What is Self-Sufficiency?
The most tangible way to know when a family enters the Cycle of Opportunity is when it becomes economically self-sufficient.
Self-sufficiency means families are able to meet their basic needs without having to rely on any public or private assistance. That is the definition that underlies the Self-Sufficiency Standard, which we have long recommended as the best way for the state government or anyone else to measure the economic well-being of families.
The traditional measure of economic well-being is the hopelessly outdated federal poverty level. It is calculated based on the cost of food alone and is uniform for all families of a given size, regardless of where they live in the continental United States or the actual composition of the family.
The federal poverty level in 2011 was $18,530 annually for a family of three – whether that was a family of two adults and one teenager living in rural Mississippi or a single mother with two preschoolers living in New York City.
By contrast, the Self-Sufficiency Standard is a carefully researched tool that helps us better understand what it really takes for a family to make it on its own where it lives. The Standard was developed in the mid-1990s by Dr. Diana Pearce while she was the Director of the Women and Poverty Project at Wider Opportunities for Women. It was adapted later for Colorado by the Colorado Center on Law and Policy.
The Self-Sufficiency Standard recognizes that families need much more than food, and that different types of families have different needs. For example, some need child care and some do not. The Standard also recognizes these needs cost more in some places than in others. For example, rent is much higher in Aspen than in Grand Junction.
The Colorado Center on Law on Policy reported that in 2011, a single parent with two children (one preschooler and one school age) living at a self-sufficiency level in Alamosa County was likely to spend 30 percent of her income on child care, 19 percent on housing, 17 percent on food, 17 percent on net taxes, 8 percent on transportation, 12 percent on health care and 9 percent on other basics.
In 2011, that family would have to be earning $37,435 annually in order to be self-sufficient – just over 2 times the federal poverty level of $18,530.
The percentages and bottom lines vary by county. The same family in Denver, for example, would have needed $50,243 to be self-sufficient in 2011, 2.7 times the federal poverty level. In Eagle County, the family would have needed $62,297, nearly three and half times the federal poverty level.
The implications for public policy are profound. If we base our policies on the goal of simply lifting people above the federal poverty level, then we would conclude this family could do just fine on an income of less than $8 an hour, in Denver, Alamosa or Eagle County. Jobs that pay at that level are within reach of the average high school graduate anywhere in Colorado.
On the other hand, if what we really want to do is ensure this family is self-sufficient (and therefore a net contributor of tax dollars that is not drawing on public assistance), then the parent would need to earn nearly $18 an hour in Alamosa, more than $29 an hour in Eagle County, and nearly $24 an hour in Denver.
Jobs that pay at that level are out of reach for many workers who do not have at least an associates degree.
In fact, it isn't until one has a bachelor's degree that the average worker will make near what is required for their family to be self-sufficient in either Eagle County or Denver.
Thus, to escape poverty as defined by the federal poverty level, one need not worry about going any further than high school. But to be self-sufficient – and to have a shot at entering the Cycle of Opportunity – one should aim for college.
This is one of many implications of making personal decisions and setting public policy based on the new concept of self-sufficiency, rather than the old concept of a federal poverty level.
If we want to increase home ownership (a stated goal of policy makers across the political spectrum), we need to move families toward self-sufficiency so they can save for a down payment and cover a mortgage.
If we want to create jobs that provide health insurance, we need to attract employers that pay Self-Sufficiency Wages.
If we want to break the Cycle of Dependency, it often isn't enough for people to move from welfare to work unless they also improve their education and training so they can get the jobs that pay higher wages.
Self-sufficiency – the ability of a family to make it on its own, to be self-reliant and financially independent – should be the goal of public policy if we are to make Colorado a state of opportunity for all.
Moving families to self-sufficiency and beyond is also a key measure by which we will judge success. Only by knowing where we are aiming are we likely to achieve our goal.