Details on Expense Estimates

The Census determines the poverty status of families based only on income, family size, and the number of children and adults 65 and over. It does not consider location or any other factor that could influence expenses. As a result, in 2014 the average family of four is not considered to be in poverty if they have an income of at least $24,230, regardless of whether they are in New York City or rural North Carolina.
Forsyth Futures attempts to address this by creating alternative expense estimates based on a more detailed consideration of family circumstances. It builds on similar analyses in The Self-Sufficiency Standard for South Carolina created by the Center for Women’s Welfare at the University of Washington for the United Way and the Living Wage Calculator developed by Dr. Amy Glasmeier at the Massachusetts Institute of Technology (MIT). It estimates seven categories of expenses: child care, food, housing, transportation, healthcare, other expenses, and taxes. Figure 1 outlines sources for these expenses, which, with the exception of healthcare, are similar or identical to those used by MIT and the United Way.
Figure 1: Sources for Expense Estimates
All estimates are as sensitive to location and family circumstance as the available data would allow. County-level housing estimates were available for all counties. For Forsyth County, childcare costs were obtained by Forsyth Futures from the North Carolina 2011 Child Care Market Rate Study prepared by North Carolina State University. Healthcare and tax expenses are based on family income, with tax expenses also using federal and state tax codes.  Child care expenses in peer communities are based on state estimates, while food, transportation, and other expenses are based on regional statistics. Additionally, child care expenses are only included when all adults in a family are working.
These estimates represent the lowest cost of living that can be generally assumed for each family type based on the information available and are designed to identify jobs/income levels that could reasonably support different kinds of families. Expenses for some families may be lower due to individual circumstances, for example: extended family who can provide childcare, but these kinds of situations cannot be assumed for the general population.
Expense estimates are calculated for individual families using Census data and compared to actual income to create the Income Insufficiency measure which can be used an alternative poverty rate.

Figure 2: Estimated Expenses and Components of Estimated Expenses for Example Households in Forsyth County, 2014
Figure 2 shows the estimated expenses for several example households in Forsyth County and compares them to the poverty threshold the Census would use to determine their poverty status.
  • Estimated expenses are consistently higher than the federal poverty threshold.
  • Compared to families with no children, families with two preschoolers in need of full-time child care, one of the most expensive childcare arrangements, are estimated to have about $30,000 more in expenses, mostly from child care and associated taxes.
  • While child care expenses are greatest for children not attending school, school-aged children with working parents still have child care expenses for after-school care.

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