The "New Poverty"

Women + Girls Research Alliance The “New Poverty”

The “New Poverty�

The UNC Charlotte Urban Institute prepared this report in conjunction with the Women + Girls Research Alliance and with funding from the Alliance.

Table of Contents Introduction ....................................................................................................................................................................................................................... 1 Poverty Guidelines ......................................................................................................................................................................................................... 1 Individuals in Poverty .................................................................................................................................................................................................. 2 Benefit Guidelines ........................................................................................................................................................................................................... 3 The “New Poverty� ......................................................................................................................................................................................................... 6 Housing................................................................................................................................................................................................................................. 7 Conclusion........................................................................................................................................................................................................................... 9

Introduction Since its creation in 2006, the Women + Girls Research Alliance (formerly known as Charlotte-Mecklenburg Women’s Summit) has been providing data-driven reports to the community that focus on issues important to women. In 2008, the Women + Girls Research Alliance created an action book addressing significant issues women face in Mecklenburg County and the United States. The book highlighted action steps recommended to create change in the community. Topics ranged from domestic violence to pay equality and health, many of which are intrinsically linked to poverty. Women and families living in poverty often contend with many of these issues because of their economic status. For example, some, if sick, may not seek medical attention until a health issue has become so great that it is more costly to treat or the treatment more extreme. Since the release of the action book in 2008, additional research has been conducted on the economic status of women during and after the Great Recession.

There has been a substantial focus on the economic impacts of the Great Recession and the recovery in Mecklenburg County. It is important to understand how changes in the economy affected the cost of living and the individuals and families struggling financially because of the Great Recession. Although some families and individuals qualify to receive benefits because their income is less than federal poverty guidelines, others struggle but earn too much to qualify for benefits. These individuals and families are being referred to as the “new poverty.” “New poverty” includes people who earn too much to qualify for social benefits but are still unable to live comfortably from the income they earn. This report focuses on individuals living in poverty, poverty limits and guidelines, and those above the poverty line in Mecklenburg County who fall into the “new poverty” category and struggle to meet basic financial needs.

Poverty Guidelines Federal levels of poverty depend on the size of a family. However, there are two different versions of federal poverty measures: one includes poverty thresholds and one includes poverty guidelines. The U.S. Census Bureau uses poverty thresholds, which are the federal poverty measures updated annually and used for statistical purposes. These thresholds are used to calculate the estimated annual number of people living in poverty, the official poverty population figures.

Poverty guidelines are different and are issued by the U.S. Department of Health and Human Services in the Federal Register. Poverty guidelines are used for administrative purposes to determine financial eligibility for federal programs. Poverty guidelines are calculated annually. Guidelines for the 48 contiguous states and the District of Columbia are what the majority of Americans adhere to (different guidelines are calculated for Alaska and Hawaii).1 In 2013, the federal poverty guideline for an individual was $11,490. The poverty guideline for a family of four was $23,550, which is what many people think of when considering poverty guidelines. The poverty guidelines

1 Office of the Assistant Secretary for Planning and Evaluation. <http://aspe.hhs.gov/poverty/13poverty.cfm>.

increase as the number of family or household members increase. A household with eight people has a poverty guideline of $39,630.2 Figure 1 presents the guidelines based on the number of household members.

Figure 1: Poverty Guidelines by Number of Persons in a Household

Individuals in Poverty In Mecklenburg County, the number of individuals in poverty increased from the beginning of the Great Recession in 2008 from 91,961 to 151,308 in 2012. During this time, the percent of women living in poverty has consistently been greater than men. While 11.1 percent of women in Mecklenburg County lived below the poverty line in 2008, this percentage grew to include 17.2 percent of women in 2012. In 2012, 35,455 more women in Mecklenburg County were living in poverty than in 2008. In comparison, an additional 23,892 men in Mecklenburg County were living in poverty during this time. These totals equate to an increase of 71.6 percent for women and 56.3 percent for men. This pattern is consistent with North Carolina and national trends. The percent of women living in poverty was less in Mecklenburg County, compared with state and national data from 2008 to 2010. In 2011, the percent of women living in poverty in Mecklenburg County was greater than women nationally but was still less than North Carolina, as illustrated in Figure 2.3

2 Office of the Assistant Secretary for Planning and Evaluation. <http://aspe.hhs.gov/poverty/13poverty.cfm>.

3 U.S. Census Bureau American Community Survey 1 Year Estimates

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Table B17001.

Figure 2: Percent of Individuals in Poverty by Gender

Benefit Guidelines Some federal and state benefits have thresholds and requirements in addition to or other than the guidelines for poverty levels that households and individuals must qualify for to receive benefits. Many programs have financial income limits that are scaled for different size households and families. A defined federal poverty guideline identifies the limit a family can earn to qualify for federal poverty benefits. Guidelines for other benefits available for those who meet the poverty requirements may differ.

