What is a living wage?
A Missouri Self-Sufficiency Standard
Public assistance policy discussions often include the term self-sufficiency. Different meanings are associated with the term, depending upon who uses it. One might argue that none of us is truly self-sufficient in that we each rely on not only our own resources, but also on public services, benefits from fiscal and monetary policies, and the contributions of friends, family members and others to our economic well-being.
A study done for the Missouri Women’s Council by the Department of Economic Development (DED) Research and Planning unit defined self-sufficiency this way: “…the amount of income needed for a family to meet its basic needs without using public assistance.” The study, The Missouri Self-Sufficiency Standard: Necessary Wages for Essential Needs, provides self-sufficiency standards for every county in Missouri. It uses costs of basic survival needs (like housing and food) and takes into account family size, composition and location.
The study reports county-level self-sufficiency wages for 30 different family sizes and compositions. This approach allows more variation than the official poverty measure. It assumes that all adults in the household work, recognizes that childcare costs vary with age of child, and incorporates regional cost differences not addressed by the official measure of poverty.
There is a large variance across counties in the wage level needed to make it without public assistance. According to the study, for example, a family with one adult, a preschooler and a school-age child living in Milan in rural Sullivan County would need $11.11 in hourly wages just to get by without public assistance (still little more than half the average U.S. wage of $20.0l an hour).
In Independence in Jackson County, that same family would need $14.32 to meet basic needs without public assistance. In no county was the minimum wage of $5.15 per hour deemed sufficient to support a single adult, much less a family.
In 1999, Becca Newman, MU consumer and family economics master’s candidate, conducted a similar study. A Basic Need Budget for Rural Missouri Single Mothers: Estimation and Comparison with Poverty Measures focused specifically on rural counties. Based on a sample of eight counties in different regions of the State, she found that a single mother with two children, ages 4 and 6, would need from $9.72 to $11.74 per hour in rural Missouri to meet basic needs.
Deanna L. Sharpe, MU associate consumer and family economics professor, was Newman’s thesis adviser. According to Sharpe, “Not all researchers agree on the specific items to include in a ‘basic need’ basket. For instance, if public transportation is available, some would say an automobile is not a basic need. Others might say entertainment is not a basic need. It could be argued that, by restricting focus to those times needed to sustain life, we overlook or undervalue expenditures for things like education, which can improve quality of life.” Sharpe says a “basic need” budget is exactly that – a budget to cover only those expenditures considered most essential.
Both studies similarly conclude that what it really takes for a one-parent family with two children to make ends meet is substantially more than either the $7.03 per hour official poverty threshold or the $5.15 per hour minimum wage. The debate over how best to measure poverty continues to unfold.
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