- Timothy M. Smeeding, Julia B. Isaacs, and Katherine Thornton
- April 2015
- Link to WI-PovertyReport2015 (PDF)
Our key finding is that while employment is modestly rising in Wisconsin, there was no reduction in poverty. In fact, poverty rates in Wisconsin actually rose between 2012 and 2013 under both the official poverty measure and the Wisconsin Poverty Measure (WPM). We find that state poverty rose between 2012 and 2013, from 10.2 to 10.9 percent, under the WPM, which takes into account resources from tax credits and noncash benefits as well as earnings; the WPM remains about 2.5 percentage points below the official rate.
While the benefits from the safety net (especially food support and refundable tax credits) played a large role in poverty reduction, other changes offset a good deal of these positive effects. Trends that decreased resources include a return of the payroll tax to pre-recession levels, increasing health care costs (especially for the elderly), and rising child care and other work-related expenses for families with children.
Although the social safety net provided a buffer against poverty during the recession—and still makes a very big difference in countering poverty—the effects are beginning to level off or even shrink, both because of the weak recovery and because of changes in payroll taxes, medical expenses, and work-related expenses. This has left the longer-term WPM poverty measure more or less unchanged from 2009 to 2013. Hence progress against poverty is flattening out as the recovery remains fragile for low-income families.
Additional findings of our report track how poverty has changed for children and the elderly, finding a surprising increase in elder poverty. We also examine poverty rates across regions within the state, revealing deep poverty in some areas, especially central Milwaukee and La Crosse, but with several other substate areas doing much better than the rest of Wisconsin.
Because we believe that the long-term solution to poverty for the non-elderly is a secure job that pays well, not an indefinite income support program, it is troubling that the labor market rebound has not led to reductions in poverty in 2013 the way it did in 2012. It is a reminder of the importance of a safety net that enhances low earnings for families with children, puts food on the table, and encourages self-reliance—as Wisconsin’s safety net does—and in doing so makes a big difference in combatting poverty.