One example of another benefit program with different eligibility requirements is the federal Food Stamp Program known as the Supplemental Nutrition Assistance Program (SNAP). This federal program also is known as Food and Nutrition Services in North Carolina and provides assistance to low-income families via Electronic Benefit Transfer cards that have a monthly allotment issued on them. Recipients are able to use the benefits provided to purchase most foods at participating stores. The program is available for any individual or household that meets the financial requirements. Examples of limited financial resources include little to no investments in savings and retirement accounts. Benefits of this federal program are distributed by each state, and financial requirements differ by state.4 The 2014 Farm Bill recently passed and has reduced SNAP benefits by $8 billion during the next 10 years. The reduction in benefits will mean that many food stamp recipients in Mecklenburg County and North Carolina will experience a reduction in benefits. Nationwide, 850,000 households will receive reduced benefits, according to the Congressional Budget Office.5, 6 In 2012, 406,756 (16.5 percent) North Carolina households received food stamp benefits. In Mecklenburg County, 34,067 (15.2 percent) households received food stamp benefits.7 For the receipt of food stamp benefits in North Carolina, qualifications in addition to being low income include being a North Carolina resident and either having a current bank balance under $2,001, or a current bank balance under $3,001 and sharing a household with a person or persons ages 60 and older or with a person with a disability.

4 Benefits.gov. <http://www.benefits.gov/benefits/benefit-details/1389>.

Washington Post. <http://www.washingtonpost.com/blogs/post-politics/wp/2014/02/04/farm-bill-passes-after-threeyears-of-talks/>.

6 U.S. Department of Agriculture. <http://www.fns.usda.gov/snap/legislation>.

7 U.S. Census Bureau American Community Survey 1 Year Estimates Table C22007.

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Figure 3 illustrates the maximum household income for food stamp eligibility by household size. A one-person household must have an annual household income less than $14,079; $18,941 for a two-person household; $23,803 for a three-person household; $28,665 for a four-person household; $33,527 for a five-person household; $38,389 for a six-person household; $43,251 for a seven-person household; and $48,113 for an eight-person household. For households greater than eight, $4,862 is added for each additional person in the household to calculate the maximum annual household income to remain eligible for benefits.8 Figure 3: Maximum Annual Household Income for Food Stamp Eligibility by Household Size

Medicaid, another benefit program for impoverished individuals, has different eligibility requirements.

Eligibility requirements for Medicaid differ by program for individuals and families. Some programs have specific financial requirements that place recipients within the federal poverty guidelines. Other programs have eligibility based on age or disability qualifications such as Medicaid for blind, aged, or disabled individuals.

Figure 4 illustrates the basic eligibility requirements for different Medicaid programs in North Carolina.

Although some programs base eligibility on age requirements, others use poverty status or limited annual incomes.

Women are eligible for specific programs based, in part, on gender or age limits. Women are eligible for the Pregnant Women MPW program as well as the Breast and Cervical Cancer Medicaid MAF-W and Family Planning MAF-D. These programs differ in basic eligibility requirements although all require enrollees to be women. The Pregnant Women MPW program requires women to provide a medical verification that they are pregnant. The Breast and Cervical Cancer Medicaid MAF-W program requires a woman to be screened and enrolled in the NC Breast and Cervical Cancer Control Program and who are otherwise ineligible for Medicaid.

The Family Planning MAF-D requires women to be between the ages of 19 to 55 and not otherwise eligible for Medicaid.9

8 Benefits.gov. <http://www.benefits.gov/benefits/benefit-details/1389>.

9 North Carolina Department of Health and Human Services. <http://www.ncdhhs.gov/dma/medicaid/who.htm>.

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Figure 4: Medicaid Assistan ce Groups Basic Eligibility Requirements Medicaid Assistance Groups10

Basic Eligibility Requirements

Beneficiaries of Cash Assistance Programs AAF, SABD, MSB SSI cases

Beneficiaries of the following cash assistance programs are automatically entitled to Medicaid. No separate Medicaid application or Medicaid eligibility determination is required. The cash assistance programs are: Work First Family Assistance–NC program under the federal Temporary Assistance to Needy Families law that provides cash assistance to families with children. Supplemental Security Income–Federal cash assistance program for aged, blind, and disabled individuals. State/County Special Assistance–State cash assistance program for aged and disabled individuals, primarily who are in adult care homes. Special Assistance to the Blind–State cash assistance program for blind individuals.

Aged MAA

Ages 65 and older

Blind MAB

Blind by Social Security (SS) standards

Disabled MAD

Disabled by Social Security standards

Health Care for Working Disabled (HCWD) MAD

*For Basic Coverage, the beneficiary does not have to meet the SS Substantial Gainful Activity requirement to be disabled. For Medically Improved coverage, the beneficiary does not have to meet the SS medical requirements for disability.

