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Modern poverty

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Title:
Modern poverty an investigation of current need standards and their relation to subsistence requirements and public policy
Creator:
Augostine, Daurie Rae
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English
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141 leaves : forms ; 28 cm

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Subjects / Keywords:
Poverty ( lcsh )
Poor -- Case studies -- Colorado -- Denver ( lcsh )
Poor ( fast )
Poverty ( fast )
Colorado -- Denver ( fast )
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Case studies. ( fast )
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )
Case studies ( fast )

Notes

Bibliography:
Includes bibliographical references (leaves 125-129).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Master of Arts, Department of Economics.
Statement of Responsibility:
by Daurie Rae Augostine.

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University of Colorado Denver
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Auraria Library
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All applicable rights reserved by the source institution and holding location.
Resource Identifier:
19817863 ( OCLC )
ocm19817863
Classification:
LD1190.L53 1988m .A83 ( lcc )

Full Text
MODERN POVERTY: AN INVESTIGATION OF CURRENT
NEED STANDARDS AND THEIR RELATION TO
SUBSISTENCE REQUIREMENTS AND
PUBLIC POLICY
by
Daurie Rae Augostine
B.A., University of Colorado, 1984
A thesis submitted to the
Faculty of the Graduate School of the
University of Colorado in partial fulfillment
of the requirements for the degree of
Master of Arts
Department of Economics
1988


This thesis for the Master of Arts degree by
Daurie Rae Augostine
has been approved for the
Department of
Economics
by
Julia L. Hansen
Date
iW


Augostine, Daurie Rae (M.A., Economics)
Modern Poverty: An Investigation of Current Need Standards and
111
Their Relation to Subsistence Requirements and Public Policy
Thesis directed by Professor Suzanne W. Helburn
Poverty, subsistence and social welfare are not fixed
concepts. Instead, they are concepts which are historically
conditioned and socially defined according to human values, customs
and social wealth. Accordingly, these concepts evolve over time as
societies advance. Despite the relative nature associated with the
meaning of poverty and human needs, societies continue to identify
standards because of a desire to help those in need. Since 1964,
poverty has been officially defined in the United States as a
condition in which a person (or household) is unable to obtain the
necessary goods and services in order to realize a minimally-
adequate standard of living. Because there is not a scientific
formula for determining what is meant by "adequate and since the
meaning of adequacy is only an abstract idea, the possibility exists
that official standards (federal and state) are too low and thus,
inadequate.
The purpose of this paper is to estimate a minimally-
adequate standard of living and to evaluate the current federal
poverty line in terms of this estimate. A "normative" or market-
basket approach is used for the estimation of a minimally-adequate
standard of living (in Colorado) and this estimate is compared to
the "official" standard to show that an income level equal to or
less than the poverty line is so low that all the necessities of


iv
life cannot be obtained. It is concluded that the current poverty
line does not measure what it is intended to who is poor compared
to who is not.
This study focuses on a three-person, mother-only family (a
typical AFDC family) because families of this type represent the
fastest increasing percentage of the poor population. Current
dissatisfaction with the welfare system, from recipients and the
middle-class, imply that reform is needed. Since social welfare
policies are based on official measures of poverty and standards of
need, it is essential to continually re-evaluate a minimally-
adequate standard so that it is realistic. If the standard is too
low, policies based on it create continued welfare dependency for
many families because such people do not have the means to become
self-sufficient except by luck, marriage or fraud.
The form and content of this abstract are approved,
publication.
I recommend its
Signed
Suzanne W. Helbum


This thesis is dedicated to the memory of my
grandmother, Mary Gusch Bellock, in recognition
of her life as a single-parent, working mother.


ACKNOWLEDGEMENTS
Looking back, it has been a long time since the research for
this paper began. Had it not been for the contribution of many
people, this study would not have been possible for me to complete
alone.
I am especially grateful to Suzanne Helburn and John Morris
for including me in the Applied Economics Research team of which
this thesis was derived from. I am particularly indebted to my
committee chairperson, Suzanne Helburn, who spent endless hours
critiquing and revising this thesis. She provided vital direction
and much needed encouragement not only for this project but
throughout my years as a graduate student. I greatly appreciate the
helpful comments, criticism and moral support given by my committee
members John Morris and Julia Hansen.
I am also grateful to Juanita Ramirez for providing
technical facilitation and a consistently cheerful perspective and
to Sherill Sullivan for her editorial suggestions.
I especially appreciate the patience of Bram Van de Werken
for reading and re-reading this paper and for pretending that he
actually cared about it.


CONTENTS
CHAPTER
I. INTRODUCTION......................................... 1
The Need for Ongoing Poverty Research................... 4
Purpose of this Study................................. 11
Arrangement of this Thesis............................. 15
II. PUBLIC POLICY: DEFINING AND MEASURING POVERTY........ 18
Historical Attitudes Regarding Poverty................. 18
Modern Attitudes Regarding Poverty..................... 24
Defining Poverty in the U.S............................ 25
Measuring Poverty in the U.S........................... 27
Limitations of the Poverty Line........................ 33
AFDC Standard of Needs................................. 38
Ratable Reduction Standard............................. 4l
Summary................................................ 44
III. A MARKET-BASKET STUDY................................... 46
Defining an Absolute Subsistence Standard.............. 46
A Case Study in Measuring Subsistence: The
Denver Cost-of-Living Study.......................... 51-
Purpose of the Study................................... 52
Methodology: The Market-Basket Approach................ 54
Part I: A Short Run Subsistence Budget for a
Family of Three........................................ 57
Food................................................... 57
Shelter................................................ 62


Vlll
Clothing........................................... 69
Transportation..................................... 76
Miscellaneous......................................... 77
Summary of Short Run Subsistence Budget............... 78
Part II: A Long Run Minimally-Adequate Budget
for a Family of Three................................ 83
Food................................................ 83
Shelter............................................... 84
Clothing.............................................. 87
Transportation........................................ 87
Child Care....................................'.... 91
Medical and Miscellaneous........................... 92
Summary of Long Run Budget........................... 95
IV. ACTUAL FAMILY BUDGETS............................... 96
Potential Income of AFDC Families..................... 96
Potential Income of Families with Employed
Mothers............................................... 99
Family A: Anna...................................... 103
Family B: Betsy..................................... 108
Family C: Caren..................................... 113
Summary............................................ 116
V. CONCLUSION..................................... 119
BIBLIOGRAPHY.................................................... 125
APPENDIX
A. THE THRIFTY FOOD PLAN................................... 130
B. PUBLIC ASSISTANCE ELIGIBILITY RULES...................... 134
C. CASE STUDY............................................... 139


TABLES
Table
1.1 Poverty Population according to Census Bureau
Definition of Poverty: 19591986..................... 3
2.1 1986 Poverty Income Guidelines for all States (except
Alaska and Hawaii) and the District of Columbia........ 32
3.1 The Thrifty Food Plan for a Young Mother with Two
Children (ages 4 and 6), 1983: Selected Quantities
of Food for a Month.................................... 59
3.2 Food Budget for a Family of Three: Menu based on the
Thrifty Food Plan...................................... 6l
3.3 HUD's Occupancy Standard for Section 8 Existing
Housing Program.......................................... 66
3.4 Data for Estimating Rent (including utilities) for a
Two-bedroom Apartment or House in a Low Rent, Denver
Neighborhood: November, 1986............................. 68
3.5 Estimate of Yearly Clothing Purchases Consisting of
Mainly Used Clothes for a Mother at Home............... 72
3.6 Estimate of Yearly Clothing Purchases Consisting of
Mainly Used Clothes for a 4 Year Old Girl.............. 73
3.7 Estimate of Yearly Clothing Purchases Consisting of
Mainly Used Clothes for a 6 Year Old Boy............... 74
3.8 Estimate of Monthly and Yearly Clothing Needs for a
Family of Three in Denver, 1986.......................... 75
3.9 Estimate of Monthly Household Items.................... 79
3.10 Estimate of Monthly Personal Care Items................. 80
3.11 Minimum Cost-of-Living for a Family of Three
(Nonemployed Mother, 6 Year-old boy, 4 Year-old
Girl) in Denver: November, 1986.......................... 81
3.12 Food Budget for a Low-Income, Family of Three.......... 85


X
3.13 Estimate of Yearly Clothing Purchases for New and
Used Clothing for an Employed Woman................... 88
3.14 Estimate of Yearly Clothing Purchases for New and
Used Clothing for a Six Year-Old Boy.................. 89
3.15 Estimate of Yearly Clothing Purchases for New and
Used Clothing for a Four Year-Old Girl................ 90
3.16 Annual Medical and Miscellaneous Expenses for a
Long Run Minimally-Adequate Standard of Living........ 93
3.17 Personal Care Items for a Family of Three............. 94
4.1 Short-Term Subsistence Budget for an AFDC Family
of Three in Denver in 1986............................ 98
4.2 Cost Summary of Minimum Adequacy Low-Income Budget.... 100


CHAPTER I
INTRODUCTION
Akaky Akakyevitch pondered and pondered and decided at
last that he would have to diminish his ordinary expenses,
at least for a year; give up burning candles in the
evening, and if he had to do anything he must go into the
landlady's room and work by her candle; that as he walked
along the streets he must walk as lightly and carefully as
possible, almost on tiptoe, on the cobbles and flagstones,
so that his soles might last a little longer than usual;
that he must send his linen to the wash less frequently,
and that, to preserve it from being worn, he must take it
off every day when he came home and sit in a thin cotton-
shoddy dressing gown, a very ancient garment which Time
itself had spared. To tell the truth, he found it at
first rather hard to get used to these privations, but
after a while it became a habit and went smoothly enough
he even became quite accustomed to being hungry in the
evening; on the other hand, he had spiritual nourishment,
for he carried ever in his thoughts the idea of his future
overcoat.
- Nikolai Gogol
Recent poverty statistics indicate that 32,370,000 (over 32
million) people or 13.6 percent of the United States population are
poor. (U.S. Bureau of the Census: 1988, 43*0. Millions of others
are living at levels just above the poverty line. Compared with
figures on poverty in 1963. the first year of Lyndon Johnson's
"Unconditional War on Poverty, the numbers are not significantly
different. In that year, 36,436,000 people or 19*5 percent of the
U.S. population were considered poor by Department of Commerce
estimates. (U.S. Bureau of the Census: 1985. 5). Since 1963. the


2
federal government has spent billions of dollars to help those in
need, but just as Jesus Christ predicted, the poor are still with
us.
Between 1963 and 1986, the percentage of poor Americans has
fluctuated between a maximum of 19-5 percent (in 1963) and a minimum
of 11.1 percent (in 1973)* Table 1.1 below shows that the rate of
poverty was relatively stable until the first year of the Reagan
Administration (1980) at which time the rate began to show an
increase. After reaching a high of 15*2 percent in 1983, the
poverty rate is now slowly decreasing even though in actual numbers
there are more poor people living in the U.S. today than at any time
since 1965* If these statistics are presumed to be reliable
estimates of the extent of poverty, then the data indicate that
policymakers are not making the progress they originally hoped to in
resolving the poverty situation. To paraphrase a popular bumper
sticker, "the war against poverty is over and poverty won"!
(Beeghley: 1983. 1)* According to economist Leonard Beeghley from
the University of Florida, the anti-poverty efforts of the 1960's
have been replaced by a structure in which poverty simply
perpetuates itself. (Beeghley: 1983. 13*0 Whatever the reason
for continued poverty, it is a situation that demands the attention
of policymakers as well as economists. Whether the poor, like Akaky
Akakyevich, have "spiritual nourishment" to help them cope with
their poverty is not known. What is known is that poor people must
devise all sorts of methods for' alleviating day-to-day deprivation.


3
TABLE 1.1
Poverty Population according to
Census Bureau Definition of Poverty:
1959 1986
Year Number of Persons Living in Poverty (in millions) Percentage of U.S. Population Living in Poverty
1959 39-5 22.4#
I960 39.9 22.2#
1961 39.6 21.9#
1962 38.6 21.0#
1963 36.4 19.5%
1964 36.1 19.0#
1965 33.-2 17-3*
1966 28.5 14.7%
1967 27.8 14.2#
1968 25.4 12.8#
1969 24.1 12.1#
1970 25.4 12.6#
1971 25.6 12.5%
1972 24.5 11.9#
1973 23.O 11.1#
197^ 23.4 11.2#
1975 25.9 12.3#
1976 25.0 11.8#
1977 24.7 11.6#
1978 24.5 11.4#
1979 26.1 11.7%
1980 29.3 13.0#
1981 31.8 14.0#
1982 34.4 15.0#
1983 35.3 15.2#
1984 33-7 14.4#
1985 33-1 14.0#
* 1986 32.4 13.6#
Source: U.S. Bureau of the Census, Current Population Reports,
Characteristics of the Population Below the Poverty Level:
1985.. Series P-60, No. 124, 5-
Adapted from Frank Levy, The Logic of Welfare Reform.,
The Urban Institute Press: Washington, D.C., 1980, 9*
* U.S. Bureau of the Census: 1988, 434.


4
The Need for Ongoing Poverty Research
Many questions are' associated with the issues of poverty and
income inequality. For instance, is it a myth that the opportunity
for upward mobility exists in the U.S. or should individuals be
blamed if they cannot make it in this society? What images are
associated with the phrase, "over 33 million poor people", and what
does this imply about the objectives in U.S. society? Is poverty
caused by the capitalist system or is it a condition associated with
a modern society that will never be alleviated? By what standards
are people classified as poor and by whose definition? Is it
possible that our expectations of the "good life" as well as what is
"adequate" may just be a little too high? If 25 years of "Great
Society" programs have not corrected this problem then does the
possibility exist that there is not an equitable solution? Is' it
not true that in any society with an unequal distribution of wealth
and income, in order to have a top 15 percent, there must also be a
bottom 15 percent (or a bottom 30 percent), implying that poverty
and inequality are related concepts? Is it reassuring to know that
the composition of those at the bottom of the income scale (the
incidence of poverty) has changed in the last 25 years even if the
poor still exist within society? Does it matter that a great
percentage of those living below U.S. standards of decency are
millions of women and children? Is it also likely that the poor
actually serve a necessary function within capitalist markets;
therefore, it may not be in the best interest of the U.S. economy to
remedy the problem of poverty?


