Child care accounts for 25% of a Rhode Island single parent’s household income in the new analysis by the Economic Progress Institute. (Getty image)
Federal estimates suggest 11.2% of Rhode Islanders live in poverty.
But the true number of residents unable to afford basic necessities like food, child care, and housing is double, or more, what federal measurements capture, according to a new report by the Economic Progress Institute (EPI) published Monday.
The 51-page Rhode Island Standard of Need report, updated biennially by the nonprofit research and advocacy group, reveals a growing chasm between federal poverty guidelines and the actual costs facing Ocean State residents.
The report suggests the federal poverty threshold is long overdue for an update. The metrics used by the U.S. Department of Health and Human Services to measure poverty have not been updated since then-President Lyndon B. Johnson declared war on poverty in 1964. They only account for the cost of food, neglecting the increasingly large share of families’ budgets eaten away by housing, child care, transportation, health care and internet costs, among other necessities.
Instead, EPI offers its own “no frills” budget, based upon a separate calculator developed by a national think tank, that includes other necessary expenses in proportion to their relative percentage of a family’s budget.
The report was unveiled Monday as part of EPI’s annual budget and policy conference at the Providence Marriott.
“If one equates living in poverty with not being able to afford basic needs, the 2023 Federal Poverty Level numbers fall well below the 2024 [Rhode Island Standard of Need] numbers (which are in 2023 dollars) and therefore clearly underestimate poverty in Rhode Island,” the report states.
A single adult needs more than twice the income suggested by federal poverty guidelines: $39,741, according to EPI, versus the $14,580 suggested by the federal poverty level.
Child care and housing account for nearly half of annual expenses for most families in Rhode Island, yet aren’t included in federal poverty guideline measurements. (Economic Progress Institute)
Rising costs of housing, child care
The flaws in federal guidelines are even more obvious when considering single-parent households; 2023 federal guidelines peg minimum income at $24,860 for these types of households to live above the poverty level. EPI’s calculator suggests the true income needed is triple that: $83,239, or $100,000 before taxes.
“One doesn’t necessarily think of someone having $100,000 in pre-tax income as not being able to make ends meet, but once you start putting in housing costs and child care costs, it adds up very quickly,” said Alan Krinsky, EPI’s director of research and fiscal policy. “I think it will be surprising to some people.”
Nearly half of that is for child care and housing, which at 25% and 21%, are the two most costly budget items for families with kids. Food, by contrast, comprises 12% of annual expenses under EPI’s budget calculation.
Rising housing costs are no secret in Rhode Island and nationwide, where high demand and short supply has forced an increasing percentage of homeowners and renters to pay more than the nationally recognized recommendation to spend no more than one-third of income on a place to live.
Among the 32,000 lowest-income renters in Rhode Island, two-thirds are “cost burdened” – meaning they spend at least a third of their income on rent — while half are “extremely cost burdened,” a definition reserved for people who spend at least half of their income on housing costs, according to 2023 data from HousingWorks RI.
Updated 2024 rental market information was not available by the time of the report, but, once factored in, might show that EPI underestimated housing costs in its calculator.
The affordability gap hits hardest among Black and Latino families, compared with white peers. (The report did not consider other minority groups due to small sample sizes).
For example, more than four in five Latino adults without children earn less than the pre-tax income needed to afford basic needs; among Black single adults, 78% cannot pay for basic needs, according to the report. Just under two-thirds of white adults without children are in the same predicament.
One doesn’t necessarily think of someone having $100,000 in pre-tax income as not being able to make ends meet, but once you start putting in housing costs and child care costs, it adds up very quickly. I think it will be surprising to some people.
– Alan Krinsky, director of research and fiscal policy, Economic Progress Institute
Women are also more likely to face affordability gaps than men, with 73% of single women, regardless of race, unable to pay for basic needs compared to 64% of single men.
For the first time, the latest edition of the report also compared costs-of-living by state county, highlighting a wide range in costs depending on geography. For example, a single-parent family in Providence County would need to earn nearly $79,000 to afford basic necessities, while that same family needs nearly $104,000 for the same necessities in Newport County.
“I don’t know if I was expecting quite that difference,” Krinsky said.
Affordability gaps persist despite federal assistance programs for low-income families and single residents. The $983 maximum monthly social security benefit available for seniors or residents with disabilities, combined with income-dependent stipends for food, leaves a $1,726 gap between benefits and the average $3,000 monthly cost for recipients, according to the EPI report.
The RI Works program for low-income families has failed to keep pace with inflation over the last three and a half decades. (Economic Progress Institute)
Low-income families with children face an even bigger financial hurdle. State assistance through the Rhode Island Works program along with food stipends cover less than 40% of the average $4,440 in monthly expenses, the report states.
That’s in part because state assistance programs have not risen at the same pace as costs of living. Meanwhile, federal funding programs such as the Temporary Assistance for Needy Families, have been partially repurposed to uses other than the direct cash assistance for which it was intended.
“The use of state money is — or was — an investment in Rhode Islanders and in our poorest residents,” the report states. “It is long past time for Rhode Island’s policymakers to reject the now decade and a half old policy to spend zero dollars of general revenue on Rhode Island Works. Instead, it is time to revive and adopt a policy of state investment in our poorest residents. In the context of a multibillion dollar annual budget, a budget that is a statement of our values as a state, we cannot afford not to invest at least a few million or tens of millions of dollars in those most in need.”
How to close the gap
The report recommends other ways to close the gap for families in need, including raising the state minimum wage — currently set to hit $15 an hour in January — and requiring the payments to rise with inflation. Other changes include increasing the state’s earned income tax credit in alignment with other New England states, increasing eligibility for income-dependent child care assistance programs, and increasing the amount and length of state paid family leave.
During the 2024 legislative session, EPI was among advocates calling on lawmakers to double the state’s six-week family leave to 12 weeks. Lawmakers ultimately adopted a compromise version, which gives eligible parents and caregivers eight weeks of paid leave starting Jan. 1, 2025. The new law also does not change compensation above the existing 60% of earnings, which “makes it difficult for the lowest-wage workers to use this important benefit,” the report states.
EPI’s annual budget and policy conference Monday featured state and federal officials, along with Chanda Womack, executive director of the Alliance of Rhode Island Southeast Asians for Education, as speakers.
“EPI’s calling card is producing credible, fact-based, and relevant research and analysis in championing the causes of social justice and economic fairness for all Rhode Islanders,” Weayonnoh Nelson-Davies, EPI executive director, said in a statement. “We must hold the line together, we must not let go of each other, and we must not let go of the vision of equity and justice for all.”
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