The official poverty rate dramatically understates the scope of economic insecurity in the country, according to a new report from the group Wider Opportunities for Women (WOW). While 15 percent of the country continues to live below the federal poverty line, WOW reports that 45 percent of the country is unable to afford basic needs like housing, utilities, food, child care, transportation, health care, and essential household items.
The report is premised on what WOW calls the Basic Economy Security Tables (BEST) Index, developed in collaboration with experts at Washington University in St. Louis. The BEST Index draws on national economic data to sketch out a basic budget for both individuals and families. Before making any attempt to save for college or to buy a home, a two-income, two-child family needs to earn nearly $72,000 per year to reach economic security, according to the index. “BEST does not include any of the non-essential items that sometimes seem commonplace but are increasingly unaffordable to many families,” the report notes, including “meals out, recreation, gifts, non-essential shopping, electronics, appliances, non-essential travel or vacations.”
Whereas the poverty rate has remained stable since leaping up during the financial crisis, the economic insecurity rate measured by WOW has steadily risen throughout the recovery:
Thirty-eight percent of the country’s families were economically insecure in 2007, compared to 45 percent today. A majority of American children — 55 percent — live in households that don’t earn enough to achieve security. The economic insecurity rate is over 60 percent for both black and hispanic households. Twenty-six percent of households with two full-time workers are still falling short of the basics. Women are more likely than men to live in economically insecure households.
The WOW data reinforces the sense of fragility during the slow economic recovery. The unemployment rate continues to fall and the economy continues to add jobs each month, but too slowly to make up for the severe job losses brought on by the Great Recession. On top of that insufficient rate of growth, the kinds of jobs being added fail to provide real economic security. Low-wage and part-time jobs dominate the recovery, and with many more people wanting to work than jobs available, employers have little incentive to reward people for their increased productivity.