American basic economic security much different than 'poverty line': study

Apr 25, 2011

( -- A University at Buffalo School of Social Work professor is helping redefine the country's definition of being poor with research that shows the dramatic difference between achieving "basic economic security" and the federal government's "poverty line."

Yunju Nam, PhD, assistant professor at the UB School of Social Work, is one of three lead authors for research that concluded with the Basic Table or BEST Index, a report prepared jointly by Wider Opportunities for Women (WOW), the Center for Social Development (CSD) at Washington University in St. Louis and the UB School of Social Work.

The BEST report concludes that single workers need more than $30,000 a year for economic security. Single-parents with two children need nearly twice the income ($57,756) to cover basic expenses and save for emergencies and retirement, while dual-income households with two children require $67,920.

These figures are well above -- sometimes several times -- traditional measurements like the poverty line and minimum wage designed to show what workers require for a basic standard of living. The 2010 national poverty level is $10,830 for a single-person family and $18,310 for a family of three.

The report, released April 1, has attracted widespread attention in the , including substantial articles or treatments in the New York Times, CBS MoneyWatch, the "Today Show," the Atlantic, the Huffington Post and the San Francisco Chronicle. Many of the articles have concentrated on how low-wage jobs, which are often reported by the U.S. Department of Labor as evidence of employment growth or possibilities, fail to pay enough to meet these basic needs.

The BEST Index is different from the federal poverty measure in that it takes into account actual spending for necessary items (e.g., food, housing, transportation and child care) for a family to meet its basic needs. In contrast, the federal poverty measure is calculated based solely on food cost. Accordingly, BEST captures changing economic needs in a rapidly changing contemporary economy, the researchers say.

The BEST Index also differs from other "economic well-being" indexes in that it aims to capture what is needed for household stability and development rather than focusing on subsistence, Nam explains. Therefore, the BEST Index includes saving components such as emergency savings, retirement savings, education savings and homeownership savings that are essential for long-term economic security and household development, she points out.

"Meeting basic monthly living expenses alone leaves a family short of genuine financial stability," says Nam. "Workers must develop assets to attain both short-term and lifelong economic security. However, past policy and scholarly discussion on economic well-being measures focused solely on consumption needs. The BEST therefore provide a new perspective on economic needs by showing how much workers need to meet both consumption and saving needs for economic security."

According to the BEST, the amount of savings needed for a family's long-term security is moderate if a family saves regularly for long-term. Emergency savings are a small part of BEST budgets (3-4 percent). Retirement savings of $73 per month per worker or $56 per couple greatly increases the chances of maintaining basic economic security in retirement.

"The problem is many families do not make enough income to meet their basic consumptions and saving needs, especially among single-parent families," according to Yung Soo Lee, one of the lead authors of the BEST at the CSD. "In addition, low saving rates in the United States indicate that even families with enough income do not save enough for their long-term economic security and development."

To solve problems of low income and low saving rate, Nam says policy intervention is essential.

"I believe that the BEST Index is the first step for the policy paradigm change, a shift from focus on consumption to emphasis on long-term economic security and development," she says. "By showing how much a family needs for their basic consumption and asset accumulation for long-term development, the BEST sets a new and higher standard for social and economic policy in the United States."

The index is intended for use by policymakers, researchers and policy advocates concerned with national policy needs and with changes in workers' and families' needs over time. The savings components incorporated in the BEST suggest the importance of asset building for household development and stability.

WOW is a nonprofit group based in Washington, D.C., advocating economic independence and opportunity equality for women and their families. CSD is a research institute whose aim is to create and study innovations in public policy for individuals, families and communities, especially for disadvantaged groups.

Explore further: Study finds law dramatically curbing need for speed

add to favorites email to friend print save as pdf

Related Stories

New index measures financial stability

Apr 13, 2011

( -- What does it take for a family in the U.S. to have long-term economic security and not just "get by"? This question inspired the creation of the Basic Economic Security Tables Index (BEST), ...

American seniors living longer on less, study

Jan 28, 2009

Older Americans have experienced huge, negative financial shifts that now make it more difficult to enter retirement with sustainable economic security, a new study finds. Seventy-eight percent of all senior households are ...

Recommended for you

Study finds law dramatically curbing need for speed

Apr 18, 2014

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...

Newlyweds, be careful what you wish for

Apr 17, 2014

A statistical analysis of the gift "fulfillments" at several hundred online wedding gift registries suggests that wedding guests are caught between a rock and a hard place when it comes to buying an appropriate gift for the ...

Can new understanding avert tragedy?

Apr 17, 2014

As a boy growing up in Syracuse, NY, Sol Hsiang ran an experiment for a school project testing whether plants grow better sprinkled with water vs orange juice. Today, 20 years later, he applies complex statistical ...

Creative activities outside work can improve job performance

Apr 16, 2014

Employees who pursue creative activities outside of work may find that these activities boost their performance on the job, according to a new study by San Francisco State University organizational psychologist Kevin Eschleman ...

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Apr 25, 2011
The economic security of families is ruined by government spending which is 44% of GDP, plus regulations which consume another 20% of GDP.
Household budgets are ruined by govt-induced inflation in housing prices, and then by the subprime collapse. Fuel prices are escalating because of the war on fossil fuels, and the mandates for high-cost, low-performing solar and windmill projects. Food prices are soaring because of the fuel ethanol program, consuming 40% of our corn crop. Government schools have doubled real per-pupil spending in the last 30 years with zero improvement in results. Government takes 15% of income with the payroll tax, but never invests a penny, destroying the investment value of your labor. Medicine costs soar because the market system has been destroyed - 90% of patient costs are paid by government or insurance, so consumers have no cost/price incentives. Massive government interference in markets has ruined all these markets.

More news stories

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...

NASA's space station Robonaut finally getting legs

Robonaut, the first out-of-this-world humanoid, is finally getting its space legs. For three years, Robonaut has had to manage from the waist up. This new pair of legs means the experimental robot—now stuck ...

Ex-Apple chief plans mobile phone for India

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Filipino tests negative for Middle East virus

A Filipino nurse who tested positive for the Middle East virus has been found free of infection in a subsequent examination after he returned home, Philippine health officials said Saturday.

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.