5
The existence of over 32 million poor people is a disturbing
"estimate'' and an embarrassment to a nation that has the resources
and ability to confront the poverty situation once and for all. If
anything in this mixed-capitalist system has remained unchanged, it
is the presence of a class of people that live far below the average
standard of living realized by much of the American population and
more importantly, beneath the concept of a minimal standard of
decency.
If all U.S. households with income levels below the official
1987 poverty line were to be grouped together and assembled in one
region, the U.S. poor would not only replace the entire population
of Canada, they would replace it by approximately one and one-third
times. The estimated number of people living in Canada is 25.6
million. (U.S. Department of Commerce: 1986, 815). If the poor
were combined in one area of the continental U. S., they would fill
the ten following states: Arizona, Colorado, Idaho, Montana, Nevada,
New Mexico, Texas, Utah, Washington, and Wyoming. The estimated
number of people living in this region of the U.S. is 32.9 million.
(U.S. Department of Commerce: 1986, 27).
These statistics bring to mind Queen Elizabeth's statement
in 1601 at the beginning of the enclosure process and industrial-
ization period. In evaluating, the changes in English society that
were a direct result of emerging capitalist institutions, her
comment was: "there are paupers everywhere!". (Heilbroner: 1980,
29). Only about 100 years before, England was a community of small
farmers working on their own land, self-sufficient yeomen and


6
prosperous by world standards. However, 30 years prior to 1601
because of population growth, the enclosure movements that forced
people off the land, the evolving market system and the early
development of wage labor, begging had become so common in England
that Parliament recognized a need to establish a more centralized
solution to deal with the problems of the poor. Modern poverty
developed with the emergence of capitalism and dependence on a money
economy. Action by Parliament for social legislation represented a
new social attitude regarding poverty and this attitude was
reflected by the establishment of a social welfare system: the
English Poor Laws.
In many ways, the current United States welfare system is
similar to the laws enacted by Queen Elizabeth in the seventeenth
century. Now, as then, the government provides for the poor because
of the inadequacy of private charity and according to what authors
Piven and Cloward have called the "principle of less-eligibility",
those receiving public support always receive less than those who
work. (Piven and Cloward: 1971 36). It is essential to understand
the history of charity/relief/welfare in order to make a judgement
about the manner in which this nation's policymakers currently
address social problems and to recommend changes that will be
beneficial. In order to appraise current public policy, compared to
the past or the performance of other countries, evaluation of
specific problems related to our current welfare system is vital.
An analysis of problems related to poverty, income
inequality and welfare reform must begin with the issue of


7
definition. Current definitions of poverty and measurement
procedures should be analyzed, questioned and revised periodically
to reflect the values and goals of a society. It is necessary to
examine the basic concepts used in defining poverty such as the
meaning of a "minimum-acceptable standard of need". Such concepts
are often taken for granted.
Any concept of poverty must begin with a generally accepted
definition of minimum needs. However, a problem exists at the
outset. Because a scientific formula for defining needs does not
exist, official standards are the result of policymakers' judgements
and political compromises and thus are partly subjective.
Therefore, it is possible that a discrepancy exists between the
officially accepted "minimally-adequate" living standard used in the
federal definition of poverty and what is actually necessary to
exist at a decent level given social customs and prices of
commodities. Official guidelines may well be outdated and/or
unrealistic. A second problem is the relation between the official
poverty level and actual public policy regarding the amount of
public assistance (i.e., household income) given to poor families by
state governments. Just as the Elizabethan Poor Laws represented a
re-evaluation of parlimentary policy in response to seventeenth
century conditions, the above problems indicate areas of public
policy that need current re-evaluation.
According to British sociologist Peter Townsend, "poverty
can be defined objectively ... only in terms of the concept of
relative deprivation". (Townsend: 1979. 31)* Michael Harrington


8

says essentially the same thing about relative deprivation only with
more conviction. According to Harrington:
The American poor are not poor in Hong Kong or in the
sixteenth century; they are poor here and now, in the United
States. They are dispossessed in terms of what the rest of the
nation enjoys, in terms of what the society could provide if it
had the will. To have one bowl of rice in a society where all
other people have half a bowl may well be a sign of achievement
and intelligence. To have five bowls of rice in a society where
the majority have a decent, balanced diet is a tragedy.
(Harrington: 1981, 188).
However, the deprivation standard is only one concept of
poverty. Poverty can also be conceived of in either absolute or
relative terms. An absolute poverty standard has the property of
cardinality meaning that there is a quantifiable level which is
necessary for economic well-being. A relative poverty standard has
ordinal properties which means that as long as economic inequality
exists, someone is going to be relatively less well off so that
relative poverty can never be eliminated unless income distribution
is completely equal. As long as relative deprivation is also
acknowledged for purposes of public policy, it makes sense to define
poverty absolutely.
Neither liberal nor conservative policy has been successful
at eliminating poverty in the U.S. Efforts to redistribute money to
the poor through "Great Society" liberal programs only reduced the
percentage of poor people; they did not eliminate poverty. The
number of persons living below the official poverty line decreased
by 8.4 percent (approximately 13.4 million people) in the 60's and
early 70's. Conservatives believe that poverty is necessary and
natural. Their view that economic growth will eventually benefit


9
the poor by way of the "trickle-down" effect has not been realized.
The poverty "programs" advocated by the two political parties offer
only half-hearted solutions. However, the era of Ronald Reagan has
brought a "trickle-up" effect which has widened the disparity
between the rich and poor resulting in more economic inequality;
hence, more absolute and relative poverty as well as increased
deprivation. Thus, recent history suggests that political
philosophy matters a great deal.
Relatively recent poverty researchers have discovered the
"feminization of poverty". This trend toward an increasing
percentage of the poor to be women and children is a result of many
factors such as changes in the structure of the modem family away
from an extended one, low female earning power averaging only 66 to
70 percent of the average male earnings, inadequate employment
opportunities for women, increasing rates of divorce in the U.S.,
and inadequate welfare payments representing only 45 percent of the
poverty line (in Colorado). These are some of the major reasons why
single women with children are becoming the majority of the
impoverished class..
Although poverty is not the same as economic inequality, the
two concepts are nevertheless related. According to economist
Lester Thurow, Americans are not comfortable with issues of economic
inequality. (Thurow: 1935* 110). Thurow claims that Americans
believe that the distribution of U.S. income is more equitable than
it actually is. (Thurow: 1985. 110). He also believes that the
widening disparity between income levels in the last few years has


10
contributed to an increase in child related poverty. According to
Thurow, of the 557.000 people added to the poverty rolls during the
Reagan Administration, 50 percent are children so that Reagan's
policies are responsible for 288,500 more children growing up poor
today. (Thurow: 1985. 110-11).
The feminization of poverty disguises the fact that it is
children, as well as women, that are most negatively affected by
this trend. It also downplays the fact that single, minority women
and their children have always been highly susceptible to poverty.
Host people would agree that it is the duty of an affluent nation to
help those who cannot help themselves, e.g., the sick, the disabled,
the elderly. But by turning away from U.S. children, the underlying
assumption is that the families of poor children (mainly single
mothers) are more capable of helping themselves than people who are
old or handicapped.
There are various opinions about why public policy is
intentionally designed to undermaintain certain classes of people.
Authors Piven and Cloward discuss the adverse effects on the labor
market when relief or welfare is high enough to reduce the incentive
to work. (Piven and Cloward: 1971. xvi-xvii). However, it may be
that it is not necessarily the work ethic that is negatively
affected by high levels of public assistance; rather, low levels of
"charity" make it impossible for people to become self-sufficient
because they are denied the financial means to change or improve
their circumstances. Piven and Cloward claim that program increases
in income maintenance for the poor occur mainly during periods of


11
societal crisis, such as during the Great Depression and the 1960's
civil rights movement. (Piven and Cloward: 1971, 3).
Another view is that poor people actually serve a necessary
and beneficial function within society and so there is no economic
reason to abolish poverty. Peter Townsend cites many reasons why
the poor are essential to the proper functioning of capitalist
societies. According to Townsend, the poor provide the people who
perform the dirty, menial and dangerous work. Poverty, as a serious
social problem, creates a number of jobs for police, government
caseworkers, and pawnshops. The poor provide a market for shoddy,
stale and damaged goods such as second-hand clothing, day-old bread
and low-income housing. (Townsend: 1979> 83)*
Purpose of this Study
This paper begins with an investigation of official poverty
guidelines in the U.S. regarding minimally-adequate living
standards. The main purpose of this paper is to use case studies of
Denver, Colorado to analyze the meaning of what Marx called "the
necessary means of subsistence" which are based on socially
determined needs. This paper specifically identifies the components
that make up a "minimally-adequate living standard" and discusses
the ability of the poor to achieve this living standard. There are
many economists who believe that poverty is a condition in which an
"insufficiency" exists. An insufficiency means living at a standard
below what is essential to maintain life in a given society at a
particular time. In this paper, it is assumed that poverty and/or
well-being are economic, not psychological, so the emphasis is on


12
material possessions and income needed for existence, not conditions
necessary for emotional well-being. It may be argued that poverty
is more than just a lack of possessions or that poverty is a state
of mind; however, that is not a concern of this paper.
In 1986, the Economics Department at the University of
Colorado at Denver, in conjunction with the Colorado Children's
Campaign, conducted a "normative" cost-of-living study to determine
a minimally-adequate living standard. The government literature
calls this a "market basket" approach to determining norms for a
particular group of people. (Dean and Tomlinson: 1982, 1-2). This
Denver area study was intended to estimate the discrepancy, called
the poverty gap, between welfare entitlements and the current cost
of living in Colorado. This research project was conducted by
Suzanne Helbum, John Morris and myself with help by volunteers of
the Junior League of Denver. The focus was on the cost-of-living
and the poverty gap for a typical three-person, urban household
consisting of a single woman with two young children. The main
concern was in defining a minimum standard of decency, using
nationally established norms, expert opinions and our own judgement.
We developed the budgets necessary to maintain a single mother and
her two children in Denver, Colorado in 1986 under two sets of
circumstances: (1) as a recipient of AFDC payments and; (2) as a
full-time working mother. The results of this study are described
in chapter III.
This study focuses on one particular class of people
single-parent families headed by women because this group has the


13
fastest increasing rate of poverty. Often called the new poor,
women and children now make up the largest component of the poverty
population 48 percent -- (U.S. Bureau of the Census: 1985, 5) and
according to Barbara Ehrenreich & Francis Fox Piven,
... if the proportion of poor in female-headed households
were to continue to increase at the same rate as it did
from 1967 to 1978, the poverty population would be composed
solely women and children before the year 2000. (Ehrenreich
and Piven: 1984, 162).
One of the main assumptions in this paper is that everyone
has the right to a "decent" minimum standard of living. It will be
shown that current public policy is not only inadequate to ensure
this, but it also does not encourage self-sufficiency among the
poor; rather, it only generates a continuance of the number of
people living in poverty. It will be pointed out that as a society,
the solution to the problem of poverty requires resolving three
issues: (1) the problem of defining and measuring poverty using a
method which accurately identifies who the poor really are; (2) the
problem of identifying an adequate and realistic standard of
economic well-being which is socially acceptable and using this as a
basis for the definition of poverty; (3) the problem of combining
the official definition of poverty with effective public policy to
alleviate relative economic insufficiency. Chapters II, III and IV
of this thesis will focus on the first two problems above.
Despite the existence of value judgments regarding "needs"
versus "luxuries" and the use of a "normative" cost-of-living study
(presented in chapter III), this paper contends that welfare reforms
and income maintenance, throughout history, have been linked to a


14
"general" standard of living, at least for the "worthy" poor. It
will be shown that there is a negative gap between basic everyday
needs (the necessary means of subsistence) and public entitlement
payments (welfare). The result is a class of people that have
always been considered the "deserving" poor, i.e., women and
children, that are currently being denied the right to any minimum
and meaningful standard of living and at the same time are being
denied the means to change their situation. Reverend Jesse Jackson
calls this scenario, "economic violence, and says that it is one
type of violence that remains legal in this country. (Jackson:
1987)
Increased rates of poverty in the U.S. have been a result of
many factors: an unstable economic system suffering from greater
international competition which has lessened domestic economic
growth and employment opportunities: concommitant decline in working
class power and real wages; the changing structure of the typical
American family, higher divorce rates and the negative effects of
labor market segregation on women's earning power.
Other capitalist countries have far more advanced "family
policies" than the U.S. For instance, the Swedish welfare system
recognizes that it is in the best interest of society to provide
public assistance to children and families, especially single-parent
families and "that no [household] ought to be forced to lower its
standard of living in order to perform this valuable service [e.g.,
the care of children] for the larger community". (Adams and
Winston: 1980, 90). Family-oriented programs include housing


15
allowances, Income-maintenance which ensures that recipients do not
fall below the poverty level, family allowance and child maintenance
grants, medical and day care services. The alternative to our
current social welfare policy is not necessarily more government
involvement but rather government policy that is willing to adapt to
individual differences, a government with more flexibility. An
important step in reforming the U.S. welfare system is the
recognition of a minimum, but adequate, family income which is based
on need in order to guarantee a realistic standard of living for all
Americans. This involves revising outdated guidelines in
identifying that part of the U.S. population that is "poor".
Arrangement of this Thesis
Chapter II begins with a very brief history of beliefs about
the poor and separates attitudes prior to capitalism from modem
attitudes about poverty. The chapter distinguishes "deserving" from
"undeserving" poor and suggests that current public policies treat
poor women and children as though they belong to the latter
category. Current philosophies regarding the identification of
those in poverty will be compared to methods used in the past
(specifically in England) to suggest the philosophy on which
current public assistance programs are based. This chapter also
deals with current public policy; it describes the "official" United
States definition of poverty and measurement procedures and points
out limitations of the poverty line. Additionally, the federal
poverty line (one standard of need) and the state-level AFDC


16
standards of need (another standard) are discussed and shown to be
arbitrary numbers, despite their importance in determining public
policies.
Chapter III begins with a general discussion of human needs,
, how they are socially determined and the theoretical difficulties
involved in defining a standard of basic need. Though it has been
suggested that it is possible to define human needs "objectively",
any determination of a living standard will usually involve a
"normative" judgment. Therefore, a Denver-area normative cost-of-
living study is presented to analyze the discrepancy between the
official standard of need (the poverty line) and the standard of
need as determined by economists from the University of Colorado at
Denver.
In the first part of chapter IV, potential income for low-
income individuals is discussed in relation to the cost-of-living
estimates derived in chapter III. Next, household budgets for
actual families whose income levels are at and below the poverty
line are presented to show how real individuals manage financially
and to justify the view that women on welfare are living poorly
whether one defines poverty absolutely, relatively or by relative
insufficiency. Case studies of three working women who also receive
public assistance and live below the poverty threshold are used to
describe the deprivation experienced by many poor, mother-centered
families.
Chapter V concludes with public policy issues and mainstream
attitudes regarding the welfare system and comments linking the poor


17
to non-participants in an affluent society. Public policy which
does not permit the alleviation of poverty or the maintenance of
those in poverty at a minimum decent level reinforce the seventeenth
century belief that the poor should be blamed and punished for their
poverty. Solutions to the poverty problem and recommendations for
welfare reform are however beyond the scope of this paper. ...


