Are Federal Poverty Guidelines for Income Meaningful?

The Self-Sufficiency Standard for Indiana 2009 released by the Indiana Institute for Working Families (Institute), a program of the Indiana Community Action Association (IN-CAA), shows that more Hoosiers are lacking the resources needed to meet their basic needs. The Self-Sufficiency Standard is a more meaningful measure of income adequacy compared to the Federal Poverty Guidelines (FPG). According to the FPG, families are characterized as "poor" if their income is below the FPG and "not poor" if their incomes are above them.

For example, the FPG for a family of three in 2009 is $18,310 annually, the equivalent of earning $8.80 an hour for full-time employment. According to the 2009 Self-Sufficiency Standard, a family of three - consisting of one adult, one preschooler, and one school age child - is $42,117 annually - the equivalent of earning $19.94 an hour or approximately 230 percent of the FPG. This Standard Wage incorporates the cost of a two bedroom housing unit, the cost of full-time child care, food, health care, transportation, and taxes in Marion County. For this family type in Marion County, they must earn wages that are almost three times the current Federal Minimum Wage of $7.25 per hour.

Earlier this month the U.S. Census Bureau released 2008 American Community Survey data showing that Indiana's median household income has declined to $47,699 and is lower than it was in 2000. Additionally, the number of Hoosiers living in poverty has increased as reflected in the state's poverty rate of 13.1 percent – based on the FPG. "However, if a more accurate measure of the amount of income needed by families was used, as opposed to the FPG, we would find even more Hoosiers are not earning enough to meet their basic needs," said Lisa Travis, with the Institute. The Self-Sufficiency Standard shows family earnings can be well above the official FPG yet below what is needed for families to meet their basic needs. To view the full report, visit the News and Update section on IN-CAA's homepage at www.incap.org.