Connecticut is one of the wealthiest states in the nation, which compounded with its highly skilled workforce, makes the cost of living very high.
For Connecticut families with children, economic self-sufficiency requires a much higher annual income than is needed for adults who are not raising children. Household expenses (including food, housing, child care, transportation and health care) nearly double for a single adult when that adult begins raising an infant.
For Connecticut residents who are not highly educated and skilled, the cost of living often exceeds their income, which may bring their households below the poverty line. Nearly one-quarter (24%) of Connecticut children live in families with an income less than 200% of the federal poverty line, which is about $37,000 for a family of four.
For many families in Connecticut, homeownership is out of reach. Even rental housing is out of reach for many families. Connecticut is the sixth most expensive state for rental housing. According to the National Low Income Housing Coalition, the Stamford-Norwalk area is the third least affordable region for rental housing of any metropolitan area in the country.
For many families, employment alone does not lead to economic self-sufficiency. A parent who has a full-time job and makes the minimum wage earns well below the poverty line ($18,400/year for a family of 4 in 2003). In 2003, despite working full-time, full-year, 9% of Connecticut workers (105,000) earned less than $20,000 annually, and more than a quarter of a million workers earned less than $30,000 annually.
Nationally, 25% of workers earn less than $8.70 an hour ($18,000 a year) before taxes or health insurance, which puts a family of four under the federal poverty level.
Along with several states, Connecticut developed a “self-sufficiency standard” to provide a more accurate picture than the federal poverty measure of what families need to meet their expenses. In 1999, the Connecticut Office of Policy and Management commissioned The Self-Sufficiency Standard for Connecticut, which set benchmarks for self-sufficiency in Connecticut.
The self-sufficiency standard “defines the amount of income required to meet basic needs (including paying taxes) in the regular ‘marketplace’ without public subsidies-such as public housing, Food Stamps, Medicaid or child care-or private/informal subsidies-such as free baby-sitting by a relative or friend, food provided by churches or local food banks, or housing shared with relatives or friends.” The standard includes costs for housing, child care, food, transportation, health care, taxes and miscellaneous expenses. It incorporates regional and local variation in costs, includes the net effect of taxes and tax credits, and takes into account that many costs differ by family size and composition and by the age of the children.
Several basic need components make up the standard, such as food and housing. The authors, Dr. Diana Pearce and Jennifer Brooks of the University of Washington, used specific data sets for each component when calculating the standard for different family types. Some of these sets have been updated and are readily available. Updating the other data sets, such as the health care component, is more problematic. We have been unable to obtain the computer model that was presumably used to calculate the standard, thus any attempts we would make to update the standard could potentially be called into question. Some have suggested simply inflating the original figures by an appropriate inflation index. We agree with the Office of Legislative Research that it is not clear whether this approach would provide a reliable update, and we do not recommend using such a method.
The Office of Workforce Competitiveness is currently working on a comprehensive and reliable update to the Self Sufficiency standard.
“Hidden” Costs of Poverty
Low-income families often face a range of “hidden” costs of poverty – costs that do not get widespread attention – that can serve to keep a family poor or drive it deeper into poverty. For example, simply getting to work is disproportionately more costly and time-consuming for low-wage workers. With jobs leaving cities such as Hartford for the suburbs, inner-city residents must travel to surrounding towns for employment. When jobs become available in cities, many applicants apply: 4,000 Hartford residents showed up on a recent Saturday morning to apply for 800 positions at the new Charter Oak Marketplace.
Jobs for low-wage workers often are inaccessible via public transit, while buying and owning a car is excessively costly. The cost of purchasing and owning a car is higher for low-income residents of Hartford than for their suburban counterparts. Low-income families, especially those transitioning from welfare to work, not only have smaller savings for such a purchase, but also have little or poor credit history to attain low-interest commercial financing necessary to make up the difference. Car buyers with poor credit histories often pay extremely high interest rates, and city dwellers may pay very high car insurance rates.22 A Hartford resident on Laurel Street will pay 33% more (annually $400 more) for auto insurance for a 1992 Honda Accord than a West Hartford resident living on Farmington Avenue. For those who purchase sub-quality cars, the cost of repairs often exceeds the value of the car and creates employment instability.
