Despite being the second-wealthiest state in the nation, New Jersey has a higher real poverty rate than 35 other states, with about 1.35 million — or one in seven — residents living in poverty, according to the recent Supplemental Poverty Measure released by the U.S. Census Bureau. That’s 44 percent more than the 930,000 that are living under the official federal poverty level.
The number of additional families falling into poverty using the more accurate measure is frightening: While the official poverty rate for poverty in New Jersey averaged 10.7 percent between 2010 and 2012, the supplemental rate was 15.5 percent. This is the second-largest difference of any of the 50 states (after California); nationally the difference was just one percentage point.
The main reason for the high level of real poverty is New Jersey’s high cost of living, particularly for housing. The new census findings confirm other research from our colleagues at Legal Services of New Jersey and the United Way of Northwest New Jersey, which has consistently shown that real poverty in New Jersey is much higher than what is reported in the official poverty statistics.
The supplemental poverty measure is a much more detailed look at poverty than the more frequently cited Federal Poverty Level, which is a single national rate that looks only at a family’s gross income and compares it to a family’s budget in 1969 adjusted for inflation.
The supplemental measure includes income from all sources — including non-cash benefits like subsidized housing and nutrition assistance — but it also subtracts necessary expenses for critical goods and services like payroll taxes, childcare and work-related expenses, and adjusts for the widely varying costs of living by state.
Under this more accurate measure, poverty rates for children, who have access to a lot of safety-net programs, — decrease, while rates for adults, particularly seniors, increase. Seniors are often thought of as being much better off because of Social Security, but they do have high housing costs and out-of-pocket medical costs. Nevertheless, the poverty rate for children still remains the highest of all age groups under the more accurate measure.
The supplemental measure also highlights the vital importance of the social safety net. Most federal programs that assist low-income Americans reduce poverty. Other than Social Security, the most effective programs are the refundable tax credits like the Earned Income Tax Credit and SNAP (formerly called food stamps). Without the refundable tax credits, for example, the national poverty rate for children would be a third higher.
Yet these are the very programs facing hostile attack in D.C. SNAP benefits were cut across the board this month, forcing millions of families to make do with less food. The ongoing automatic budget cuts known as sequestration have also cut important work supports like childcare for struggling families.
But the threat is far larger, with the House having passed legislation essentially gutting SNAP and making millions like the long-term unemployed ineligible. Efforts by the House to derail the Affordable Care Act, if successful, would force many moderate-income families into bankruptcy because of uncovered catastrophic medical bills.
New Jersey’s leaders — particularly its members of Congress of both parties — should continue to support effective antipoverty measures and oppose federal cuts. Meanwhile, the state’s leaders in Trenton need to step up to the plate and enact state-based measures to stem the dramatic increase in families falling into poverty.
There’s some good news on that front: The recent approval of a minimum wage increase and the state’s decision to expand Medicaid eligibility will bring some real economic relief to hundreds of thousands of low-income New Jerseyans.
But there is more to be done. The most important immediate step New Jersey lawmakers can take to help struggling working families is to fully and immediately restore 2010’s 20 percent cut to the state’s Earned Income Tax Credit, which resulted in a de facto tax increase of about $150 million for a half-million working families. It is important that the EITC be put on the front burner in 2014 and that it be untethered from broader political fights over larger tax cuts. These hard-working families have suffered long enough.
Policymakers also need to address New Jersey’s unrelenting housing crisis — probably the greatest cause of poverty in the state. When one in four renters spends half of his or her income on rent, and the rate of foreclosure is the second-highest in the nation, there’s clearly something wrong. We need a consistent and fair housing plan for the middle class, the working poor, and the homeless that makes New Jersey an affordable place to live for everyone.