NJ report: Families earning $64,000 are ‘poor’

According to the U.S. government, the poverty line for this size family is $23,850.

But a report out next month from a New Jersey nonprofit research group says the standard federal poverty line “grossly understate(s) the extent of poverty” in the Garden State.

According to this report, two parents raising two school-age children while earning $64,000 would be considered poor. A couple with two infants or preschool age children would need to earn $73,371 a year in order to escape poverty.

Under these guidelines by the Legal Services of New Jersey Poverty Research Institute, nearly a third of the state is struggling to make ends meet.

The report’s income threshold, based on what the organization calls the “real cost of living” in the state and about 250 percent of the federal poverty line, is a staggering figure considering that the state’s median household income is $71,637, which is the second highest among the 50 states.

Advocates for the poor and needy have criticized the federal poverty line as outdated and unrealistic for generations. But the federal benchmark, which is used by many government agencies and nonprofits to determine qualifications for financial assistance and housing programs, is especially meaningless in New Jersey, where the cost of living is so much more expensive.

“People who were donating in the past are now coming in for food,” Jackie Goedesky, president of the Hands of Hope Food Pantry in Edison, said last week.

“The unemployment numbers aren’t exactly accurate because a lot of people have been out of work for so long already that their unemployment has run out,” she added.

While the dollar amount of the federal poverty line has adjusted for inflation, the formula has essentially remained the same since the 1960s. One shortcoming is that it is the same for the whole country even though cost of living varies from region to region. People in New Jersey could make more money than workers in another state, but people in this state pay more for rent, food, transportation and property taxes.

The federal poverty line also was created during a time when there were more stay-at-home moms and fewer single parents. Childcare for working parents and transportation costs take up a larger portion expenses of working families and single mothers.

Sharon Clark, executive director of the Central Jersey Housing Resource Center, said unemployment and housing foreclosures has increased the demand for apartments. The counties of Somerset, Hunterdon and Middlesex have the most expensive rents in the state. A fair market two-bedroom apartment here goes for $1,458. A couple would have to earn at least $58,320 a year in order to afford that, she said.

The Poverty Research Institute’s “real cost of living” is based on families being able to afford housing, food, transportation, healthcare, taxes and basic needs such as clothing without having to make tradeoffs. The formula is conservative in that it does not allow for retirement or college savings, vacations, cable TV, dining out or buying a car.

The formula also uses the U.S. Department of Agriculture’s “low-cost” food plan, not the emergency “thrifty” plan used in the federal formula. The USDA reported in July that a low-cost plan would cost a couple $496.90 a month and a family of four as much as $854.60. The thrifty plans would be about $100 and $150 less, respectively.

Other organizations and agencies have tried to come up with their own formula to measure poverty. The United Way developed the Asset Limited, Income Constrained, Employed category, or Alice, to describe people who earn more than the federal poverty line but still struggle. According to the United Way of Northern New Jersey, 24 percent of New Jersey falls in the Alice category. That is in addition to the 10 percent who fall below the poverty line.

By the numbers

According to the Poverty Research Institute’s “What is Poverty?” report:

• In Hunterdon County, 18.3 percent struggle to make ends meet. In Middlesex it is 28 percent, in Somerset it is 20 percent, and in Union it is 35.6 percent.

• Morris had the fewest people struggling to make ends meet: 16.9 percent. Essex and Hudson had the most at 44 percent.

• About 39 percent of children were living with insufficient resources. Under the federal poverty line, the percentage would 15.4.

• About 33.7 percent of adults 55 and older are struggling, as compared to the 7.9 percent figure under the federal poverty line.

• Nearly half of the population of blacks (46.9 percent) and Latinos (54.6 percent) cannot make ends meet. Under the federal poverty line, 20 percent of these m
inority groups would be considered in poverty.

Contributing: Staff Writers Joe Martino and Pam MacKenzie

Staff Writer Sergio Bichao: 908-243-6615; sbichao@mycentraljersey.com