In addition, low-income families living in economically isolated rural and urban communities often face higher costs of living based on where they live and have fewer choices of where to spend limited resources. Such families often are “captive consumers”, paying higher prices for inferior basic goods and services than their suburban counterparts.
Cost of Health Care
In a survey of Connecticut’s kindergarten teachers in low-income school districts, 65% of the teachers identified specific health problems among children entering kindergarten – including asthma, skin rashes, ringworm and lack of physical exams.
Low-income workers frequently end up paying a lot more for family health care costs than higher paid workers who are covered by their employers.
Uninsured families are more likely to go without preventive care, leading to costly emergency visits and hospitalizations. Without health insurance, a medical emergency or chronic condition needing ongoing treatment can threaten the household’s financial security.
High-Cost Health Coverage
In many cases, low-wage workers are either not eligible or cannot afford the employer-sponsored health benefits for themselves and their family.
Even though some low-income families qualify for HUSKY medical coverage, others do not and end up buying high-cost coverage or paying out-of-pocket. A health insurance quote from Anthem showed that Connecticut individual coverage costs from $155 to $263 and family coverage from $477 to $702 per month, depending on the deductible, coinsurance and co-payment.27 Low-income parents who do not have public insurance often have to make difficult financial trade-offs between getting health care for themselves and their children and buying groceries, paying rent or paying for car repairs.
In some families that do qualify for HUSKY, the parent refuses to accept the coverage, perhaps due to the stigma of public health insurance.
For many uninsured workers and those who have gaps in insurance, medical care can become medical debt. A national survey in 2001 found that half of the uninsured had problems paying for their medical care, and a significant portion of those had been contacted by collection agencies. The average amount of medical debt was about $9,000, ranging from less than $1,000 to more than $100,000. Such medical debt can become a lifetime obstacle to accumulating real assets or savings.
Child with Special Health Care Needs
Caring for a child with special health care needs can quickly drain the income of a family. Annual expenditures to care for a child with special needs vary, but can deplete the financial resources even of middle- and upper-income families, placing them at risk of poverty. For example, board and care costs for non-institutionalized children with special needs in DCF’s care average $16,911/year; costs for complex cases requiring institutionalization at one hospital annually average $328,270.
Low- and moderate-income families are more likely to have children with special health care needs. These children tend to be more economically disadvantaged, with a greater percentage living in poverty, living in single-parent families, living with nonworking parents, living with a parent in fair or poor health, and receiving cash assistance through either SSI or TANF. Nationally, more than 13% of low-income children with special health care needs are uninsured, and 29.8% have public insurance.
When a low-income parent does not have health benefits at work – including health insurance and sick leave to care for a child – a child’s serious illness may be more likely to prompt the parent to leave their job to take care of the child, thus forcing that family deeper into poverty. The shortage of home health aides also may affect the parent’s ability to care for the child without giving up his or her job.
Mental Health Disorders
According to the U.S. Surgeon General, children at greatest risk for behavioral health problems include those from a family that has experienced multigenerational poverty, and those who were born at low birth weight (which is more likely among children in poverty).
The consequences of mental health disorders in adults can be severe, including unemployment, poverty, involvement with the criminal justice system and homelessness. Poverty is common among the Connecticut population with mental health disorders.
In addition to potential job loss, home loss and homelessness, mental health problems can interfere with a parent’s ability to take care of their children. These parents are at risk of their children entering foster care.
Substance Abuse and Domestic Violence Substance abuse and domestic violence are additional individual and family problems that can affect whether a family lives in poverty. These problems may be reflected in lost productivity and high health costs. They not only impair the ability to work, but also affect the parenting process, which can hinder child development. As a result, children may enter school without the cognitive, social and emotional skills and competencies they need to succeed, setting the stage for increased placement in special education, grade retention and ultimately school drop-out. Recent studies found that women who have been physically abused are at higher risk for depression, and that those who are at higher risk for depression are more likely to report drug use.
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