Qualified Medicare Beneficiaries MQB-Q

Entitled to Medicare Parts A and B

Specified Low-Income Medicare Beneficiaries MQB-B

Entitled to Medicare Parts A and B

Qualifying Individual MQB-E

Entitled to free Medicare Part A

Working Disabled MWD

Lost entitlement to free Medicare part due to earnings but still has disabling impairment.

Families and Children MAFN/C/M

Parents/caretaker relatives must be living with and caring for a child to whom they are related who is under age 19. Children must be under age 21.

Pregnant Women MPW

Medical verification of pregnancy

Children under ages 6 MIC-N

Be under age 6

Children ages 6 through 18 MIC-N

Be age 6 through 18

Title IV-E Children IAS

Be a Title IV-E adoptive or foster child

State Foster Care Children (HSF)

State Foster Care Children are evaluated as families and children's group above. (if not eligible for HSF, then evaluate for other children's programs.)

Expanded Foster Care HSF, IAS

Be ages 18 through 20 and a Title IV-E or state foster child on 18th birthday

Breast and Cervical Cancer Medicaid MAF-W

A woman who has been screened and enrolled in the NC Breast and Cervical Cancer Control Program and is otherwise ineligible for Medicaid.

Family Planning MAF-D

Women ages 19 through 55. Men ages 19 through 60. Not otherwise eligible for Medicaid.

NC Health Choice (NCHC)

Be ages 6 through 18, ineligible for Medicaid, Medicare, or other federal governmentsponsored health insurance; be uninsured and a NC resident; be in a household with 101 to 200 percent FPL; and pay enrollment fee when applicable.

10 North Carolina Department of Health and Human Services. <http://www.ncdhhs.gov/dma/medicaid/who.htm>.

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The “New Poverty” Many individuals and families live above the poverty line but continue to struggle financially. This pattern has become ever more apparent, especially during the most recent economic downturn as the cost of living increased and incomes declined. Those individuals who are thought to be the “new poverty” include families and persons who do not qualify for state or federal benefits because they earn too much but struggle financially to meet basic needs. In general, these households have annual incomes between $20,000 and $47,400, as stated in the Charlotte-Mecklenburg Women’s Summit 2008 Action Book.11 For a family of four, the federal poverty guideline was $23,550 in 2013. For an individual to earn this minimum amount per year to support a family, an hourly wage of $12.27 (if working 40 hours per week, four weeks per month) must be earned. Even then, this wage keeps a family living at or just above the poverty line. In North Carolina, like other states, many workers are employed in positions paying minimum wage. In North Carolina, the minimum wage is $7.25 per hour. The potential annual earnings for a worker being paid the minimum wage of $7.25 per hour is $13,920 if working 40 hours per week, four weeks per month. This income is $9,630 less than the federal poverty guideline. For workers in North Carolina, no increase in the minimum wage has occurred since July 2009. Although some states have recently increased the minimum wage, North Carolina remains unchanged.12 The hourly earnings for an individual to exceed the federal poverty line for a family of four is about half of the Living Income Standard of $23.47 per hour as calculated by the North Carolina Justice Center.13 The center defines the Living Income Standard to be a market-based measure of how much a working family of four must earn to meet basic expenses. The standard is calculated to help understand what a worker must earn to provide for his or her family. The annual income for a family of four earning the Living Income Standard at 40 hours per week, four weeks per month equates to $45,062. This income is nearly double the federal poverty cutoff for a family of four and would allow a family to earn an income that would reduce financial struggles.

The difference in the Living Income Standard and the minimum wage is $16.22. This difference represents the gap in what a person paid minimum wage earns annually and the income needed to realistically provide for a family. If this same person earning minimum wage worked the same number of hours, but earned the living income standard, the annual income would increase by $31,142 to an annual income of $45,062. Such an increase would allow for greater financial stability, a reduction in the number of families living below the federal poverty line, and an increase in economic activity because of additional funds available to households.

In Mecklenburg County, 25.5 percent of households have annual household incomes between $20,000 and $44,999.14 These households are identified as the “new poverty” in our community. They have incomes too high to qualify for benefits but do not earn enough to provide for a family in today’s economy.

11 Charlotte-Mecklenburg Women’s Summit 2008 Action Book.

12 North Carolina Department of Labor.

13 North Carolina Justice Center. <http://www.ncjustice.org/?q=budget-and-tax/prosperity-watch-issue-17>.

14 U.S. Census Bureau American Community Survey Table B19001.

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Housing The cost and types of housing varies throughout Mecklenburg County. Expenditures on housing vary widely and often are the greatest household expense. Some households spend a large percentage of their income on housing. According to the U.S. Department of Housing and Urban Development (HUD), families that spend 30 percent or more of income on housing are considered cost burdened and may have difficulty providing necessities such as food, clothing, transportation, and medical care to their families.15 In Mecklenburg County, more than one-quarter (25.8 percent) of owner-occupied households spent 30 percent or more of their household income on housing in 2012. The percentage of renters who spent 30 percent or more of their household income on housing was even greater at 46.1 percent. This proportion equates to a total of 125,366 (34.3 percent) households (owners and renters) in the county that spent 30 percent or more of household income on housing.16 The proportion of renters in the United States who spent 30 percent or more of household income on housing was 48.1 percent in 2012, greater than that of renters in North Carolina and Mecklenburg County (see Figure 5).

