By Robyn Schwartz, Policy Advisor, Homes for the Homeless (HFH)
Last month, New York City voters approved an amendment to the City Charter that would require the City government to create a True Cost of Living measurement. This measure would track how much it costs to meet essential needs in New York City—including housing, childcare, food, transportation, healthcare, clothing, hygiene and cleaning products, internet service, and more—without public, private, or informal assistance. The City will report this measure annually beginning in 2024.
This new tool would move beyond the Federal Poverty Guideline, Supplemental Poverty Measure, and NYCgov Poverty Measure to reframe the discussion about living wages/income from a deficit- or deprivation-based one to one that focuses on dignity and a clear-cut standard that speaks to all New Yorkers, regardless of their current above- or below-the-poverty-line status.
The Federal Poverty Guideline (or official poverty measure) that is used to qualify families for a multitude of income supports dates back to the 1960s and sets an “above the line” pre-tax cash income as over three times the cost of a minimum, low-income food budget (inflation-adjusted annually and adjusted for family size). The official poverty measure does not account for regional cost of living differences nor does it include the value of public benefits.1
The Supplemental Poverty Measure (SPM) was created as a research measure that could correct for the limitations of the Federal Poverty Guideline, with the aim of helping policymakers better understand the populations living in poverty. The U.S. Census Bureau first published the SPM in 2011.2 The homegrown NYCgov Poverty Measure was created in parallel to the SPM, and its first iteration was published in 2008. 3 By accounting for regional cost of living differences and including after-tax cash income and public benefits minus some eligible expenses to calculate a family’s overall income, both alternative measures demonstrate how many families exceed the official poverty measure’s threshold, buoyed by higher regional wages and/or anti-poverty programs. Nevertheless they are struggling, far from thriving, and living in constant fear of hitting the benefits cliff and losing access to the resources keeping them afloat.
The difference between the official poverty measure and the SPM in New York City varied by up to $10,000 in 2020(the top threshold for a family of two adults and two children was $35,813).4 Similarly, in 2019, the year for which NYCgov Poverty Measure data is most recently available, the official poverty threshold for a family of two adults and two children was $25,465 and the poverty rate 14.5%, while the NYCgov threshold was $36,262 and poverty rate 17.9%.5 The SPM and NYCgov Poverty Measure usually show a lower child poverty rate6 than does the official poverty measure on account of the inclusion of benefits.
Notably, individuals and families living in shelters are not included in the SPM tabulations as they are ineligible to participate in the surveys (Annual Social and Economic Supplement to the Current Population Survey (CPS ASEC)) from which the data is drawn. However, they are included in the NYCgov Poverty Measure, which uses a different survey source (American Community Survey (ACS)).7
The True Cost of Living measure has the potential to help policymakers understand how much it costs to not just survive but thrive in New York City. When this number is run against the existing poverty measures, the public will be able to gauge where their income falls in relation to the True Cost of Living and the number of New Yorkers struggling to make ends meet will come into greater focus. This measure may then help shape policy interventions such as wage setting or the administration of public assistance to better support the advancement of more New Yorkers toward income growth and wealth building. It is critical that those creating tools and programs aiming to alleviate poverty and keep families out of the shelter system understand the breadth of the problem.
As the City begins to develop its methodology for a true cost of living, here are some additional suggested considerations of particular relevance for families currently or at risk of experiencing homelessness:
- Families living in shelter or at risk of entering shelter contend with the opportunity costs of “time poverty” and lost wages due to having to take time off to administer their public assistance by attending appointments with case workers, filling out paperwork, and making phone calls to enroll in and maintain various benefits. In some cases, the burden of appointments mixed with the demands of childcare or absence of deeply affordable childcare make seeking regular work unfeasible for parents in these situations. Finding a way to measure this time and assign a value to it as another cost of maintaining essential needs and dignity would also be useful for policymakers.
- Stopgap vouchers for essential items not covered by federal benefits (such as cleaning products, clothing/shoes, diapers, and hygiene products) could be streamlined and provided by the City while families advance toward living wages. Presently, many families living in and newly exiting shelter are dependent upon in-kind donations to shelter providers or dedicated goods distribution nonprofits to receive these critical items.
- Determining the existing gap between a living wage that meets the True Cost of Living measure and the current NYC minimum wage will help the City focus on expanded educational and job training needs for unemployed and underemployed New Yorkers. While the Adams administration has already made several investments in this area, City leaders could continue to find new ways to partner with business, philanthropy, and employment-focused nonprofits to expand the number of industries that have supported employment and pathways out of poverty.
Innovative anti-poverty policies and programs will grow out of new ways of capturing how much it truly costs to live in New York and determining who isn’t yet “making it.” It’s always been up to New York to devise compassionate and cost-conscience ways to lift people up so they can contribute back to this vibrant city. This new measurement tool will help the City determine the resources needed for more New Yorkers to truly be a part of it.
https://crsreports.congress.gov/product/pdf/R/R45031#:~:text=The%20Supplemental%20Poverty%20Measure%20(SPM,measure%2C%20without%20supplanting%20it%20outright., p. 18; https://www.census.gov/topics/income-poverty/poverty/guidance/data-sources/acs-vs-cps.html