Basic family budgets better reveal the hardships in America

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Snapshot for August 31, 2005.

This Snapshot previews a Briefing Paper that will be released tomorrow on Basic Family Budgets along with an interactive online calculator. 

Basic family budgets better reveal the hardships in America
A basic family budget is the amount required to adequately afford a safe and decent, yet modest, standard of living. These budgets are estimated for six family types—one or two parents with one, two, or three children—in over 400 U.S. communities. That the budgets differ by geographic area is important, since certain costs like housing vary significantly depending on where one resides. On the other hand, official government poverty thresholds vary by family size but do not vary by geographic location. Also, family budgets represent a higher standard of economic welfare, whereas the poverty thresholds measure severe economic deprivation.

The chart shows the share of working families with incomes less than the basic family budget and poverty thresholds by region. Typically, the Southern region of the United States has the highest poverty rates: 11.8% of the six family types analyzed live in poverty. However, when family budgets, which build in geographic cost-of-living variations, are the measure of comparison, the Western region has the highest share of families with incomes below basic family budget thresholds.

Any measure of economic welfare must take into account the considerable variations in cost-of-living throughout the United States. The comparison of family budget thresholds to actual working family incomes offers valuable insight into the significant shares of working families whose incomes fall below these basic needs budget levels.

This week' Snapshot was written by EPI economist Sylvia A. Allegretto.