The proportion of homeowners that spend 30 percent or more of household income on housing was lower in North Carolina, compared with Mecklenburg County or the United States.17 Figure 5: Percent of Households that Spend 30 Percent or More of Income on Housing

Of the 125,336 households that spent 30 percent or more of household income on housing, households earning less than $50,000 annually were more likely to spend more on housing for both renters and homeowners. In 15 U.S. Department of Housing and Urban Development.

<http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/>.

16 U.S. Census Bureau American Community Survey 1 Year Estimates Table B25106.

17 U.S. Census Bureau American Community Survey 1 Year Estimates Table B25106.

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2012, 62.7 percent of homeowners and 71.1 percent of renters with household incomes less than $50,000 in Mecklenburg County spent 30 percent or more of their income on housing. For households with incomes of $50,000 or more, the percent of homeowners and renters that spent 30 percent or more on housing was significantly less. Only 9.6 percent of homeowners and 4.4 percent of renters with annual incomes of $50,000 or more spent 30 percent or more of their income on housing. Figures 6 and 7 illustrate that households with lower earnings often spend a greater percentage of income on housing. This consequence is a reduction in income that can be used for other necessities for families.18 Figure 6

Percent of Households that Spend 30% or More on Housing with Annual Incomes Less than $50,000 (2012) United States

Owners Renters

North Carolina Mecklenburg County

50.5% 71.6%

46.2% 65.9%

62.7% 71.1%

Figure 7

Percent of Households that Spend 30% or More on Housing with Annual Incomes $50,000 or More (2012) United States

Owners Renters

North Carolina Mecklenburg County

14.0% 11.5%

8.4% 4.5%

9.6% 4.4%

HUD also estimates that around 12 million renter and homeowner households pay more than 50 percent of their annual household incomes on housing. The family with one worker earning minimum wage and working full time is unable to afford the local fair market rent for a two-bedroom rental anywhere in the nation.19 Although some households spend 30 percent or more of household income on housing, affordable housing options are available in the Charlotte community for those who qualify. In Mecklenburg County, 53 low-income housing properties are available. The types of properties vary by location and include affordable, disabled, HOPE IV/Project-based section 8, project-based section 8, senior/project-based section 8, supportive, conventional, HOPE VI mixed-income, mixed-income, senior, and senior/disabled housing. The 53 properties include a total of 5,655 dwelling units that range in size from efficiencies to five-bedroom units. The types of populations targeted differ by property but include families and disabled, elderly, and homeless individuals. The Charlotte Housing Authority has 38 properties that provide housing to eligible families and/or elderly populations. The remaining properties house populations who are disabled, homeless, or elderly.20

18 U.S. Census Bureau American Community Survey 1 Year Estimates 19 US Department of Housing and Urban Development.

Table B25106.

<http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/>.

20 Charlotte Housing Authority.

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Conclusion This report focused on individuals living in poverty, poverty limits and guidelines, and those above the poverty line in Mecklenburg County who fall into the new poverty category and struggle to meet basic financial needs.

As the cost of living increases and incomes remain stagnant, a greater number of households struggle and seek benefits. Unfortunately, number of households with incomes that exceed benefit guidelines and do not qualify for assistance is growing. These households represent the new poverty group discussed in this report.

Many continue to struggle even if they are eligible to receive benefits, causing a profound effect on a community.

Whether an individual or household is in poverty or the new poverty, the community suffers. Unemployment, declining wages, and higher housing costs depress economic spending, which in turn depresses economic growth. More benefit eligible households also place a larger burden on government services and expenditures to provide those services, which may decrease spending in other areas. Greater job creation, expanded or improved government benefits, or an increased minimum wage are all options to alleviate some of these problems. But these are short-term solutions to a long-term problem rooted in structural concerns of income growth and disparities. With the recognition of these problems, a dialogue can begin and a long-term solution identified.

The findings in this report reinforce the research from previous reports. The Women, Work, and Wage reports found that in Mecklenburg County, women only earn 77 cents on the dollar, compared with men. Women lag behind men. Although many have incomes that place them above the poverty line, individuals and families that are part of the new poverty will still struggle because they do not qualify for benefits. These households do not earn enough to be financially stable and need to find assistance in other ways to keep families afloat.

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