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8 Hardships in America
example, a two-parent, two-child family in Birmingham, Ala. that needs an
after-tax income of $29,300 to meet all of its expenses needs $33,360 in pre-tax
income.
Family budgets also differ from poverty thresholds in that they measure
the income needed for a safe and decent standard of living, independent of
government subsidies. While most poverty measures are viewed as a measure
of deprivation, or the minimum necessary for survival, basic family budgets set
a higher standard. For example, basic family budgets include the cost of quality
child care, because they assume that families should not be expected to make
their children worse off than if the mother remained at home. 2
1.3 Family budget methodology
The first step in measuring the number of families whose incomes fall below
basic family budget levels was to create a consistent set of budgets for the
entire U.S. We created basic budgets for every metropolitan area in the country
and a combined rural budget for each state using the detailed methodology
outlined in Bernstein et al (2000). Unlike other poverty measures, which use
equivalence scales to extrapolate income levels for a large variety of family
types, these budgets focus only on after-tax income for only six family types:
single- and two-parent families with one, two, or three children all under the
age of 12. These budgets cover 29% of the U.S. population and 71% of U.S.
families with children under 12. The budgets assume that all adults work and
that, therefore, child care is a necessity for all six family types.
We count families who fall below basic family budget levels using budgets
for metropolitan statistical areas (MSAs) and one combined budget for rural
areas per state. Creating a state or federal family budget would not give an
accurate estimate, because there is much variation in the cost of living between
various MSAs and between cities and rural areas even within a state. MSAs are
the smallest geographic area for which data are available. We created a combined
budget for rural areas in the state because creating a budget for each rural county
in the country would involve creating hundreds of additional budgets.
Researchers around the country have already generated family budgets for
specific communities. There are over 40 family budget studies that have been
conducted for various communities around the country, each using a slightly
different methodology. 3 However, we needed a methodologically consistent
budget for every MSA and rural area in the country. Therefore, we created over
400 budgets for each family type, presented in Appendix F.
To create these budgets, we first determined the items necessary for a
working family to maintain a safe and decent standard of living, then determined
the cost of providing each item at an adequate level based on family composition.
The cost estimates are based on the following sources (see Appendix A for a
more detailed account of the methodology):
· Food is based on the minimum amount a family needs to spend for food