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Good Jobs and Real Self-Sufficiency

Research shows that many people at the bottom end of the economic spectrum are struggling, working for wages that do not meet basic family needs, while public measures of poverty fail to capture the full extent of this needy population. Protections such as minimum wage laws are not tied to the cost of living, and generally are not indexed to inflation so their value erodes over time. A measure of “self-sufficiency” can show what a family actually needs to earn to be able to meet its basic needs.

Expanding economic opportunity for the working poor and dislocated workers, and raising the quality of entry-level jobs, are primary goals of the Workforce Investment Act. To be effective, workforce development strategies must respond to the realities of the regional economy. Self-sufficiency standards under WIA offer one opportunity to make this system more responsive to the needs of workers.

Defining wage benchmarks for self-sufficiency is not a simple task. A variety of approaches exists, and the choice of standard can have real policy consequences. The 1996 poverty threshold for a three-per-son family (with one adult and two children) was $12,636. A review by the Economic Policy Institute of a broad sampling of basic budgets for a family of this size, on the other hand, found minimum budgets for basic necessities ranging from $20,000 to $40,000, averaging over $30,000 in 1996 dollars – more than twice the poverty threshold. Depending on what standard is used as a wage benchmark, families who are working but are not making nearly enough to get by may or may not be eligible for services. Further, the Consumer Expenditure Survey shows that low-income families spend less on basic necessities than many family budgets would require, suggesting that poor families frequently must compromise on necessities under their existing budgets.

Under WIA, local Workforce Investment Boards (WIBs) must: 1) set self-sufficiency standards as a means test for intensive and training services for employed workers, and 2) be at liberty to use these standards for performance measurement. It is useful, therefore, to determine what level of income truly allows for self-sufficiency within the regional economy, and to understand how different standards will shape these minimum income requirements. In determining the appropriate level for a WIA self-sufficiency standard, each WIB must balance the desire to provide broad access to services with the desire to ration services to those most in need. Regionally derived basic family budgets offer one way to meet this challenge; traditional poverty measures provide another.

Measuring Need: Poverty Guidelines and the Lower Living Standard Income Level

Access to many public services is determined by some measure of need. The U.S. Department of Health and Human Services, for example, issues poverty guidelines, which form the basis for determining access to programs as diverse as school lunches, free legal services, and food stamps. This measurement of who is poor has real significance for working families. It is important, therefore, to understand how poverty and self-sufficiency are determined.

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