Measuring Economic Hardship
The release of the Census Bureau data each year brings attention to a particular measure of economic hardship–the official or federal poverty line. And while it is certainly staggering that more than 17 percent of North Carolinians are earning less than $22,314 for a family of four, and more than 728,000 North Carolinians had half that income in 2010, there is a general consensus that the poverty line does not capture the full scope of economic hardship. Thus, the number of folks facing challenges in getting by is likely much greater.
The Federal Poverty Level (FPL) was designed in the 1960s to determine the minimum income necessary for a family to survive, not to be economically secure. Most notably, the FPL is based only on the cost of food and assumes that cost accounts for one-third of family expenses, ignores expenses that are significant today but were not common in 1960, like child care, was designed to measure after-tax income but today is applied to pre-tax income, thereby inaccurately portraying the amount of money a family actually has available to spend. It also is the same across the nation and does not take into account cost-of-living variations.
Better measures of the full scope of economic hardship are needed. The North Carolina Budget and Tax Center released its 2010 Living Income Standard this summer, a market-based estimate of what it takes for a working family with children to pay for basic expenses. One key finding of that report is that the average North Carolina family of two adults and two children would need $48,814, an amount equal to 221 percent of the federal poverty line, to make ends meet. However, the Living Income Standard also provides county specific estimates due to the geographic variation in costs and opportunity.
The Census data released last week suggest that at least 1 in 3 North Carolinians do not earn a living income. Such a closer estimate of economic hardship demonstrates the truly staggering challenges facing North Carolina but can also better inform solutions.