Annual study shows Wisconsin poverty rose in fragile economic recover

April 21, 2015

MADISON—Researchers studying the economic and policy forces that affect Wisconsin poverty released their latest results, which show that although the state economy is creating jobs, they are low-paying service sector jobs that don't pay enough to cover working-poor families' expenses.

Wisconsin Counties and Multicounty Areas with 2013 WPM Poverty Rates Above or Below the State Rate of 10.9 Percent

While employment is rising in Wisconsin, the researchers found that there was an increase in the Wisconsin poverty rate, from 10.2 to 10.9 percent in 2013 using the researchers' expanded measure. One would not expect to see poverty increase during recovery from the recession. However, many of the new jobs created in Wisconsin are in the low-wage service sector, and families also are facing lower resources due to the loss of the federal payroll tax holiday and higher out-of-pocket work and medical expenses.

The analysis that led to these results was developed by Timothy Smeeding, an economist at the University of Wisconsin–Madison La Follette School of Public Affairs; Julia Isaacs, a senior fellow at the Urban Institute and affiliated scholar at the university's Institute for Research on Poverty (IRP); and Katherine Thornton, an IRP programmer analyst, and outlined in their seventh annual report. Support for the study from the Wisconsin Community Action Program Association (WISCAP) is gratefully acknowledged.

The Wisconsin Poverty Measure (WPM) was developed in order to provide Wisconsin policy and practice professionals with a more accurate and state-specific accounting of economic status that includes findings for children and the elderly and at the county level for most of the state. For example, child poverty statewide is actually lower using the WPM (12 percent) than the Census Bureau's official measure (19 percent); while for the elderly it is a full percentage point higher than the 9 percent found in the national study.

Within state borders, poverty varied across and in some cases within counties, sometimes dramatically. For example, the Milwaukee County poverty rate was 18.2 percent, but within the county, overall poverty rates varied from 8 percent in the south to 30 percent in the central area of the City of Milwaukee. The range in child poverty in Milwaukee is even more dramatic, with 6.5 percent child poverty in the south and 38.5 percent poverty in the north part of the City of Milwaukee.

La Crosse County at 17.6 percent poor was the other area with a poverty rate significantly higher than the state rate of 10.9 percent. Dane County at 11.2 percent was also higher than the state rate.

These statewide, by age group, and county-level findings reveal a timelier, accurate, and place-specific accounting of poverty rates in Wisconsin than the official poverty measure.

What accounts for the differences between the WPM and the official poverty rates?

Poverty in Wisconsin in 2013 by Measure: Overall and for Children and the Elderly

The WPM differs from the federal poverty measure in significant ways that lead to the difference in poverty rates. The WPM has more expansive definitions of economic need, resources, and family units, and takes into account Wisconsin priorities and policies than does the federal measure.

For example, the study found the state FoodShare program reduced child poverty in the state in 2013 by 4 percentage points. Researchers also found that out-of-pocket medical expenses—which are not accounted for in the official measure—increased elder poverty by 3.6 percentage points.

The end result, the report finds, is this improved measure is evidence of the effectiveness of safety net programs like food assistance in reducing child poverty.

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—Deborah Johnson, djohnson@ssc.wisc.edu, (608) 262-7779