This edition of the Graph of the Week continues our recent discussions surrounding income trends and poverty (or even material deprivation). It comes from some really fascinating, detailed Census data work Kanhaiya Vaidya, the state demographer, did recently. The graph shows the household composition for all low-income Oregon children — defined as those below 200% of the federal poverty level. What strikes me is that the vast majority of low-income children live in multiple adult household (married, cohabiting, roommates, etc). The most common is not the stereotypical single mother of three.
This work arose during the last legislative session when policymakers were examining the so-called “benefit cliff”. This refers to the fact that many benefit programs are based on an individual, or household, or family’s income. As income goes up, benefits go down. Not all of these programs have perfectly smooth exit paths, although many are close, thus resulting in a drop in overall purchasing power once a particular income threshold is passed. As our office has written previous:
…as a family moves from around $20,000 per year to $40,000 or $50,000 per year, they face very high marginal tax rates. The reason for this is that many of the benefits and need-based programs are means tested, so as a family earns more, their benefits are phased out. One can broadly consider this income range from $20,000 to $50,000 as the transition zone, where the purchasing power or spending power for a family does not increase as much as their market based income does, due to the phasing out of benefits.
The work Kanhaiya did focused on trying to figure out what a representative low-income household in Oregon looks like, so that policymakers could run a few different scenarios or case studies to examine the benefit cliff implications. It was largely focused around the impact of an increase in the minimum wage, however the context is much broader than that. The end result of this work was a research paper produced by the DAS CFO’s office (Budget and Management), along with assistance from DHS/OHA, LFO, LRO and our office. I cannot find a link to the paper online. Email if you want a copy.