon public assistance. Moreover, 20% of our clients are low-income single mothers and single-mother households have a 31.6% poverty rate, as compared to a 6.2% poverty rate for families headed by a married couple. Many opponents of government assistance programs posit that such programs perpetuate a cycle of dependence. However, we have seen at Women’s Initiative that by providing specialized training and space for personal growth and empowerment, even some of the neediest welfare recipients can become self-sufficient and provide for themselves and their families. In fact, just 12 months after training, only 12% of our clients are still receiving assistance and two years out that number drops to 8%. Additionally, the average amount of benefits received decreases from $575 to $391 after one year, and further reduced to an average of $266 two years after training. Thus, not only do our clients manage to decrease the amount of benefits they receive, but many are able to get off of them entirely.

Food assistance is a fundamental resource for many of our clients as well as the volunteers at Women’s Initiative. Personally, as an AmeriCorps VISTA member, I know that many of my fellow volunteers would not be able to make the full-time commitment to our organization and others like us without this vital supplement to our modest living stipend.

Thank you, Congresswoman Lee, for fiercely defending an essential program for our community.

Of course, government assistance programs continue to be a hotly debated topic (just take a look at the comments left on the congresswoman’s Facebook post). What are your thoughts? Do you agree with the congresswoman's argument?