CHAPTER II
PUBLIC POLICY: DEFINING AND MEASURING POVERTY
"The trouble Isn't what people don't know; it's what they do
know that isn't so.
- Will Rogers
For centuries, the acknowledgment of poverty as a societal
problem and the issue of how to best help (or not help) the poor has
been a concern. A look back to the attitudes of our ancestors
regarding the need for charity is brought up here, as a brief
overview of the similarities and differences in today's beliefs
regarding those in need. According to historian Walter Trattner of
the University of Wisconsin, "the basic tenets and programs of any
social welfare system reflects the values of the society in which
the system functions". (Trattner: 1984, 1). Portions of the
following were derived from his book. From Poor Law to Welfare
State.
Historical Attitudes Regarding Poverty
Primitive people were often hospitable to strangers, not
that strangers were necessarily poor, but that the concept of
"sharing" was believed to be good and virtuous. Hammurabi (approx-
imately 2000 B.C.), the ancient ruler of Babylon, believed that
women, orphans and society's weakest members needed and deserved


19
protection. Aristotle recognized the social bond between people and
stressed cooperation and sharing; thus, the words "charity" and
"philanthropy" are derived from Greek and Latin origin. Cicero (106
- 43 B.C.) wrote, "justice commands us to have mercy on all ... to
give everyone his due, rich and poor alike". (Trattner: 1984, 2).
The Greeks and Romans had a variety of ways to help the poor, not
all of them good (e.g., slavery), but they made sure that food was
publicly distributed and allowances were made for pensions and
institutional care especially for orphans who were not often able to
care for themselves.
One of the most important developments in the history of
social welfare was that of the ancient Jewish religion and the
concept of the "Jubilee". These doctrines taught the duty of giving
and just as important, the right of receiving. Such "charity should
be given with a friendly countenance, with joy, and with a good
heart". (Trattner: 1984, 2). How much was to be given the poor?
"Sufficient for [their] needs ..." (Trattner: 1984, 2).
Christianity has carried on the same tradition that good deeds such
as charity would promote entry into heaven. The Christian idea was
much the same as that of the Hebrews, that poverty was not consi-
dered a crime. To be "needy" was a result of misfortune and it was
up to the community to assume the responsibility for relieving
individual hardship. "The needy had a right to assistance, and
those who were better off had a duty to provide it." (Trattner:
1984, 4).
Poverty was not a social problem in early European society


20
because of the isolation of communities and very little private
property held outside the church. In most cases, the poor were
aided by the family just as a matter of course. By the sixth
century, the church or individual parish assumed responsibility in
establishing formal rules for assisting the unfortunate, as members
of the church and communities grew. Honey needed to help the poor
was available because the "tithe1* was a compulsory tax and the
church was a public institution. But poverty was not widespread, at
least in relative terms since the rest of society was also poor if
compared to today's standards. When poverty existed, it was because
of unusual cases of accidents, illness, or death in the family.
Aside from periods of famine, in which everyone suffered,
subsistence was generally guaranteed to everyone or as Helen
Ginsburg has very aptly put it, "... the poor ... had been looked
upon as God's friends, destined to inherit the earth". (Ginsburg:
1972, 2). It is clear that in these early periods of society,
poverty was regarded as individual misfortune and personal
deficiency. Although it was the fault of the person(s),
responsibility was always assumed by society simply because of the
religious belief that it was better to give than to receive. The
/
Catholic religion today continues to emphasize that "faith, hope and
charity" are the three most important virtues.
Under feudalism, there was little distress due to the
organization of the manorial system. According to Trattner, the
medieval period was characterized by "an environment of social
stability, in which mass destitution was absent". (Trattner: 1934,


21
6). Though individual freedom was extremely limited, the lord of
the manor generally provided a form of social insurance to all
members of the estate, peasants on up. For those who lived in the
emerging cities, the guilds provided assistance, not only to their
own members but also to outsiders.
As the market system gradually evolved between the
thirteenth and seventeenth centuries, economic growth caused
economic upheavals which altered traditional social conditions.
With capitalist institutions and urban growth came individual
freedom as well as social disorder, uncertainty, and oftentimes
serious hardship. A new form of poverty emerged as did the belief
that the poor should be blamed and punished for their poverty.
(Ginsburg: 1972, 2). Poverty was no longer regarded as individual
misfortune or failure. Poverty inherent to a market economy often
resulted from economic conditions over which the individual had no
control; however, the victims were held responsible. Subsistence
was no longer linked to the amount of work that one did on the farm
or one's access to land; it was tied to the ability to find employ-
ment in order to obtain money from those who owned the resources.
In England, the enclosure movements forced people off the land and
removed all means of traditional subsistence. The evolution of
private property, wage labor, tendencies toward self-interest, and
"the market" became the new way of life. New social arrangements
were necessary.
Agrarian distress produced vagrancy. Dispossessed and
distressed peasants took to the road, and the frightening
numbers of "sturdy beggars" gave rise to the most remarkable


22
body of social legislation enacted in pre-industrial Engl and -
the Elizabethan Poor Laws. Its purpose was to keep poor people
in their respective parishes and force their parishes to take
care of them. (Baugh: 1975, 4).
By 1834( the harsh middle-class attitude toward the poor was
reinforced by Malthus who "calmly [dismissed] as nonsense the tradi-
tional view that every human being [had] an inalienable right to
food, clothing and shelter". (Engels: 1968, 321). In short,
because of an expanding economy based on money, property and the
idea of "gain" that was very different from the form of social life
in which tradition defined people's social roles, attitudes thus
changed enormously, especially in regards to the poor. The idea of
gain and that one needed to strive to get ahead emerged along with
the market system. Before capitalism, "making a living" was not yet
a concept. (Heilbroner: 1980, 22). According to Heilbroner:
... the new philosophy [of the market system] brought with
it a new social problem: how to keep the poor poor ... unless
the poor were poor, they could not be counted upon to do an
honest day's toil ... (Heilbroner: 1980, 37)*
Capitalism not only produced paupers due to increased
economic inequality but also generated the idea that those who were
poor were so because of their own idleness. However, charity was
not only needed by the poor, it was needed by the rich in order to
save their souls. It was believed that personal salvation was the
reward to those who gave and so charity benefited both classes.
However, private charity was inefficient because it meant that very
few poor people actually got aid, and rarely got enough for their
needs.
When poverty began to reach alarming proportions, the need


23
for more "centralized" solutions aroseT In England, the "solution"
was the Elizabethan Poor Laws. Some time before 1601, other Western
European countries were experiencing similar problems of expanded
poverty. In 1520, Martin Luther advised the German nobility to
provide for their poor. (Piven and Cloward: 1971, 9). By 1531,
laws similar to England's Poor Laws were established in Germany that
outlawed begging, provided work for the able-bodied and took care of
indigent women and children. (Piven and Cloward: 1970, 9)
Similar centralized solutions were made in France to counteract the
turbulence among the poor peasants and since the l600's, many
industrialized, western countries have made arrangements for the
care of those in poverty. (Piven and Cloward: 1970, 8). It was
during this period that public responsibility replaced religous
responsibility.
Important features of these social arrangements were similar
to today's social welfare laws: (1) assistance was provided by the
state; (2) the "worthy" and the "unworthy" poor had to be
distinguishable so that charity did not encourage idleness; (3)
relief recipients were often subjected to surveillance in order to
make sure that the received charity was needed; (4) measures for
recipient rehabilitation were necessary and people were expected to
work for welfare; (5) the "less-eligibility principle" (183*0
guaranteed less income to people who were unwilling or unable to
work; (6) the system was deliberately "degrading" so that work,
even the lowliest kind, was always preferred. (Piven and Cloward:
1970, 11).


24
Poor laws have always been designed so that people who work
are better off than those who do not. Whether financially ("less-
eligibility" rules) or psychologically, income-maintenance has been
viewed as that which should not interfere with the labor market so
people on welfare are encouraged to respect the "work ethic".
Stigmatization, whether in the past or today has been the
traditional means to discourage malingerers. For example, in the
17th century, people in Pennsylvania were required to wear a "P" on
their sleeve, indicating that they were paupers. Today, the welfare
department makes it degrading to be on public assitance and
mandatory work laws are enforced (e.g., the WIN program or
Workfair).
Modem Attitudes Regarding Poverty
Today's method of identifying poverty originated at least as
far back as 1795* In that year, economist Bruno Stein wrote, "a
minimum income should be the cost of a gallon loaf of bread,
multiplied by three, plus an allowance for each dependent". (Sidel:
1986, 3). If it is unclear what Stein meant by "a gallon loaf, it
can only be assumed that the terms are used to represent nothing
more than a statement regarding a general nutritional standard
characteristic of the 1800's. To determine precisely what he meant
is not the point. The point is that Stein's description represents
one of the first attempts by an economist to establish a concept, in
absolute terms, of a minimum level of need (possibly subsistence)
conforming to social conditions in the late eighteenth century.
Presumably, this idea was useful in providing some type of


25
assistance to those whose income fell below Stein's minimum.
At the turn of this century, Benjamin Seebohm Rowntree, a
British businessman and one of the first policy-oriented poverty
researchers, used the minimum subsistence concept of need to define
and measure poverty in York, England. He collected information
about the nutritional requirements of food for children and adults
(per body weight) and then added the cost of food to a minimum
amount of the cost of clothing, fuel and other household items
according to different sized families. Housing (rent) was regarded
as an additional and unavoidable expense and so Rowntree counted it
in full. According to Rowntree, a household was poor if income
minus rent was insufficient to obtain what he considered to be
necessities. Using this standard in 1901, Rowntree was able to show
that 43.4 percent of York's population were not only poor but that
at least one-third of the poor were living below his "primary"
poverty line, meaning that they had too little money to buy enough
for physical existence. (Veit-Wilsons 1981, 70-2). B.S. Rowntree is
remembered today because British income maintenance programs have
been based on much of his early work on subsistence needs, minimum
wages and his absolute definition of poverty.
Defining Poverty in the U.S.
In the early 1960's, Mollie Orshansky at the Research and
Statistics Department of the Social Security Administration (SSA)
revived Stein and Rowntree's ideas about poverty hoping to establish
a new concept of a minimum level of necessary income in the U.S. in


26
order to distinguish the poor from the non-poor. Since this was the
era of the Johnson Administration's "War on Poverty", Orshansky's
purpose was purely political. Poverty was to be defined in order to
measure the extent of the problem, to establish government programs
that would be effective in reducing the number of poor, and also to
measure the nation's progress. As Orshansky noted, "There is no
particular reason to [identify and] count the poor unless you are
going to do something about them." (Beeghley: 1983. 18).
In 1965. Orshansky defined a person (household) as poor if
his/her (their) income was not sufficient to purchase a minimally-
adequate amount of goods and services. (U.S. Department of Health,
Education and Welfare: 1976, 23). Note that the definition is an
economic one which defines poverty as state of negative well-being
based on the level of insufficient income. This definition also
establishes the existence of a threshold which identifies a
particular consumption level as that which is necessary for economic
well-being.
The purpose of defining poverty is the same today to
establish the existence of poverty and to design pragmatic public
policy programs that will benefit the poor as well as society. Most
people agree that those in poverty ought to be helped and that the
less fortunate are "people who deserve something, sympathy only
perhaps, but possibly some kind of assistance". (U.S. Department of
Health, Education and Welfare: 1976. 25). For this reason, poverty
indicators must be socially acceptable; that is, they "must identify
a sufficient number of individuals as poor, but not too many ... ".


27
(Beeghley: 1983, 19).
The crux of the poverty problem is here. Any proposed
definition of poverty must begin with a generally accepted indicator
of what is meant by economic well-being or how much consumption is
necessary to represent an adequate living standard. However, not
just any indicator will do. According to James Tobin:
Administrations will be judged by their success or failure
in reducing the officially measured prevalence of poverty. So
long as families are found below the official poverty line, no
politician will be able to claim victory in the war on poverty
or ignore the repeated solemn acknowledgements of society's
obligation to its poorer members. (Tobin: 83).
That is, there are indications to believe that there exists an
unwillingness on the part of policy-makers to commit themselves to
an "objective standard" because of political consequences.
Measuring Poverty in the U.S.
What came to be known as the "official poverty guideline",
an absolute definition of poverty, was the procedure of calculating
the cost of one component (i.e., food) of a total household budget
and then multiplying this cost by three to determine a total measure
of need. (Dean and Tomlinson: 1982, 6). Although the cost of food
was chosen by the SSA to be the base component, any component of the
budget can just as easily be used in determining a general concept
of need. Of all the components (food, housing, transportation,
clothing, etc.), food was the most easily measurable and no accepted
standard of need existed at the time for non-food items; therefore,
food became the SSA's base component.
Recognizing that society had progressed significantly since


28
17951 the initial task of the SSA in 1963 was to derive a modern
equivalent of Stein's "gallon loaf of bread". Faced with the
' problem of scientifically determining an "independent criteria of
need" or a nutritionally-adequate diet that was to become the
representative food component, the SSA turned to the U.S. Department
of Agriculture (USDA). At that time, the USDA published four
different food lists, each nutritionally adequate but different in
cost and content. They are: the Economy Food Plan, the Low-Income
Food Plan, the Moderate-Income Food Plan and the Liberal Food Plan,
where each plan denotes a different standard of living. The Economy
or Thrifty Food Plan corresponds to a short term, subsistence level
standard and the Low-Income, Moderate and Liberal Plans correspond
to a minimal-adequacy, an average and affluent level of living,
respectively. (Dean and Tomlinson: 1982, 25).
Realizing that the correct choice of food plans was
essential to their procedure and that each food plan implied large
variations in cost, the SSA chose the Thrifty Plan (the least
expensive) with the intention that they were trying to establish a
minimum standard of need and because it would result in lower
numbers of poor than if a more substantial food plan was used.
The bureaucracy simply did not want a figure that would
put 25 or 30 percent of the people 50 or 60 million citizens
- below the poverty line. (Harrington: 1984, 173)
A few comments regarding the Thrifty Food Plan are worth
mentioning here. First, the SSA pointed out in 1976 that this plan
was only an approximation. (U.S. Department of Health, Education
and Welfare, 1976, xxiii). Second, although considered nutrition-


29
ally adequate, it is not intended for long term use. (National
Social Science and Law Center: 1982, 125), Third, according to the
USDA, fewer than 10 percent of families spending an amount of money
equivalent to the cost of the Thrifty Food Plan receive 100 percent
of the recommended daily allowances. (The Washington Post: 12
February 1981, El6). Additionally, it assumes no variation among
individuals as to the ability to select low-cost, nutritious food,
and in preparing food; it does not recognize special diets or
cultural differences in diets; it does not take into account the
fact that the cost of certain items changes according to seasons.
All the plans, if strictly followed, can provide an accept-
able and adequate diet but generally speaking the lower the
level of cost, the more restricted the kinds and quantities of
food must be and the more the skill in marketing and food pre-
paration that is required. (Townsend: 1979 36f).
Given that the Economy (Thrifty) Food Plan was chosen and
costed out, the next step was to determine the percentage of a total
household budget that the food component represented. The three to
one ratio was selected because of a 1955 consumer expenditure study
which indicated that the "average" U.S. family spent approximately
one-third of its income on food. (Beeghley: 1982, 25). The SSA's
poverty index was based on estimates of the:
... average sums spent per capita on food as a proportion
of all income (derived from consumer expenditure surveys)
[which assumes] that food costs represent 33 percent of the
total income needed by families of three or more persons and 27
percent of the total income needed by households consisting of
two persons. (Townsend: 1979. 35)
The procedure for determining overall need in 1965 was to multiply
by three the cost of the estimated food component.
There has always been some question about whether food


30
represents one-third of total need or some other value. Orshansky
even suggested at one point that the cost of the food component
might be closer to one-fourth of the budget and "the consumer expen-
diture surveys of 1960-61 and 1972-73 seem to indicate that the
ratio exceeds 5:1" (U.S. Department of Health, Education and
Welfare: 1976, 75) At the time, however, it was decided that one-
third would be a close enough approximation since it was based on a
previous study of average behavior and because a larger multiplier
would result in a higher standard of need and a higher poverty
line meaning that many more people would be considered as offic-
ially poor. Therefore, multiplying the food component times three,
known in the literature as the "Orshansky multiplier", was selected
as a basis for determining a total measure of need. This idea
appears to be very simple and straight-forward, perhaps too simple
as will become apparent shortly.
Recall that Stein recognized a similar multiplier procedure
(see above). However, his statement does not specify what is meant
by "an additional allowance for each dependent". This reference to
something "extra" could imply that the greater the size of the
household, the smaller the multiplier. In other words, for an
individual, food may be one-third of the budget. In a two-person
household, the amount of food required doubles, but because of
economies of household scale, where the amount of furnishings do not
necessarily increase at the same rate as the increase in household
size (e.g., a large family may still only need one couch or one car)
then in the two-person household (or larger) food costs become more


31
than one-third of the budget. Thus making the multiplier inversely
related to the size of the household. However, at the time that
Stein wrote average income levels and the standard of living was
much lower so food represented a much larger proportion of total
expenses than today.
This procedure of using food costs as a portion of the
budget and a guideline from which the remainder of a measure of need
is extrapolated from, is no longer used in the determination of the
official poverty line. The original procedure, the food component
times three, was adopted by the U.S. federal government in 1969 as
the official measure of poverty. Today, the method for defining the
poverty "line" uses the original thresholds adjusted annually ac-
cording to changes in the Consumer Price Index (CPI). Many argue
that the method has changed so considerably that it is no longer a
reliable estimate of poverty.
After fifteen years, [the poverty line] has become a rela-
tively arbitrary number, but it nonetheless is the most widely
accepted indicator of poverty. (USR&E: 1981, 391)
At first, there were 124 separate poverty cutoffs that dis-
tinguished between families by size, number of children, age and sex
of the householder as well as for farm and non-farm residence.
Today, the poverty thresholds are a weighted average of the original
poverty matrix and adjusted annually only for price changes. The
poverty line today consists of many lines, adjusted for household
size only. Age and sex differences among family units of the same
size are indicated by a weighted average. The most current (1987)
poverty indicators are shown in Table 2.1 below.


