Robert M. La Follette School of Public Affairs
Monday, June 24, 2019

Wisconsin poverty rate fell overall and for children, but rose for elderly

Tim Smeeding Tim Smeeding

The latest Wisconsin poverty analysis using a state-specific poverty measure devised by University of Wisconsin–Madison researchers found mixed results in efforts to alleviate poverty and promote self-sufficiency in the state.

The statewide overall poverty rate using the Wisconsin Poverty Measure (WPM) dropped from 10.8 percent in 2016 to 10.2 percent in 2017, a significant drop, but still above the 2015 rate of 9.7 percent. This suggests that progress against poverty in Wisconsin since 2010 has been limited.

Child poverty fell using the WPM, from 12.0 percent to 10.1 percent during the same time period, but elder poverty rose from 9.0 percent to 9.5 percent.

Timothy Smeeding, the Lee Rainwater Distinguished Professor of Public Affairs and Economics at UW–Madison, and Senior Programmer Analyst Katherine Thornton of the Institute for Research on Poverty (IRP) released the findings June 24. Smeeding, a La Follette School of Public Affairs faculty member, is an affiliate and former director of UW–Madison’s federally funded IRP.

“These findings suggest that the economy is not benefitting workers and families evenly across our state,” said Smeeding. “I’ve been conducting this study for 11 years now and I have to say, after more than eight years of nationwide recovery from the end of the Great Recession through 2017, we should see better poverty outcomes.”

The WPM results suggest that the decline in child poverty is due to higher earnings by poor parents, despite real wages that are lower now than in 2010. The drop also reflects the broader range of tax credits and benefits for families with children; and the fact that the WPM counts the income of unmarried partners as contributing to family resources.

The increase in elder poverty is in large part due to increasing out-of-pocket medical expenses, considered in the WPM but not the official poverty measure. Insurance premiums, copayments for medical services, prescription and over-the-counter drugs, and uninsured medical costs are expenses that present a significant financial challenge for older people with low incomes.

To understand how poverty varies across Wisconsin, the report estimates poverty for several counties and sub-state areas (see map below). Estimates for poverty rates are as low as 3.6 percent in Washington and Ozaukee counties and 4.2 percent in Waukesha County.

The WPM rises to 17.2 percent in Milwaukee County and 14.4 percent in the area includes Eau Claire and south Chippewa counties. These are the only places with rates significantly higher than the state average of 10.2 percent.

The report suggests that to make progress against poverty for the non-elderly, work alone at today’s wages is not enough; greater work supports and income supports are needed.

“We need to maintain and improve the safety net, reduce childcare costs, and raise Wisconsin’s minimum wage to more than $10 per hour if we are to break out of the poverty rut we are in and share the benefits of the recovery more widely with the most disadvantaged among us,” Smeeding said.

Brad Paul, executive director of the Wisconsin Community Action Program Association (WISCAP), which supports the Wisconsin Poverty Report, commented, “WISCAP is proud to support the Wisconsin Poverty Project, which shares University of Wisconsin expertise in this important way so we can all have an accurate accounting of poverty among Wisconsinites—and therefore be better equipped to fight it.”

IRP Director Lawrence Berger, a La Follette School faculty affiliate, notes, “I am pleased that the annual Wisconsin Poverty Project has its home at IRP. This year, we learn that the state’s economic expansion has had little effect on the poverty rate as a rising cost of living, especially childcare and medical expenses, and falling real wages are leaving many low-income families treading water and low-income elders losing ground, both of which are concerning.”

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