Welfare Reform and Work-Family Studies
To analyze the financial reality of budgeting in a single family household
- Ask the students to read the following background information:
For a moment, assume you are an intern in the office of a mayor whose city has a Living Wage Ordinance. This living wage ordinance specifies that anyone who is employed by the city or works for larger companies and agencies (i.e. have over 25 employees) who have contracts with the city must be paid a minimum wage of $10.54 an hour (every year, the level of the living wage has increased by the rate of inflation as measured by the Consumer Price Index).
Assume that the mayor is receiving political pressure to NOT increase the living wage for next year. For political and economic reasons the mayor is especially interested in knowing if a person employed at the current living wage of $10.54 can make ends meet and how the living wage relates to the official U.S. poverty threshold. Given the recent changes to welfare, the mayor is concerned about those leaving the welfare rolls and entering employment.
- Memo Assignment:
The mayor’s staff has asked you to prepare a memo for the mayor documenting the cost of living in this city for a family of three and to assess if:
- it is reflective of the officially US poverty rate and,
- if the living wage of $10.54 is sufficient to cover basic expenses. The family of three should include a single parent with two children ages 4 and 9.
To make matters simple, the staff has asked you to estimate the monthly costs and income that a family of three would have if the parent works 40 hours a week in a job without health insurance. When this parent works 40 hours a week, the younger child will need to have child care while the older one can attend a free after-school program. In the memo the mayor would like to see:
The items that are considered basic for a family of three with two children and a fully employed adult living in a major U.S. city [You can pick one]. Find the lowest market cost (i.e. do not assume someone can barter, or get things “under the table”) for all these items, but make sure the family does not starve or put any family members in physical jeopardy. In most states, this family will not be eligible for welfare, Food Stamps, or child care subsidies, however, will be eligible for the Earned Income Tax Credit, worth about $200 a month. You should include this as income. In most states, the adult will not be eligible for Medicaid, the health care program for low-income people, but the children will be. For purposes of this memo, a month includes 4.3 weeks.
Provide a brief assessment of how monthly income compares with those costs, when working at the living wage level.
Compare how this family fares relative to the poverty line.
NOTE: You will need to make some reasonable assumptions to get cost figures (e.g. how many bedrooms the family will need; what kind of transportation to use) and sometimes it will be appropriate to include a range of costs. Make all assumptions explicit and include your sources of information (documentation of where you obtained the information on costs) which could be included either in the text of the memo or as a methodology appendix.
Content contributed by Randy Albelda as a Suggested Work and Family Class Activity