32
1986 Poverty Income Guidelines for all
States (except Alaska and Hawaii)
and the District of Columbia
TABLE 2.1
Poverty
1 ................................ $5,360
2 ................................ 7,240
3............................. 9.120
4 ................................ 11,000
5 ........................... 12,880
6 ............................... 14,760
7 ............................... 16,640
8 ........................... 18,520
For family units with more than 8 members, add
$1,880 for each additional member.
Source: Federal Register, Vol. 51, No. 28, (11 February 1987), 5106.


33
Limitations of the Poverty Line
Orshansky's objective in defining and measuring poverty was
actually in response to a prior (1964) SSA study for the President's
Council of Economic Advisors (CEA). Orshansky's method corrected
some inconsistencies in the previous study and she included in her
revised report two standards of need. According to Leonard
Beeghley, the lower level need standard was chosen by President
Johnson's advisors as the "official" one because "the lower
threshold was judged to be [more] politically realistic" since it
estimated the number of poor as just about the same number of people
as did former study. (Beeghley: 1983. 19).
Deciding who is poor and how or even whether they ought to
be helped is a political, social and ethical question. The concep-
tion of a poverty line, at least as defined by the U.S. government,
is supposedly to measure a "minimally-adequate" amount of goods and
services needed for survival. Note that deciding what is meant by
"adequate" is done by politicians and indirectly, the middle/upper
class, not by the poor. According to Webster's New Collegiate
Dictionary (1981), the meaning of minimal is "constituting the least
possible". The meaning of adequate is "lawfully and reasonably
sufficient". The two terms together mean the very smallest amount
needed to sustain life. When related to the requirements of human
needs, "minimally-adequate" is the same concept as "subsistence".
According to Webster's dictionary, subsistence means "the minimum
necessary to support life". What is not addressed in either
Webster's dictionary or the U.S. definition of poverty is the length


34
of time in which the least possible amount of goods and services is
supposed to be sufficient. That is, there is no distinction made
between short term (temporary) subsistence and long term (permanent)
subsistence.
There are other limitations in the official measurement of
poverty and most of these are acknowledged by the U.S. Department of
Health, Education and Welfare in a 1976 report to Congress. The most
obvious limitations will be pointed out below. Suffice it to
conclude that the poverty line does not precisely identify all the
poor and how poor they are. It is not really designed to do so
since its main use is as a criteria for evaluating and administering
public policies which address poverty in the U.S. Since most public
assistance is based on some' percentage of the poverty line anyway,
in itself, it would not matter if an adjusted poverty line
represented a less political and more accurate estimate of
subsistence because it would not necessarily affect federal budget
outlays for the poor tinless this action increased pressure to raise
eligibility criteria. At present, raising the poverty threshold
will not increase government expenditures since AFDC benefit levels
are determined by the states and always represent significantly less
than 100 percent of the poverty line.
Since there is not an agreed upon, scientifically determined
need standard, other than possibly for food, a budget that is
determined to be minimally-adequate implies judgmental and
subjective decision-making. According to Suzanne Helbum (1987),
identifying a total measure of need based on the food component


35
might make sense because food and shelter are the major expenditures
of a household budget as well as those essential for survival.
(Helbum: 1987. 1). The food component comes closest to being
objectively determinable since certain amounts are needed for
existence and it becomes socially acceptable by having a USDA "stamp
of approval" implying that it is sufficient for subsistence.
However, the U.S. Department of Health, Education and Welfare has
suggested that the USDA's food standard (the Thrifty Food Plan) is
still only an approximation. (U.S. Department of Health, Education
and Welfare: 1976, xxii).
The Orshansky multiplier, or the 3:1 ratio, is a "crude"
normative measure used to determine overall need. In 1955. data
indicated that the average American family spent one-third of its
income on food. However, statistics based on averages can be
deceiving. It is not known for certain whether poor families (now
or in 1955) spend one-third of their income or some other amount
since they may have different methods for "stretching" their
budgets, but presumably they have the same biological needs. Many
poor families are not similar to the typical four-person household
of husband, non-employed wife and two children. As stated
previously, many of the poor are single-parent households, different
from the average household.
The poverty line does not account for geographical or re-
gional differences in living standards. Because local needs vary,
the poverty line in Miami, Florida (a city with a very low cost-of-
living) is the same as the poverty line in San Diego, California (a


36
city with a cost-of-living index 2.17 times higher than Miami).
(U.S. Bureau of the Census: 1986, 466). The poverty gap, or the
difference between the poverty line and actual income, would
assuredly be much greater in San Diego than in Miami, assuming the
same income in both cities.
The current poverty measure is adjusted annually to account
for changes in the CPI. Though the CPI is a useful indicator of
price movements, it still only approximates the change in the
overall cost of living. This is because the CPI is a measure of a
number of goods and services that make up a "typical" market basket
where each commodity is represented as a proportion of all
commodities purchased. Similar to the reasoning above, the typical
market basket may not be the actual market basket of poor families.
Changes in the CPI might not actually reflect changes in the cost of
living for poor families.
Another criticism of the poverty standard is that it does
not include the notion of relative poverty. It does not take into
consideration changes in customs and the standard of living. Change
in an economy does not simply reflect inflation and changing living
standards but also economic development and growth. Technological
progress is an integral part of any growing society and especially
pertinent to the U.S. economy. If all of society's members are not
permitted to participate in the advantages of growth, then it is
problematic that as a society we progress. It would be a mistake to
assume that conditions in the 1980's are exactly like those of the
1960's. The poverty threshold is also not adjusted for changes in


37
average, median or real income. Not making adjustments to account
for these changes is essentially saying that "progress for those in
poverty is not recognized as important enough by society to adjust
the poverty line accordingly.
It is difficult to take into consideration all the variables
involved in determining a level of need, but the existence of the
poverty line simply assumes any and all differences away. Given the
above problems, the official poverty line leaves itself open to much
criticism. However, used as such, the SSA does makes its estimates
of absolute poverty levels and major public policy issue take them
as given.
Despite numerous debates about the appropriateness of the
official thresholds and income concept, the adoption of an
official measure of poverty and its use as a social indicator
[is] a symbol of the country's commitment to aiding its poorest
citizens. (Birdsall: 1984, 43).
Providing the poor with certain types of public assistance
means that the government recognizes that the concept of poverty
implies a concept of "insufficiency". Acknowledging that
deprivation, or rather relative deprivation, changes over time, so
must the standard procedure for measuring absolute poverty.
However, by including change as a variable into the concept of
poverty, absolute definitions of poverty are also in some ways
relative definitions.
Peter Townsend goes beyond the current definition of poverty
as set by the SSA and accounts for some of the problems mentioned
above. According to his definition of poverty:
... individuals, families and groups in the population can


38
be said to be in poverty when they lack the resources to obtain
the types of diet, participate in the activities and have the
living conditions and amenities which are customary, or at least
widely encouraged or approved, in the societies to which they
belong. (Townsend: 1979. 31).
As for relative deprivation, Townsend says:
... resources are so seriously below those commanded by the
average individual or family that they are, in effect, excluded
from ordinary living patterns, customs and activities.
(Townsend: 1979. 31)*
For the most part, the SSA has come up with only a general
concept of poverty. If this nation wants to confront realistically
the proverty problem, then the first step is to produce an
appropriate definition that will specify what poverty is or at least
admit that it is not possible. As stated above, a national poverty
line does not account for individual and regional differences or
changing customs and economic development. It may include people
who are not really poor and exclude those who are. Unless a
standard definition can be agreed upon, there is not assurance that
the federal agencies are accurately identifying the poor and using
public revenues effectively.
AFDC Standard of Needs
As stated above, the offical poverty line is a federally
determined absolute standard of need. It is used to count the
number of people that lack the necessary income to live at what the
nation considers a minimally-adequate level of living. It is also
used to determine elibigility for various government programs, e.g.,
public or subsidized housing, Title XX day care assistance and food
stamps


39
In addition, there exists another poverty line that
distinguishes the working poor from those who depend largely on
public assistance programs, such as AFDC (Aid to Families with
Dependent Children) recipients, usually non-employed women with
children. In fact, there is a distinction and it is derived from
the AFDC need standard. This is a state-level determination of an
"adequate" level of living. According to an act of Congress in
1967, in determining need standards, states must acknowledge an
adequate level of living.
The adequacy of the standard ... [and] the guidelines of the
AFDC program itself provide only the implicit requirement that
the standard represent a monetary measure of the income or
expenditures necessary for a family to attain an adequate level
of living. (USR&E: 1981,21).
The official poverty line and the AFDC standard, both ttnormativett
standards of need, are two separate though related measures. The
former is used to identify who is poor in the U.S. and to determine
eligibility for certain public assistance programs and the latter is
used to determine the amount of their AFDC grant in a given state,
that is, the level of their income.
The AFDC standard of need is different from the national
poverty line in several ways. First, it is not a national line, but
differs with each state. Presumably, this solves the problem of
regional and geographical differences (discussed above) which are
not accounted for by one standard. This means that there are 50
different interpretations of the concept of need or what is
considered "adequate" and therefore, 50 different publicly funded
programs for income maintenance. Second, in every state the AFDC


40
standard is lower than the poverty line. How much lower depends on
priorities set by the states as to how frequently the standard is
revised and the procedure used for measuring needs. For instance,
in Colorado the need standard is derived from a "market basket"
study, last updated in 1979 and is equal to $421 per month. Third,
the standard determines actual AFDC benefit levels. Thus, no matter
what procedure used by the Feds to define poverty, states determine
the actual cash payments to AFDC recipients based on separate
standards. This is because, "the need standard defines the
potentially eligible population". (USR&E: 1981, 45)*
For what reasons are the state-level need standards
different from the poverty line? States base payment levels on the
amount of their own need standard, or some percentage of it, and
therefore they argue that a poverty level need standard would cost
too much. State administrators also believe that the poverty line
has not been updated through its original methodology (the food
component times three or some other multiplier), but only by the
CPI, so that as the years go by it becomes more and more an
arbitrarily derived figure. (USR&E: 1981, 412). However, unlike
the federal poverty line, state-level need standards are not
adjusted to cost-of-living changes.
Although virtually every state uses the official poverty
line in some way or another as a reference point for the
adequacy of its standards, no state currently uses those
guidelines as a basis for deriving its need standard. (USR&E:
1981, 144).
Because it is acknowledged that "no single objective measure
exists which can measure [income] adequacy, any number of indicators


41
could be used" suggesting that they are purely subjective. (USR&E:
1981. 21). Individual states have complete autonomy over the
determination of their standards and there is considerable variance
in their amounts. In 1979 Vermont had the highest standard ($629)
and the lowest ($187) was in Texas. (USR&G: 1981, 355).
Colorado's need standard (ranked as the 37th highest in 1979) is
currently $421 per month which is 55*4 percent of the poverty line
for a three-person household. Although an act of Congress in 1967
that most states update their standards, "Congress has never
explicitly specified either the purpose of the need standard or the
method by which it should be derived". (USR&E: 1981, 12).
Ratable Reduction Standard
Actual benefits for AFDC recipients are determined by a
third standard or some percentage of the state-level need standard
which is called the "ratable reduction". The ratable reduction
standard varies by states, but in most cases is less than the
state's AFDC need standard. For instance, in Colorado, the ratable
reduction is 82 percent of the state's need standard which is 55 4
percent of the poverty line. Thus, a mother-centered family of
three without any other source of income would receive at most $346
per month ($421 times 0.8237) or 45-6 percent of the poverty line.
In 1979. the highest payment level was in New York ($563) and the
lowest was in Mississippi ($120). (USR&E: 1981, 356). AFDC is the
only government assistance program that uses a normative concept of
need but with a separate and smaller payment schedule. (USR&E:
1981, 15)* If the need standard is considered "adequate" and


42
benefits are lower, than by anyone's definition, the income
maintenance grant (AFDC) to people who are oftentimes not employed
is therefore "inadequate" for subsistence.
There are two primary reasons why states fail to pay out the
equivalent of their need standard. The primary reason is cost;
state bureaucrats claim that they just do not have the money.
Second, it is claimed that other public assistance programs (such as
food stamps) help people to meet basic needs. However, in 1986 in
Colorado, a three-person household receiving maximum AFDC and food
stamp benefits (the equivalent of $532 worth of grants) would only
receive 70 percent of the federal poverty line, although 126 percent
of the state-determined need standard. As with most poverty
problems, there are also many conflicting political goals. Whether
or not it seems fair, federal laws give states the right to provide
benefits that do not cover basic needs. (USR&E: 1981, 11).
The assertion above, that the AFDC need standard treats the
working poor differently than the non-working poor was suggested for
two reasons. Women who are employed and earn more that $496 per
month are ineligible for AFDC. This excludes anyone from receiving
benefits who works more than 34 hours per week at minimum wage.
Also, women who work are sometimes eligible for other types of
assistance which could help them to achieve an income above the
porverty level. But this is not the case for an unemployed
individual. This issue is discussed in chapter IV. Nevertheless,
"AFDC does not guarantee any minimum level of assistance". (USR&E:
1981, 15).


43
Today's method of discriminating between standards of need
and actual public assistance payments is comparable to B.S.
Rowntree's purpose in identifying the poor in York, England. His
research identified two types of poor persons. People living in
"primary" poverty were those with insufficient income to obtain even
the necessities of life. People living in "secondary" poverty were
also poor (living below his overall poverty line), but only because
they wasted their money, i.e., by gambling, drinking, etc.
Essentially because they "mismanaged" their money. Summed together,
those in 'primary poverty (the deserving poor) plus those in
secondary poverty (the undeserving poor) made up the total poor
population, as identified by Rowntree. However, when it involved
helping the poor, the distinction between the types of poverty
helped clarify how much society would be willing to give. By
identifying two categories of poor people, public policy could be
directed not at the total poor population, but at the "primarily
poor". Rowntree's main concern was to convince society that his
primary poverty line was not unrealistically high, by demonstrating
that it was a "bare bones" existence and almost (he believed)
impossible to live on. According to Rowntree:
No! My standard cannot be successfully attacked because it
is too liberal. Rather it is open to criticism as being too
low, and yet millions of our fellow citizens belong to families
whose breadwinners earn less than my minimum figure. (Veit-
Wilson: 1981, 85).
By distinguishing between two types of poverty he fulfilled
two purposes. He identified the truly needy and also made sure that
the amount of assistance suggested was socially acceptable.


