Robert M. La Follette School of Public Affairs
Friday, June 8, 2018

Study finds Wisconsin poverty rate increased in 2016 despite jobs growth

Study finds Wisconsin poverty rate increased in 2016 despite jobs growth

Wisconsin’s poverty rate increased to 10.8 percent in 2016, compared to 9.7 percent in 2015, according to the 10th annual Wisconsin Poverty Report. As measured by the Wisconsin Poverty Measure (WPM), the significant rise came despite the state’s jobs growth during the period.

The annual study led by Timothy Smeeding of UW–Madison’s La Follette School of Public Affairs found poverty rates rose for children as well as elders. A former director of UW–Madison’s Institute for Research on Poverty (IRP), Smeeding collaborated with IRP Programmer Analyst Katherine Thornton.

WPM child poverty increased by 2 percentage points, to 12 percent, while the official poverty rate for children rose from 15.4 percent to 16.9 percent. WPM elderly poverty rose from 7.8 percent to 9.0 percent between 2015 and 2016; the official poverty rate for elders grew from 6.2 to 6.6 percent.

As explained in the report, the WPM child poverty rate is almost 5 percentage points lower than the official child poverty rate because the WPM counts as income family resources from tax credits and noncash benefits, which the official poverty measure does not. Noncash benefits include Supplemental Nutrition Assistance Program or SNAP food assistance (FoodShare in Wisconsin) as well as the Child Tax Credit and Earned Income Tax Credit.

In contrast, WPM elderly poverty is about 36 percent higher than the official rate (6.6 percent versus 9.0 percent). This difference results mostly from the WPM’s inclusion of out-of-pocket medical costs, which are not included in the official poverty rate.

For child poverty, the comparison between the two measures provides striking evidence that public programs such as SNAP significantly reduce economic disadvantage for many Wisconsin families with children. However, the report notes that changes in SNAP participation reduced its antipoverty effects in 2016 compared to earlier years of the study.

In addition, unlike the official poverty measure, the WPM takes childcare and work-related expenses for families with children into account. Such expenses partially offset antipoverty effects of increases in market income through earnings.

The WPM also allows researchers to analyze poverty across regions within the state, which reveals the report’s bright side: 26 of Wisconsin’s 72 counties have WPM poverty rates below the 10.8 percent state average, which is the highest proportion since the report began in 2008.