UW-Madison researchers release Wisconsin Poverty Report: New measure tells new story

The second Wisconsin Poverty Report shows the rate of poverty in Wisconsin worsened in 2008, with more than 11 percent of the state’s population living in need, including one in seven children and one in 10 elderly residents.

Produced by the Institute for Research on Poverty (IRP) at the University of Wisconsin–Madison, the report issued today (Sept. 2) uses a more complete accounting of both resources and need to determine the state poverty rate than traditional measures.

Based on findings under the new, Wisconsin-specific measure devised by IRP, the report shows that Milwaukee County posts the highest poverty rate, 18.8 percent, while Ozaukee and Washington counties were the lowest, at 4.6 percent. More detail on county-specific rates is available at http://www.irp.wisc.edu.

Most areas within the state have poverty rates that are slightly higher than the official poverty rate. The statewide poverty rate would be even higher, however — 2.0 percentage points higher — but for the financial resources provided by tax credits, nutrition assistance, public housing and energy assistance, the report says.

In every demographic group — children, elderly and all age groups combined — the poverty rate was higher under the Wisconsin Poverty Measure than official measures. The Wisconsin measure shows a higher overall poverty rate of 11.2 percent, compared with the 10.2 percent under the official measure.

IRP created the Wisconsin Poverty Measure with the knowledge that poverty can’t be reduced unless researchers and policymakers have an accurate view of both the resources and expenses of individuals and families, says Tim Smeeding, director of the IRP and La Follette School of Public Affairs faculty member.

“We can’t gauge the efficacy of public programs, and thus make the best use of limited government resources, without having this more complete picture of need versus resources, such as is provided by the new Wisconsin Poverty Report,” he says.

The Wisconsin measure also indicates a steep increase in poverty among the elderly, whose rate jumps to 10.4 percent — compared with 7.1 percent under the official measure — and an increase in children’s poverty rate, which is 13.6 percent under the Wisconsin measure, compared with the 13.3 percent rate under the official measure.

The report’s authors say its findings demonstrate that the official poverty measure, while useful, is not providing an accurate tally of Wisconsinites whose basic needs outweigh their resources, nor does it tell policymakers what they need to know to gauge the effectiveness of public programs such as nutrition assistance (FoodShare in Wisconsin) and tax credits.

The Wisconsin Poverty Report shows that differences in benefits and expenses each have a large effect on poverty in Wisconsin, the authors say.

The official federal poverty measure considers pretax cash income, whereas the new Wisconsin Poverty Measure counts other resources as well, such as food assistance and tax credits.

The official measure does not consider work-related expenses, such as transportation and child care, or out-of-pocket medical expenses, the authors say, which reduce income that could be spent on food, housing and other basic needs, whereas all of these are accounted for in the Wisconsin measure.

The new Wisconsin Poverty Measure also looks at geographic differences in cost of living both within the state and relative to the nation as a whole.

Poverty experts, including many IRP researchers, have called for these changes on the national level for many years. IRP researchers incorporated many of those recommendations into the Wisconsin Poverty Measure as well as policies and priorities unique to the state.

The Wisconsin Poverty Measure was developed by Smeeding with Julia Isaacs of the Brookings Institution; Joanna Young Marks, an IRP researcher; and the IRP programming team.

The IRP researchers join a handful of other groups across the country in developing state and local poverty measures that provide a much broader picture of not only poverty in a given area of the state but also of how well public programs in Wisconsin such as FoodShare (Wisconsin’s name for the federal program formerly known as food stamps), refundable tax credits, work-related expenses and health care protection under BadgerCare are affecting need among Wisconsin families.

“The report findings will inform future efforts to improve the well-being and economic security of children and families statewide,” says Smeeding.

The IRP Wisconsin Poverty Measure approach is also being used by other states to develop their own state- and local-level poverty measures and the institute is serving as a resource for their efforts. The basic results of IRP’s Wisconsin Poverty Project are found in the Wisconsin Poverty Report: New Measure, Broader View, which is available at http://www.irp.wisc.edu along with detailed technical reports intended to serve as a resource to other states and localities.