44
However, Rowntree never intended that his primary poverty line "be
an income level on which real people should have to live". (Veit-
Wilson: 1981, 85). Rowntree is primarily credited with changing
society's attitudes toward paupers from "whether to give money to
the poor" to "how much money to give the poor". (Veit-Wilson:
1981, 97).
The AFDC standard seems to be used in the same way. It is
not an income level that could be considered as substantial, no
matter what one's values are toward the poor. Because it is so low,
it is socially acceptable; furthermore, it encourages a "work ethic"
because it is difficult to live one. Like Rowntree's concern to
make his standard socially acceptable, the AFDC need standard is "a
perscription of what an adequate standard of living ought to be for
assistance recipients". (USR&E: 1981, 31). For others, today's
employed or Rowntree's secondary poverty population, more is always
obtainable provided they are willing and able to work for it.
Therefore, the somewhat higher poverty line is used to identify the
poor (like Rowntree's method) but it exists only to count the number
of people living in poverty, not necessarily to guarantee any
minimum level as assistance.
Summary
In the U.S., there are 51 different standards of need, one
national standard and 50 individual state standards. Also, these
need standards seem to be intentionally made complicated to
understand for various reasons. It is the view here that because


45
there are such a variety of ways used in defining subsistence needs,
that society is relieved of the responsibility of committing itself
to just one realistic standard, possibly adjusted for some obvious
differences in local needs, because it might be too high and it
therefore might become socially acceptable. By not acknowledging a
realistic (and objective) standard, less than adequate income
maintenance is justified. The federal government can pass laws to
make sure that states are assured the right to pay less than minimum
subsistence using the rationale that it might discourage incentive
to work if a higher standard became the norm.
In sum, although the poverty line is only one perceived need
standard, that of the federal government, and the state-determined
AFDC standards are other perceived need standards, it is essential
to go beyond these normative measures in order to analyze how an
objective need standard is derived. Consequently, the next chapter
will first discuss basic needs in general. Then a "market-basket"
approach, used by economists from the University of Colorado at
Denver will be presented to argue that the poverty line may be too
low for a realistic assessment of working and non-working class
needs


CHAPTER III
A MARKET-BASKET STUDY
How much land does a [person] need? No more than enough for
a grave.
- Leo Tolstoy
More! More! is the cry of a mistaken soul; Less than all.
cannot satisfy man.
- Blake, Minor Philosophies
Suppose you wanted to compile a list of all the goods and
services needed for minimum subsistence by a typical three person
household. Initial considerations regarding the determination of
basic needs would depend on the length of time that a level of need
pertains to as well as what one must do in order to earn their
income. "Thus one cannot consider the needs of [people] in the
abstract; they must be placed in the context of a specific society".
(Lebowitz: 1977-78, 434).
Defining an Absolute Subsistence Standard
The assumption here is that it is possible, although diffi-
cult, to define an adequate level of need objectively, at least at
one point in time. The basic problem is how to determine a "bottom
line" in which to classify people below it as in need or as "poor".
Should society acknowledge only a bare subsistence or a little more?


.47
It seems .that society is not really morally comfortable in assigning
only the barest of subsistence to be used as an indicator of
poverty. Therefore, how much above bare subsistence is need still
clearly identifiable?
Consider an example. An article appeared recently in the
Denver Post regarding the pending execution of a mildly retarded man
who was said to have murdered his neighbor. The environment in
which this man was raised was described by the Denver Post as,
... the most barest conditions in which a family could
exist. [They lived in] a weather-beaten three room shack
without running water, its broken windows covered with tattered
plastic sheeting. (The Denver Post: June 22, 1987* 13A).
One of 18 children, this man grew up in a state of deprivation that
was so great that often he and the other children were kept out of
school because they did not have shoes.
These conditions border on the unimaginable, at least to
middle-class people brought up in the U.S.; nevertheless, this
family did survive and therefore their basic subsistence needs had
been met. For that matter, society's homeless also survive also
though in ways many people do not like to imagine. However, when
society tries to determine what is meant by a mininum standard of
living, call it subsistence or minimally-adequate or whatever, the
above examples are clearly far below what they mean. According to
Karl Marx:
By counting this lowest possible level of life (existence)
as the standard, indeed, as the general standard general
because it is applicable to the mass of men, [a person is
changed] into an insensible being lacking all needs." (Marx:
1964, 149).
Marx commented on living standards and needs. He believed


48
that it was possible to define an individual's need in an objective
and absolute manner. For instance, Marx states in Capital, Volume
I, "the quantity of [human] necessities is known at any given epoch
of a given society and can therefore be treated as a constant
*
magnitude". (Lebowitz: 1977-78, 442). He called this quantity the
"socially necessary means of subsistence". For Marx, although needs
can be measured at any one point in time as a constant, they are
historically variable meaning they are relative to place and time.
Marx stressed that new needs emerge as societies develop through
technological innovation and that needs of the working class are
mainly determined by the costs incurred to work and to reproduce
their kind. These are social costs of production which are paid for
by workers rather than by capitalists.
For Marx, there are three levels of need that determine the
socially necessary means of subsistence and which exist for all
humans, at all times, but in different proportions: physiological
needs, necessary needs and social needs. (O'Connor: 1984, 156).
Physiological needs. These are needs that are biologically
determined. As an example, necessary food consumption
depends on the number of calories that a person must have in order
to survive. However, this concept is changeable and depends
somewhat on production methods where "there is no way to buy flour
without buying packaging art." (O'Connor: 1984, 156).
Necessary needs. These are a result of the way of life
existing in a particular epoch, partly related to custom and


49
tradition and partly related to the needs created by the mode of
production, i.e., the consumption norm. For example, in the U.S.,
people live in houses and drive cars because "capitalism is always
revolutionizing the consumption norm". (O'Connor: 1984, 156).
More people drive cars today than ten years ago.
Social needs. According to O'Connor, the term "social
needs" does not mean things paid for collectively such as education
and the treatment of pollution. Social needs arise as a result of
advancements in technology and productivity where different
products, and new use values are created by the system. A colored
television is a good example. Social needs are "needs which are
often frustrated owing to the low level of real wages" for the
majority of people. (O'Connor: 1984, 156).
Is it possible to distinquish "real needs" from "created
needs"? One argument for establishing an absolute level of need
(i.e., a poverty line) is that new products should not alter what is
needed for subsistence within a short period of time. Unlike Marx,
the Physiocrats talked about an absolute minimum standard of need
that was unchangeable. In their view, this standard which they
called the minimum of wages was "determined entirely by nature and
not by the stage of human development" or social conditions.
(Lebowitz: 1977-78, 433).
With regard to the definition of necessities, Adam Smith
said that there are certain necessities of life which are:
... not only the commodities which are indispensably neces-
sary for the support of life, but whatever the custom of the


50
country renders it indecent for creditable people, even of the
lowest order, to be without. (Smith: 1776, 351*2).
Like Marx, Smith believed that subsistence is fixed at one point in
time but is historically varible.
In a modern society, successful advertising is used to
distort the relationship of true needs from created needs. Low-
income individuals are just as susceptible to advertising techniques
as are other classes. Author Stuart Ewen discusses the tendency of
advertizing to associate products with pleasant experiences, not
with things like factory life. Ewen says that a leading advertising
executive indicated that the key to successful advertizing is to
"release people from the limitations of their own lives". (Ewen:
1976, 80). If advertizing is aimed at eliminating the perception of
drudgery, than the poor are prime targets. Those who live in day-
to-day poverty need very much to believe that life can feel good.
What other way to realize some semblance of the "good life" than
through consumerism. According to James O'Connor, consumption is
one realm in which people believe that they have some amount of
control over their lives. (O'Connor: 1984). They certainly have
no control over the choices associated with public welfare policy,
but they can exercise control in the market place via the products
they buy.
Piven and Cloward discuss the relation between purchasing
nonessentials and being poor. They refer to an Austrian study
conducted during the Great Depression that found "rational budget
planning abandoned in favor of expenditure on trinkets, while
essentials could not be paid for". (Piven and Cloward: 1971. 7f)


51
They say that people start to spend money on non-essentials,
especially when their income is very low, and therefore less is left
over for necessities. It is well known that advertising and the way
that many goods are presented can distort ones perception of true
needs.
Although Marx and others believed that basic needs existed
and could be measured objectively, others argue that it is not
possible. For instance, the Bureau of Labor Statistics Expert
Committee on Family Budget Revisions claimed that:
... in a society as diverse and as far above subsistence as
[that of the U.S.], we believe that the specification of
technical physical standards is no longer even conceptually
appropriate as a way of arriving at living norms. (MacDonald:
1985. 3).
With the above in mind, economists at the University of Colorado
conducted a study of the socially necessary means of subsistence.
A Case Study in Measuring Subsistence: The Denver Cost of Living
Study.
Concerned with the question of measuring the degree of
relative deprivation in households living at and below poverty
levels, the Applied Economic Research Group at the University of
Colorado in Denver completed an in-depth study of the costrof-living
needs of poor households headed by single mothers in Denver,
Colorado. The study was prepared for the Colorado Children's
Campaign in conjuction with volunteers from the Junior League of
Denver. Much of the research for this M.A. thesis originated from
that Denver area cost-of-living study which was conducted by Suzanne
W. Helbum, John R. Morris and myself.*


52
Purpose of the Study
The purpose of the study was to establish a minimum family
income for a low-income, single head of household mother of two
small children in order to measure the degree of adequacy of
Colorado AFDC payments as well as the level of income required by a
working mother. From the outset, it was assumed that such a
standard of living could be measured objectively given societal
norms. To carry out this project, many guidelines were used from "A
Guide to Conducting a Cost-of-Living Study by Audrey Dean and Paula
Tomlinson of the National Social Science and Law Center in
Washington, D.C.
The Dean and Tomlinson guide explains how to conduct as well
as how to evaluate a cost-of-living study. Such studies are used to
N ft
measure the total cost or the amount of income necessary to achieve
and maintain a particular standard of living in a given locale,
usually a state. Specifically, Dean and Tomlinson's guide provides
a discussion of how to conduct a market basket study, including
information on data collection procedures, sources for government
standards, and other factors that must be considered for judging the
validity of existing studies and for designing entirely new ones.
For the most part, their guide was based on an actual cost-of-living *
* For information regarding the actual study, one should consult
the "1986 Denver Cost-of-Living Study for an AFDC Family of Three"
which describes a mother-only family living on a short-term, subsis-
tence budget, and the "Denver Cost-Of-Living Study, 1987: Part II,
Low-Income, Minimum-Adequacy Budget for a Single Parent Working
Mother and Two Small Children" which describes a long-term budget
for the same hypothetical family only with an employed mother.
(Dean and Tomlinson: 1982, 11).


53
study done by the National Social Science and Law Center for Legal
Services of New Jersey in 1981.
In that guide, Dean and Tomlinson suggest that there are a
variety of methods used to estimate living costs. The methodology
chosen depends on whether a "normative" or a "descriptive" approach
is desired. One method is to survey actual expenditures to
determine standards based on prevailing consumption patterns. (Dean
and Tomlinson: 1982, 4). This method is a descriptive one and is
useful in analyzing the demand for goods and services based on
various household characteristics such as income levels. The
Consumer Expenditure Survey is an example of this method which is
published by the Bureau of Labor Statistics (BLS) to update and/or
to revise the sample of items in the market basket for the Consumer
Price Index (CPI).
Another descriptive method is a public opinion survey. This
method is based on what the general public believes are adequate
income levels. (Dean and Tomlinson: 1982, 5)* The Gallop poll is
one example. Although it may be argued that this method is somewhat
subjective, it was the focus for the "Basic Needs Study" of the
Institute for Research on Poverty at the University of Wisconsin in
1982. In their study, the Institute attempted to incorporate this
with other methods of research for estimating living costs in order
to objectively define basic human needs. (Dean and Tomlinson:
1982, 5).
A third method, also a descriptive one, is to use the amount
of income earned at the prevailing minimum wage as a measure of


54
income adequacy and as a basis for a minimum standard. (Dean and
Tomlinson: 1982, 5). The advantage of this method is that it is
easy to measure and the standard is uniform. The disadvantage is
that total earnings at the minimum wage have no relationship to
actual needs since the minimum wage floor is adjusted irregularly by
Congress and differences in family size and characteristics are not
taken into consideration.
The fourth method is the Orshansky multiplier procedure used
originally by the Social Security Administration in creating the
official federal poverty guidelines. (Dean and Tomlinson: 1982,
6). The multiplier approach is a normative measure of needs based
on the cost of one component (i.e., food) of a household budget
which is multiplied by some factor to establish an overall standard
of living. Use of this method has been previously discussed in
Chapter two.
The fifth and final method is the market basket approach.
Of the five methods suggested to measure needs and poverty in Dean
and Tomlinson, the "market basket" method was chosen for the Denver
study. This is usually the preferred method of conducting a cost-
of-living study since each item of the budget is clearly defined and
each dollar of the budget estimate is accounted for. (Dean and
Tomlinson: 1982, 6-7).
Methodology: The Market Basket Approach
The market basket approach to measuring needs is a
"normative" rather than a "descriptive" one. That is, it involves


55
judgements regarding the social meaning of subsistence and
minimally-adequate living standards. While it may be true that the
decisions regarding "needs" require judgement, the methodology
supporting this approach is extensive and the conclusions in the
Denver study are not arbitrary. They are based on "official"
government specifications, such as the USDA food plans and HUD
housing standards, as well as judgements and other standards arrived
at by experts. The market basket method is currently used by
Colorado and other states to determine benefit levels for AFDC
programs and is also used in developing family food plans by the
USDA. In addition, this method was used by the Bureau of Labor
Statistics (BLS) Family Budget Series that was discontinued in 1981.
Use of the market basket approach assumes that needs can be
identified objectively and absolutely.
The 1986-1987 Denver area research actually involved two
parts. Part I of the study estimated a short-term, subsistence
budget for a Colorado household consisting of an non-employed
mother, a four year-old girl and a six year-old boy: essentially a
typical welfare family. This short run budget compares subsistence
expenditures with income available to a family that has no support
beyond public assistance.
It should be noted that the cost-of-living estimates are for
bare subsistence; that is, the family is assumed to be temporarily
(i.e., for 18 months or less) in financial distress, but also has a
minimum amount of durable consumer goods as assets. Whenever norms
are created for a minimum standard of living, a decision has to be


56
made about the purchases of such durable consumer goods and other
services normally considered necessary, even for a low-income
standard of living. In part I of the study, all purchases of
durable goods, toys, entertainment, smoking materials, alcohol.
Insurance, books, miscellaneous non-durable expenditures, finance
charges, church and other cash contributions were excluded from
consideration.
The particular ages (four and six years) for the children
were chosen for two reasons. First, it was believed that the costs
of child rearing at these ages are low relative to the costs for
households with either younger or older children. Second, these
ages were used to compare the expenditures of a working mother to
those of a non-working mother when child care is necessary. Because
younger children often need diapers and special baby food and older
children usually have larger appetites and experience rapid growth,
if any family can live within the AFDC budget, this hypothetical
family would be most likely to be able to. Therefore, even the type
of three-person family was purposely chosen for the scenario in the
Denver study in order to derive the lowest possible subsistence
level budget.
In part II of the study, a budget was estimated for a
household in which the mother is employed, responsible for paying
taxes and for maintaining a household over the long run. Since this
hypothetical family is assumed to be living permanently on a low-
income budget, the household must be permitted enough income for the
mother to maintain a full-time job and to keep one child in school


57
and the other child in day care. Unlike the short run subsistence
study, a long run budget must allow for a family trying to live
somewhat "normally" (i.e., consuming durable goods such as household
furnishings, owning a car, etc.) over a much longer period of time
on a lower than average income from wages and/or from public
assistance benefits.
The remainder of this chapter describes the results of the
Denver Cost-of-Living Study. Like the original study, it is divided
into two parts. Part I describes the short-run budget and part II
the long-run. These two sections are then subdivided to describe
expenditures on five components of a household budget: food,
shelter, clothing, transportation and a miscellaneous category.
Part I: A Short Run Subsistence Budget for a Family of Three
Food
This category of a household budget is not only linked to
biological necessity, but in many ways also to social convention.
The food component was used by the SSA as a base in which to measure
all other needs in order to derive the poverty line because it was
thought that food is so easily measureable. This household budget
component does not seem to have the tendency to vary as much
according to changes in customs as other components. In comparing
groups of households at different income levels, this component does
not increase proportionately to the increase in income as do all
other categories. If price changes are accounted for, the
percentage of expenditures for food should not change over time as


58
other components of the budget usually do. "Moreover, the capacity
of the human stomach Is limited, [although] so far as food
expenditures are concerned, a variety of Roman emporers disproved
any such statement many centuries ago.w (Lebergott: 1975. 104).
The USDA and the Thrifty Food Plan (TFP). As was discussed
in chapter two, the food plans developed by the USDA represent
federally established norms. Currently there are four official food
plans: the Economy (Thrifty), Low-income, Moderate and Liberal plans
of which the Thrifty Food Plan (TFP) is the least costly of the four
plans. The TFP was developed in 1975 by the USDA as the basis for
the monthly USDA publication, "Cost of Food at Home". (Family
Economics Review: 1984, 1). The TFP was last revised in 1983 by
the Human Nutrition Information Service (HNIS) of the USDA and is
designed to provide updated information on adequate nutrition from
economical sources. (Family Economics Review: 1984, 1). Since
July, 1983 the main purpose of this plan has been to provide the
basis for estimating the food stamp allowance. It is a national
diet and contain little ethnic food. Of particular relevance to
Colorado, it contains no Mexican food. Shown in Table 3*1 below is
the information provided by the USDA regarding the food groups of
the TFP.
The Denver Food Study for an AFDC Family. In November,
1986, the Junior League of Denver collected food prices at five
grocery stores in low-income neighborhoods in Denver.* In pricing,
the Junior League used menus developed for two weeks of meals by the


59
TABLE 3-1
Hie Thrifty Food Plan for a Young Mother with Two Children of Ages
4 and 6, 1983: Selected Quantities of Food for a Month
Food Groups (in pounds) Children Mother Total
Vegetables, Fruit: -potatoes (fresh weight) 8.00 4.99 12.99
-high-nutrient vegetables 7.40 8.21 15.61
-other vegetables 7.18 11.52 18.70
-mixtures, mostly vegetables: crmdlfltentA 0.30 0.09 0.39
-vitamln-C-rich fruit 11.01 7.44 18.45
-other fruit 10.88 4.00 14.88
Grain Products: -whole graln/high-fiber breakfast cereals 2.15 0.52 2.67
-other breakfast cereals 1-99 0.82 2.81
-whole grain/high-fiber flour, meal, rice, pasta 1.12 0.65 1.77
-other flour, meal, rice, pasta 13-24 7.78 21.02
-whole grain/high-fiber bread 0.82 1.46 2.28
-other bread 7.14 2.54 9.68
-bakery products, not bread 2.24 0.52 2.76
-grain mixtures O.56 1.59 2.15
Milk, Cheese, Cream: -milk, yogurt (quarts) 27.74 10.19 37-93
-cheese O.56 1.25 1.81
-cream, mixtures mostly milk 2.11 0.13 2.24
Meat and Alternatives: -lower-cost red meats, variety meats 5.98 6.88 12.86
-higher-cost red meats, variety meats 1.03 1.51 2.54
-poultry 4.82 4.09 8.91
-fish, shellfish 0.17 0.17 0.34
-bacon, sausage, luncheon meats 2.71 1.94 4.65
-eggs (number) 20.64 18.92 39.56
-dry beans, peas, lentils (dry weight) 1.55 1.76 3.31
-mixtures, mostly meat, poultry, fish, egg, legume O.30 0.56 0.86
-nuts (shelled weight), peanut butter 1.59 1.20 2.79
Other Foods: -fats, oils 3.91 1.20 5.11
-sugar, sweets 4.90 0.90 5.80
-soft drinks, punches, ades (single-strength) 5-25 1.72 6.97
Source: Kerr, Richard L., et al. 'TJSDA 1983 Thrifty Food Plan."
Family Economics Review. No. 1, (1984), 19.


60
HNIS in "Making Food Dollars Count: Nutricious Meals at Low Cost"
and added a small amount of coffee, tea and seasonings. Table 3*2
below shows the menu (used in the Denver study) based on the TFP and
the weekly expenses for each food category assuming that all meals
are prepared and eaten at home. The total monthly expense is
reduced to take into consideration the six year-old boy's
participation in the free lunch program at school.
The Junior League of Denver questioned the appropriate
nature of the TFP specifically because of the absence of many
inexpensive "convenience" foods. Many others, including Mollie
Orshansky and the USDA, have also questioned the validity of the
TFP. According to the USDA:
The Department recognizes that a number of factors make it
difficult for many families to obtain an adequate diet on the
amount of money which represents the cost of the Thrifty Food
Plan. In fact, data on food consumption among low-income
households indicates that fewer than one in ten families
spending an amount of money equivalent to the cost of the
Thrifty food Plan received 100 percent of the Recommended Daily
Allowances. Less than half received even two-thirds of the
Daily Allowances. (National Social Science and Law Center:
1982, 125).
The nutritional effectiveness of the plan depends on
considerable food preparation time and knowledge of nutrition. The
* Each category of food includes several items taken from menus
based on the Thrifty Food Plan. The items were priced at five
grocery stores in lower income neighborhoods of Denver and the
prices averaged. The stores include Denver's two major chains, one
independent, one warehouse store and one convenience store. After a
simple average of the prices for each item was calculated, those
averages were used to compute a weighted average of each category
shown above with the weights based on the amounts of each food in
the Thrifty Food Plan.


61
TABLE 3.2
Food Budget for a Family of
Three: Menu based on the
Thrifty Food Plan
Average Price Quantity Per Week Weekly Expense Monthly Expense
Vegetables & Fruits Potatoes $0.24 /lb. $2.90 $0.69 82-99
High-nutrient 0.82 /lb. 3-51 2.89 12.56
Other vegetables 0.60 /lb. 4.24 2.53 10.99
Condiments & Mixtures 0.73 /lb. 0.08 0.06 0.27
Vitamin-C-rich fruit 0.74 /lb. 4.14 3.05 13-25
Other fruit 0.67 /lb. 3.27 2.20 9-56
Grain Products:
Whole grain/high-fiber cereal 1.69 /lb. 0.60 1.02 4.41
Other breakfast cereals 1.64 /lb. 0.63 1.03 4.47
Uh. gr./hi. fi. flour, meal, rice,pasta 0.53 /lb. 0.40 0.21 0.91
Other flour, meal, rice, pasta 0.38 /lb. 4.68 1.75 7.62
Whole grain/high-fiber bread 0.66 /lb. 0.52 0.34 1.49
Other bread 0.52 /lb. 2.13 1.10 4.80
Bakery products, not bread 1.69 /lb. 0.59 1.00 4.34
Grain mixtures 1.32 /lb. 0.49 0.65 2.81
Milk, Cheese, Cream:
. Milk, yogurt 0.46 /qt. 8.43 3.91 16.99
Cheese 2.76 /lb. 0.41 1.13 4.92
Cream, mixtures 1.23 /lb. 0.48 0.59 2.56
Meat and Alternatives:
Low cost red & variety meat 1.41 /lb. 3.11 4.39 19-09
Higher-cost red & variety meat 1.69 /lb. 0.57 0.97 4.21
Poultry 0.98 /lb. 2.00 1-95 8.49
Fish, shellfish 1.44 /lb. 0.08 0.11 0.49
Bacon, sausage, lunch meat 1.96 /lb. 1.04 2.04 8.87
Eggs 0.90 /dz. 0.75 0.67 2.93
Dry beans, peas, lentils 0.53 /lb. 0.75 0.40 1.74
Nuts & peanut butter 1.58 /lb. 0.63 1.00 4.35
Other Foods: Fats, oils 0.94 /lb. 1.12 1.06 4.61
Sugar, sweets 0.91 /lb. 1.26 1.15 5.00
Soft drinks, punches, ades 1.36 /lb. 1.54 2.10 9.12
Miscellaneous seasonings, etc. 1.54 pkg. 0.46 0.71 3.08
TOTAL FOOD COST $40.71 $176.89
Source: Helbura, Suzanne W., Morris, John R., and Augostine,
Daurie R. "1986 Denver Coat-of-Living Study for an AFDC
Family of Three." (unpublished) 9 February 1987,


62
menus Include many casseroles and home baked goods. The TFP does
not include such items as soft drinks, alcoholic beverages, cookies,
candy, ice cream, potato chips and convenience foods. No provision
is made for waste or spoilage and no allowance is made for eating
out (even at McDonald's) despite the Consumer Expenditure Survey
estimates that 24 percent of the food budget of poor people is spent
outside the home. The diet does not take into consideration ethnic
eating patterns and the plan depends heavily on starches, sugar and
milk with very small quantities of meat. In addition to whether the
TFP represents a meaningful, modem standard of food consumption
further complications arise from advertising techniques that usually
i
display commodities so attractively that basic needs are distorted.
The disadvantages of the TFP were documented in the Denver study;
however, it was assumed that the TFP was a reasonable approximation
for a short-term, emergency budget. Thus, part I of the Denver
study used the TFP menu despite these drawbacks.
The estimated monthly cost of the TFP (1987 ** Colorado) for
a family of three is $176.89. It should be noted that this figure
is slightly lower than other and much older published studies. For
instance, in September, 1980 the USDA calculated that the cost of
the TFP for a family of three was $183 per month. (Haynes: 1982,
7). Appendix A shows a working list of food categories from which
the figures in Table 3*2 were derived.
Shelter
When one speaks of necessary housing in the U.S. what comes


63
to mind is a general concept of the idea of shelter. Like other
categories of the budget, the meaning of shelter at any particular
time and place is socially determined. One needs only to consider
that different stages of human development and different customs
determine "the standard". Igloos, grass huts, teepees and caves
have all been considered traditional types of housing. In the same
milieu, even "the three little pigs had different ideas of the
meaning of shelter". (Townsend: 1985, 665). Modem U.S. standards
of decent housing/shelter include enough space for cooking and
cleaning, adequate light, heat, ventilation and complete plumbing,
facilities, room for sleeping and working as well as additional
space for privacy.
Dean and Tomlinson state that it is difficult to set up a
housing standard. Consider two types of housing; a small, three-
bedroom apartment in a run-down neigborhood with a large backyard,
or a large, two bedroom apartment in a better neighborhood with no
yard. It is difficult to say which of these represent "more
housing. Therefore, in estimating nonsubsidized rent for a
household, the program occupancy standards set by the U.S.
Department of Housing and Urban Development (HUD) for national
Public Housing Authorities (PHA) are available. According to HUD
specifications, a dwelling is required to be adequate, "decent, safe
and sanitary ... of a modest (non-luxury) nature with suitable
amenities. (Federal Register: 1986, 31014). However, despite
specific guidelines, many public housing projects do not even
fulfill all these reguirements. Listed below are seven indicators


64
of adequate housing as specified by HUD In their annual housing
survey. (Dean and Tomlinson: 1982, 35)
PLUMBING: The unit must contain complete as well as non-
shared plumbing facilities.
KITCHEN: The unit must contain complete and nonshared
kitchen facilities which include a working stove, refrigerator
and sink.
SEWAGE: The unit must have running water and a usable toilet
which is not shut off for longer than 18 hours at three separate
intervals in 90 days time.
HEATING: Heating must be provided in every room with proper
ventilation.
MAINTENANCE: Inside, the unit must not have a leaking roof,
open cracks in the interior or ceiling, holes in the floor,
broken blaster or peeling paint larger than one square foot.
Outside, public halls must have working light fixtures, and no
loose or missing steps or stair railings.
VERMIN: The unit must not have signs that rats or mice were
present in the last 90 days and an exterminator must visit
regularly. HUD does not mention cockroach problems.
ELECTRICAL SYSTEM: The unit must have electricity without
exposed wires and circuit breakers must not have blown more than
two times in the last 90 days. (Dean and Tomlinson: 1982, 35)
To determine the monthly cost of housing in the Denver
study, there were four options: (1) use HUD's Fair Market Rents
(FMR) which are based on data from newly rented units and represent
different regional costs; (2) use an estimate of the median rent of
households living above the poverty line (Dean and Tomlinson: 1982,
37); (3) use the outdated BLS Lower Budget estimate of housing costs
(Dean and Tomlinson: 1982, 37)! (4) conduct a survey of rental
prices in low income neighborhoods in Denver. Option four was
chosen for the short run study for reasons discussed below.


65
HUD and the Fair Market Rent (FMR). The HUD standard for a
family of three with two small children is a two-bedroom apartment.
This standard was used in the Denver study although HUD's estimated
FMR was not. HUD estimates the monthly cost of a two-bedroom
apartment in the Denver area to be $495. which includes the cost-of
utilites. This figure represents the rent at the 45th percentile
for acceptable apartments of this size. The FMR base estimates the
portion of rent at 80.3 percent ($397*49) and utilities at 19*7
percent ($97*52). It should be noted that the HUD standards for a
family of three with two older children of opposite sex is actually
a three bedroom dwelling. The following criteria are specified by
HUD: (HUD: 1979, 4-31).
(1) The bedroom size assigned should not require more than
two persons to occupy the same bedroom.
(2) The bedroom size assigned should not require persons of
opposite sex other than husband and wife to occupy the same
bedroom with the exception of infants and very young children.
(3) A two-bedroom unit may be vised by a two member family
which consists of a single parent and child or by a couple who,
due to medical reasons, must have separate bedrooms, as approved
by the PHA (Public Housing Authority).
These principles result in the following HUD standard which is shown
in Table 3*3 below.
The advantages of using HUD data are that housing costs are
adjusted annually according to the CPI and local Public Housing
Authorities are consulted about market conditions. The data are
regional and reflect housing costs more accurately than the BLS
lower budget because it represents median rental costs. (Dean and
Tomlinson: 1982, 37).* However, the disadvantage of using HUD data


66
TABLE 3*3
HUD's Occupancy Standard for
Section 8 Existing Housing
Program
Certificate Size Minimum No. of Persons in Household Maximum No. of Persons in Household
O-BR 1 1
1-BR 1 2
2-BR 2 4
3-BR 4 6
4-BR 6 8
5-BR 8 10
6-br 10 12
Source: U.S. Department of Housing and Urban Development, Public
Housing Agency Administrative Practices Handbook for the
Section 8 Existing Housing Program. November 1979* Wash-
ington D.C., 4-32.


67
is that the cost of housing is based on newly rented apartments
which may overestimate the actual price of rent paid by many
families.
The Denver Rent Survey for an AFDC Family. As part of the
research of housing costs in Denver, a rent survey was conducted by
the Junior League in October, 1986. Using the HUD standard of a
two-bedroom apartment, the research was carried out by two Junior
League volunteers, Julie Valeski and Laurie Straub, who made the
following observations.
We gathered data by driving around the designated low-
income areas looking for "for rent" signs. For the three or
four apartments with inquire within signs, only one manager was
in. We went through the apartment, the upper floor of a house,
with 2-bedrooms, a living room, bathroom and kitchen, renting
at $385. $200 deposit, electricity not included, with a nice
backyard, "quiet", children permitted. After obtaining the
phone numbers and addresses the calls were placed from our
homes. Given the apparent segregated neighborhoods, it should
be noted that possibly not all apartments would be equally
available to all potential renters. Also, this kind of
apartment hunting requires a car. In addition, the children
would either have to be taken along or some kind of day care
would be required.
Valeski and Straub estimated that the average rent for a
two-bedroom apartment in a typical, low-income neighborhood of
Denver was $390*50 per month plus $44.70 per month for utilities.
The data from their survey are provided in Table 3*4 below. Unlike
HUD, quality of housing was not a consideration and as noted by the
Junior League, most of the apartments required a $200 damage
deposit, an expense that was excluded from the Denver study. Moving
expenses were also excluded in that study. The advantage of
conducting a survey such as this one is that the apartment can be


68
TABLE 3-4
Data for Estimating Rent (including utilities) for
a Two-bedroom Apartment or House in a Low
Rent, Denver Neighborhood,
November 1986
Address Rent Utilities Estimates of Rent & Utilities Amount of Deposit Required
34 Sherman $400 water incl. $461 $400 .
6 Grant 400 separate 461 200
1349 Downing 395 separate 456 395
1538 High 350 separate 411 350
1236 Pearl 350 elec, separate 370 350
1136 Logan 375 included 375 375
307 Fox* 390 separate 451 390
310 Bannock* 400 separate 461 400
129 3rd 450 included 450 450
1349 Downing 395 ' separate 456 395
AVERAGE: $390.50 $44.70 $435.20 $370.50
* House, not apartment
Source: Helbum, Suzanne W., Morris, John R., and Augostine, Daurie
R. "1986 Denver Cost-of-Living Study for an AFDC Family of
Three", (unpublished), 9 February 1987, 13*


69
seen as well as priced, and collected rents reflect actual market
conditions in a specific area at one point in time. Therefore, this
is the primary reason why this survey was chosen for the Denver
study instead of HUD's Fair Market Rent. However, like HUD's
estimates, rental costs may be overestimated since they reflect
prices of newly rented units only.
Estimate of Utility Costs. The estimation of utility costs
(shown in Table 3*2) was derived from data per the Low Energy
Assistance Program Grants (LEAP). According to Dean and Tomlinson:
Unless there is reason to believe that [HUD's estimate of
utility] allowances understate utility requirements, it may be
sufficient to rely on those quantities (and their associated
costs) for the utility standard. (Dean and Tomlinson: 1982,
38).
The utility expense used in the Denver study ($44.70 per
month) is based on $436.09 average heat cost for the 1985-86, six
month heating season paid by LEAP, $60 total for 3 additional months
of heat, plus $20 for other utilities. This estimate matches the
utility expenses in the 1984 U.S. Consumer Expenditure Survey for
the same utilities for families earning less than $10,000 per year.
However, this estimate is more likely to be low than high, since HUD
estimates the monthly cost of utilities to be almost double ($97*52
per month) the amount used in the Denver study.
Clothing
Very little research has gone into developing a standard of
needs for budget components Other than food and shelter. For this


70
reason, an "official" clothing standard does not now exist in the
United States. At the turn of the century in England, clothing
needs for a woman were defined in B.S. Rowntree's study (1899) as
consisting of:
One pair of boots, two aprons, one second-hand dress, one
skirt made from an old dress, a third of the cost of a new hat,
a third of the cost of a shawl and a jacket, two pairs of
stockings, a few unspecified underclothes, one pair of stays,
and one pair of old boots worn as slippers". (Townsend: 1979
50).
Although it has been only 89 years since Rowntree suggested
the above norm, clothing needs have evolved dramatically. Like
other components of a household budget, the necessity for particular
types of clothing are established according to social expectations,
as well as by other factors such as climate. For the clothing
component in Part I of the Denver study, the objective was to
establish a standard that would sufficiently and realistically
represent the needs of an AFDC household in the short run. Dean and
Tomlinson's guide suggest that the following factors must be
considered in order to draw up an original clothing list for a price
survey. (Dean and Tomlinson: 1982, 31).
(1) Functioned use of garments (e.g., sports, work, etc.)
(2) Style specifications.
(3) Quality and durability controls.
(4) Seasonal variation.
(5) Frequency of replacement.
They also suggest that variations of dress ought to be minimized and
should allow only enough variety to maintain cleanliness. Clothing
items should be durable, conservative (plain) and inexpensive.
(Dean and Tomlinson: 1982, 31-2).


71
Denver clothing study for an AFDC household. The data pre-
sented in the next three tables describe annual and monthly clothing
expenses for individual members of a household consisting of a non-
employed woman with two children. The total cost of a normative
clothing standard as determined in October, 1986 by the Denver
Junior League is $32.59 per month ($398.01 per year) for this
hypothetical, three-person family. Table 3*8 summarizes clothing
expenses of mainly used clothes from the three individual tables and
also compares a short run budget with expenditures in the long run.
The Junior League of Denver volunteers designed the clothing
lists on which the clothing budget is based. The comparison of this
list with published studies shows remarkable consistency; if
anything, the short run Denver study allowance is more modest.
Presumably, a person on "welfare" spends more time in the home
rather than outside it, implying that clothing needs for the mother
should reflect this type of casual environment. However, there are
occasions when one needs to be appropriately dressed for more formal
situations such as church and school functions, holidays, etc.
Children's needs depend for the most part on their ages, their
growth process and most importantly, whether or not they attend
school.
The information regarding types of clothing, quantities of
items and prices was collected by the Denver Junior League in
November, 1986. The clothing was priced at seven Denver area stores
that were located in "low-income" neighborhoods. Of the seven
sample stores chosen for the study, three were used clothing stores


TABLE 3.5
72
Estimate of Yearly Clothing Purchases
Consisting of Mainly Used Clothes
for a Mother at Home
Prices
Quantity Item Goodwill ARC 1 ARC 2 Average
2 prs. jeans $8.00 $10.00 $8.00 $8.67
1 pr. slacks 4.00 9.97* 2.00 5.32
2 sweatshirts . 6.00 1.00 1.30 2.77
1 pr. sweatpants 15.94* 15.94* 3.25 11.71
3 T-shirts 6.00 2.40 7-95 5.45
1 sweater 4.00 3.00 3.25 3.42
2 blouses 4.00 1.00 6.00 3.67
1 skirt 4.00 3.10 4.50 3.87
1 dress 4.00 3.50 3.00 3.50
1 parka/coat 14.00 3-98 3.50 7.16
1 pr. shoes 4.00 12.97* 4.00 6.99
1 pr. sneakers 4.00 5-97* 5-97* 5.31
1 pr. boots 5.00 17.97* 5.00 9.32
3 pr. socks 3.69* 3.69* 3.69* 3.69
9 pr. pantyhose 8.73* 8.73* 8.73* 8.73
1 nightgown 2.50 3.00 2.00 2.50
1 slip 2.50 6.00* 6.00* 4.83
3 bras 8.67* 8.67* 8.67* 8.67
7 pr. underpants 9.73* 9.74* 9.73* 9.73
1 pr. gloves 3.57* 3.57* 1.90 3.01
1 hat 3.97* 3.97* 1.90 3.28
1 purse 5.00* 5.00* 0.40 3.47
Total Annual Cost $131.30 $143.17 $100.74 $125.07
Total Monthly Cost $10.94 $11.93 $8.40 $10.42
* These items were not available in the used clothing stores above;
therefore, prices from new clothing stores (i.e., Yellowfront,
Kmart and Penneys) were substituted.
Source: Helbum, Suzanne W., Morris, John R., and Augostine,
Daurie R., 1986 Denver Cost of Living Study for an AFDC
Family of Three." (unpublished), 9 February 1987*


TABLE 3.6
73
Estimate of Yearly Clothing Purchases
Consisting of Mainly Used Clothes
for a 4 Year Old Girl
Prices
Quantity Item Goodwill ARC 1 ARC 2 Average
3 pr. jeans $9.00 $15.00 $1.80 $8.60
1 pr. slacks 3.00 2.50 8.99 4.83
1 sweatshirt 3.00 3.00 3.00 3.00
1 pr. sweatpants 9-99* 9.99* 4.00 7-99
2 T-shirts 2.00 1.20 1.00 1.40
1 sweater 3.00 2.50 6.99 4.16
2 shirts 6.00 4.00 6.00 5.33
1 dress 12.97* 12.97* 4.00 9-98
1 pr. shoes 6.99* 6.99* 4.00 5-99
2 pr. sneakers 5.00 15.94* 15.94* 12.29
6 pr. socks 4.56* 4.56* 4.56* 4.56
2 pr. shorts 0.20** 0.20** 0.20 0.20
6 pr. underpants 5.94* 5.94* 5.94* 5.94
1 hat 0.25 1.00* 1.20 0.82
1 pr. mittens 0.25 0.97* 3.50 1.57
1 pr. boots 3.00 4.00 1.81 2.94
1 pr. pajamas 2.50 4.35* 0.65 2.50
1 winter jacket 3.00 3.00 23.00 9.67
1 pr. snowpants 5-00 12.99* 13.99 10.66
Total Annual Cost $85.65 $111.10 $110.57 $102.44
Total Monthly Cost $7.14 $9.26 $9.21 $8.54
* These items were not available in the used clothing stores above;
therefore, prices from new clothing stores (i.e. Yellowfront,
Kmart and Penneys) were substituted.
** These items were not available in that particular used clothing
store; therefore, prices from a different used clothing store
were substituted.
Source: Helbum, Suzanne W., Morris, John R., and Augostine
Daurie R., "1986 Denver Cost of Living Study for an AFDC
Family of Three." (unpublished), 9 February 1987.


TABLE 3-7
74
Estimate of Yearly Clothing Purchases
Consisting of Mainly Used Clothes
for a 6 Year Old Boy
Prices
Quantity Item Goodwill ARC 1 ARC 2 Average
5 pr. jeans $15.00 $27.50 $12.50 $18.33
1 pr. dress pants 3.00 2.50 4.50 3.33
3 sweatshirts 9.00 9.00 6.00 8.00
1 pr. sweatpants 6.00 12.99* 12.99* 10.66
3 T-shirts 3.00 1.80 9.00* 4.60
1 sweater 3.00 2.50 2.00 2.50
3 long-sleeve shirts 9.00 6.00 7.50 7.50
1 dress shirt 2.50 6.99* 0.80 3.43
1 pr. shoes 2.50 4.99* 2.00 3.16
2 pr. sneakers 5-00 21.80* 21.80* 16.20
1 pr. boots 3.00 4.00 3.13 3-38
3 pr. shorts 2.70** 2.70** 2.70 2.70
6 pr. socks 4.99* 4.99* 4.99* 4.99
6 pr. underpants 7.98* 7-98* 7.98* 7-98
1 hat 0.50 1.00 0.80 0.77
1 pr. mittens 2.07* 2.10 3.00 2.39
1 belt 2.97* 2.97* 2.97* 2.97
1 pr. pajamas 2.50 6.99* 6.99* 5.49
1 pr. slippers 7-99* 7.99* 7.99* 7.99
1 back-pack 7-99* 7.99* 7.99* 7.99
1 winter jacket 3.00 3.00 6.95 4.32
1 pr. snowpants 5.00 12.99* 6.50 8.16
1 bathing suit 0.80** 0.80** 0.80** 0.80
Total Annual Cost $109.49 $161.57 $141.88 $137.65
Total Monthly Cost $9.12 $13.46 $11.82 $11.47
* These items were not available in the used clothing stores above;
therefore, prices from new clothing stores (i.e., Yellowfront,
Kmart and Penneys) were substituted.
** These items were not available in that particular used clothing
store; therefore, prices from a different used clothing store
were substituted.
Source: Helbum, Suzanne W., Morris, John R., and Augostine,
Daurie R., "1986 Denver Cost of Living Study for an AFDC
Family of Three." (unpublished), 9 February 1987


75
TABLE 3-8
Estimate of Monthly and Yearly Clothing
Needs for a Family of Three
in Denver, 1986
Employed Mother Non-employed Mother
.Family Member (average monthly cost)
Mother $31.36 $10.42
Four year-old girl 8.54 8.54
Six year-old boy 11.47 11.47
Sales Tax 3.40 2.16
Total Monthly
Expense $54.77 $32.59
Total Annual
Expense $657.24 $391.08
Source: Helbum, Suzanne W., Morris, John R., and Augostine, Daurie
R. "1986 Cost-of-Living Study for an AFDC Family of Three"
(unpublished), 9 February 1987, 14.


76
and are shown In the tables below. It was assumed that appropriate
clothing for an entire AFDC family could be obtained mainly from
thrift stores.* Implicitly assumed was that the family had the
means and the time to shop around for necessary clothing items.
Dean and Tomlinson's guide was used to corraborate the
Denver study clothing list. Although the two studies are pretty
much consistent, the New Jersey study described by Dean and
Tomlinson, does not distinquish between different life styles (i.e.,
employed versus non-employed households) as the Denver study did.
Transportation
Like the clothing component, there is currently no
"official" U.S. standard to refer to when determining the minimum
cost of necessary transportation for a household. To establish a
norm, many factors must be considered. The most important factor is
deciding whether or not car ownership is a household necessity. In
order to establish a minimally-adequate standard for transportation
in Part I of the Denver study, the following assumptions were made.
The family has no car and no access to one. They use the bus and
the children ride for free. The family lives within walking
* In the cases where certain items were not available in a used
clothing store (such as underwear, socks, nylons, etc.) the lowest
price from a new clothing store (i.e., Yellowfront, Kmart, Penneys)
was substituted in the list. Also, whenever a range of prices was
found in one store for a particular item, the lowest price was used.
And if an item was found to be on sale, the sale price was used.


77
distance of the elementary school and they make one weekly taxi trip
from the grocery store with groceries.
The total monthly cost of transportation for a low-income
family of three in Denver was determined in November, 1986 to be
$41.00 per month. This includes one monthly bus pass valued at $24
and four, three-mile taxi trips (per month) estimated at a cost of
$4.25 per ride. Although not owning a car may not be the most
practical solution to transportation, car ownership would cost
approximately three times as much.
Miscellaneous
In determining norms for other components of a household
budget, many items that would be considered necessary for many
households, even in the short run, were excluded from consideration
in the Denver study. As previously mentioned, all items that were
not absolutely essential for short run subsistence needs to a family
assumed to be only temporarily in financial distress were not
included.
In this section, three other components were chosen to
complete the cost-of-living estimate for a hypothetical AFDC family:
laundry expenses, household and personal care items (e.g., aspirins
and toilet paper) and a telephone. The cost of doing laundry was
included in part I of the study, as per Dean and Tomlinson, because
it is a necessity in a modem society. The laundry expense was
extremely modest, only four loads of laundry per week at an average
cost of $1.25 per load for a family that only has access to a coin-


78
operated washer and dryer. Therefore the monthly cost of laundry
was a modest estimate of $21.67.
The list of items needed for household and personal care was
complied by the Denver Junior League in November, 1986 and is shown
in the Table 3.9 and 3.10 below. The decision about whether or not
to include a telephone is perhaps the only expense that one might
legitimately argue is not absolutely essential for subsistence.
However, it should be noted that 92.2 percent of U.S. households do
own a phone. (U.S. Bureau of the Census: 1987* 531). In the
Denver study, the household subscribes to the cheapest phone service
(i.e., a two-party phone service) and makes no long distance phone
calls. The estimated cost was $6.89 per month.
Summary of Short Run Subsistence Budget
Table 3>11 below summarizes the expenses necessary for the
above categories which define a short run subsistence level budget
for a hypothetical family of three. Total expenses for this short
run budget equal $75^ per month. It is interesting to note that
this estimate of monthly expenditures for this typical family
closely approximates the income figure established as the national
poverty line in 1986 for a family of three which is $760 per month.
According to the Basic Needs Study conducted by Maurice MacDonald of
the University of Wisconsin's Institute for Reasearch on Poverty,
MacDonald concluded that the national poverty line was a sufficient
reference standard by which to define a level of basic need in
Wisconsin. (MacDonald: 1985. 31). In addition, he concluded that
the CPI was a sufficient method by which to update the national


TABLE 3.9
79
Estimate of Monthly
Household Items
Item Unit Size Price Approx. Monthly Use Monthly Expense
Plastic garbage bags 30 small $1.49 0.5 $0.74
Scouring powder 14 oz. 0.36 1.0 0.36
Light bulbs pkg. of 2 1.19 4.0 2.38
Liquid floor wax 32 oz. 2.59 0.2 0.52
Saran wrap 150 sq. ft. 2.89 0.5 1.44
Scouring pads 1 0.59 .0.5 0.30
Sponges small 0.57 1.0 0.57
Dish detergent 32 oz. 0.89 2.0 1.78
Clothes detergent 42 oz. 2.40 2.0 4.80
Bar soap bar 0.52 2.0 1.40
Gen. household cleaner 15 oz. 1.14 1.0 1.14
Toilet paper 8-roll pkg. 1-54 1.0 1.54
Facial tissue box of 175 0.89 1.0 1.89
Paper napkins pkg. of 140 0.79 1.2 0.95
Paper towels Roll 0.45 2.0 0.90
Aluminum foil small roll 0.67 0.25 0.17
Bleach qt. 0.30 1.0 0.30
Baking soda lb. 0.47 0.33 0.16
Pens 1 flair 0.65 0.5 0.33
Pencils 6 pk. 0.77 0.2 0.15
Glue 4 oz. 0.59 0.1 0.06
Crayons 16/box 0.75 0.2 0.15
Envelopes 30/pk. 0.75 0.2 0.14
Paper tablet 200 sheets 1.49 0.2 0.30
Twine 200 ft. 1.25 0.1 0.12
Scotch tape 1/2" x 500" 0.64 0.25 0.16
Stamps 0.22 10.0 2.20
Sales tax 1.67
TOTAL MONTHLY EXPENSE $25.26
Source: Helbum, Suzanne W., Morris, John R., and Augostine,
Daurle R. "1986 Denver Cost-of-Living Study for an AFDC
Family of Three." (unpublished) 9 February 1987.


TABLE 3-10
80
Estimate of Monthly
Personal Expenses
Item Unit Size Price Approx. Monthly Use Monthly Expense
Tampons 40/box $3-77 0.25 $0.94
Gauze bandages 25 3" x 3" 2.59 0.2 0.52
Antiseptic 1 oz. tube 3-92 0.1 0.39
Brush 1 1.42 0.2 0.28
Comb 6 pack 1.16 0.2 0.23
Toothbrush 1 0.90 0.5 0.45
Plastic band-aids 70/box 2.03 0.33 0.68
Aspirin 300/bottle 1.27 0.2 0.25
Cold pills 24 2.23 0.25 0.56
Laxative 12 oz. bottle 2.07 0.1 0.21
Petrol, jelly 7 1/2 oz. 1.99 0.1 0.20
Cotton balls 300 0.87 0.1 0.09
Vitamins, multiple 250 3-09 0.33 1.03
Diarrhea medicine 12 oz. 3.81 0.1 0.38
Lipstick 1 2.27 0.2 0.45
Deodorant 1.5 oz. 1.69 1.0 1.69
Sanitary napkins box of 40 3-75 0.25 0.94
Toothpaste 8 oz. tube 2.13 1.0 2.13
Shampoo 16 oz. 1.06 0.5 0.53
Hand/body lotion 16 oz. .. 1.93 0.5 0.96
Sales tax 0.96
TOTAL MONTHLY EXPENSE $1*1.46
Source: Helbum, Suzanne W., Morris, John R., and Augostine,
Daurie R. "1986 Denver Cost-of-Living Study for an AFDC
Family of Three." (unpublished) 9 February 1987,


TABLE 3.11
81
Minimum Cost-of-Living for a Family of Three
(Nonemployed Mother, 6 Year-old boy,
4 year-old Girl) in Denver:
November 1986
Type of Expenditure Ave. Monthly Expenditures Percent of Expenditure Percent of $530 AFDC & Food Stamps
Food $176.89 23.52 33-42
Rent and Utilities- (2 bedroom apt. or house) 435.20 57-7% 82.12
Clothing 32.59 . 4.32 6.12
Transportation (1 bus pass @ $24/mo.) (4 3-mile taxi trips § $4.25/ride) 41.00 5.42 7.72
Laundry (4 loads/wk § $1.25/load) 21.73 2.92 4.12
Household Supplies 25.26 3-42 4.82
Personal Care Supplies 14.46 1.92 2.72
Phone (2 party measured service) 6.89 0.92 1.32
TOTAL MONTHLY COST-OF-LIVING $754.02 100.02 142.22
TOTAL ANNUAL COST-OF-LIVING $9048.24
Source: Helbum, Suzanne W., Morris, John R., and Augostine,
Daurie R. "1986 Denver Cost-of-Living Study for an AFDC
Family of Three." (unpublished) 9 February 1987.


82
poverty line. (MacDonald: 1985, 31)
In part I of the Denver study, subsistence expenditures were'
compared to the level of income available to a mother with two small
children that had no support beyond public assistance programs.
Income for a three person family on AFDC includes several potential
elements. The maximum AFDC grant is worth $346 per month. If the
family is receiving no rent subsidy, the food stamp grant is worth
an additional $184, but only 66 percent of AFDC families receive
i
food stamps. About 43 percent of AFDC recipients receive LEAP aid
averaging $29.54 per month to subsidize heat bills for the coldest
months of the year. In addition, AFDC recipients are entitled to
Medicaid although only 42 percent make use of it. Thus, an AFDC
family may have an income from these welfare programs varying from
$346 to $560 plus Medicaid. If they have additional income from
private sources, then at least part of the public assistance is
reduced.
Findings in the Denver study were that for ten to twenty
percent of mothers receiving AFDC, food stamps and housing
assistance, minimal needs are met and a little is left over for such
"luxuries" as newspapers, toys and an occasional dinner at
McDonalds. However, the other eighty to ninety percent of AFDC
families who either do not receive public housing or miss out on
food stamps, face a deficit in the short run subsistence budget from
$200 per month to just over $400.


83
Part II: A Long Run Minimally-Adequate Budget for a Family of Three
In part II of the Denver area research, a long-term,
"minimally-adequate" standard of living was estimated for a Colorado
household consisting of an employed mother with two children, a four
year-old girl and a six year-old boy: essentially a typical low-
income family. The most obvious difference between the financial
situations of the two hypothetical families is that a household with
an employed head of the family must include expenses related to
being able to work. These additional expenses include day care
services, clothing for work, enough income for eating away from the
home, etc. In addition, longer run expenses that must also be
considered are income available for the consumption of durable goods
such as household furnishings and a car.
The remainder of this chapter describes the long run
minimally-adequate budget.
Food
For the long run budget, food costs were based on the USDA's
Low-income Food Plan instead of the Thrifty Food Plan. Food
consumed away from home was also considered. The cost of food
consumption at home was calculated by using the cost of the Thrifty
Food Plan (used in the short run subsistence budget), first
subtracting the cost of meals eaten away from home and then
multiplying the result by 1.28. The 1984 Consumer Expenditure
Survey reports that households with annual incomes of $10,000 -
$14,999 spend 26.7 percent of their food budgets on meals away from


84
home. The 1.28 ratio is based on studies of relative costs of USDA
thrifty and low-income food budgets, performed by the USDA. Pood
that is consumed at home is assumed to be exempt from sales tax.
The cost of food consumed away from home includes sales tax and
tips, if any.
The assumptions made in part II of the Denver study were as
follows: (1) the children's food at home was reduced by 5 lunches
per week to compensate for the six year-old boy's participation in
the school lunch program; (2) the children's food was reduced by one
dinner per week to account for a meal away from home; (3) the mother
carries a lunch to work four days per week; therefore, the mother's
food was reduced by one lunch and one dinner per week. Table 3*12
below shows the food budget for this family. The total monthly food
cost is equal to $253.76 for a family of three.
Shelter
Unlike the short run subsistence budget which estimated the
cost of housing according to a Denver area survey and did not take
housing quality into consideration, HUD's Fair Market Rent (FMR) was
used for the long run budget because the FMR and the utility
estimate of $495 per month for a two bedroom apartment meet minimum
U.S. standards of decency and safety.
Included in the long run budget were household expenses such
as furniture, fumishings/appliances and other household supplies.
A telephone was also included in this category of household expenses.


85
TABLE 3.12
Food Budget for a Low-Income,
Family of Three
Item Weekly Weekly Expense Monthly Expense
Food at Home $42.40 $184.24
Food Away from Home Family Dinner Lunch at Work School Lunches $10.00 4.00 2.00 16.00 69.52
TOTAL FOOD COST $58.40 $253.76
Source: Helbum, Suzanne W., Morris, John R., and Augostine,
Daurie R. "Denver Cost-of-Living Study, 1987: Part II,
Low-Income Minimum Adequacy Budget for a Single Parent
Working Mother and Two Small Children." (unpublished),
31 March 1987, 7-


87
Clothing
The clothing allowance was estimated in a similar way to the
short run subsistence budget. The major difference was that the
average clothing budget was determined by averaging the prices of
clothing obtained from the same three used clothing stores and four
addtional new clothing stores: Pennys, Yellow Front and K Mart.
Tables 313. 3*14 and 3*15 below show the revised clothing lists for
this low-income family of three.
The cost of clothing is substantially higher for this type
of household. The obvious reason is due to the higher cost of new
clothing. An additional reason is that an employed mother must be
provided with enough variety in wardrobe to be able to work. It is
also believed that a working mother does not have the time to shop
around used clothing stores for all necessary items. The monthly
cost of the long run clothing budget is $72. Laundry expenses were
also included in this category at a monthly expenses of $30.
Transportation
For a variety of reasons, a few people choose to go without
a car; however, in part II of the Denver study the no car option
seemed impratical. According to John Morris, as a single working
mother with a mediocre job, one might seem to seek out a car
offerring a combination of low cost and reliability. Low cost
requires that the car be a used economy model such as a sub-compact
and reliability requires that the car not be too old. The estimated
monthly cost of transportation involving car ownership is $148.66


88
TABLE 3.12
fclimnLe of Yearly Clothing Purchases
New aiui Used Clothing Tor Working Mother
Quan tity I tom Prices Goodwill ARC 1 ARC 2 Yellow Front Yellow Front K Mart Penney Average
pr. jeans 8.00 10.00 8.00. 29.98 35.98' 39.94 29.9S 23.13
2 pi', slacks 8.00 4.00 20.00 19.98 25.94 21.98 I6.65
1 sweatshirts 3.00 7-97 0.65 7-99 7-99 7-97 7.99 6.22
1 pr. sweatpants 2.10 15.94 16.00 15.94 15.94 13.1S
2 T-shirts A.00 1.60 5-30 13-98 7.98 31.94 7.9S 10.40
2 sweater 8.00 6.00 6.50 25.98 25.9S 31.94 21.9S 18.05
3 blouses 6.00 1.50 9.00 29.97 29-97 41.91 29.97 21.19
2 skirt 8.00 6.20 9.00 31.98 17.94 17.94 35-93 18.15
2 dress 8.00 7.00 6.00 36.00 22.00 22.00 59-98 23.00
1 parka 14.00 3-98 3-50 49.99 29.99 22.97 49.00 24.78
0.25 raincoat 15.00 15.00
0.25 winter coat 3-50 1.00 5-50 12.50 9.27 12.25 7.34
2 pr. shoes 8.00 8.00 29.98 30.00 39.94 33-98 24.98
1 pr. sneakers 4.00 10.00 10.99 12.97 16.99 10.99
1 pr. boots 5.00 5.00 18.99 17.99 17.97 32.00 16.16
3 pr. socks 4.47 4.47 4.47 4.47 4.47
12 pr. pantyhose 21.48 13.08 5.64 20.28 15.12
1-5 nightgown 3-75 4.5Q 3.00 13.49 11.99 11.96 14.99 9.09
1 slip 6.00 6.00 6.00 6.00 11.50 7.10
3 bras 8.67 11.97 13.11 8.97 10.68
0.5 robe 2.50 1.50 7.50 4.50 7.94 5.50 4.91
7 pr. underpants 9-59 9.73 11.83 10.99 11.69 10.77
1 pr. gloves 1.90 4.99 3-57 4.99 3.86
1 hat 1.90 4.99 3-97 4.99 3'-96
1 purse 2.00 3.00 2.00 5-99 6.99 5.00 8.99 4.85
1 pr. slippers ' 2.99 2.99 3-00 4.99 2.99 4.99 3.66
0.5 bathing suit 12.50 12.50
2 shorts 7-98 7.98 11.98 17.93 11.48
Sales Tax * 24.6 2
Total Annual Cost 376.27
Total Monthly 1 Cost 31.36
Source: Helburo, Suzanne W., Morris, John R., and Augostine,
Daurie R. "Denver Cost-of Living Study, 1987: Part II,
Lov-Income Minimum Adequacy Budget for a Single Parent
Working Mother and Two Small Children." (unpublished)
31 March 1987.


89
TABLE 3.13
Estimate of Yearly Clothing Purchases
Cuuntity Item Goodwill Prices ARC 1 ARC 2 Yellow Front 1 Yellow Front 2 K Mart Pennys Average
5 pr. jeans 15.00 27.50 12.50 64.95 44.95 39-85 64.95 38.53
1 pr. dress pants 3.00 2.50 4.50 8.99 8.99 9-97 10.99 6-99
3 sweatshirts 9.00 9.00 6.00 17.97 26.97 23.91 23.97 16.69
1 pr. sweatpants- 6.00 12:99 18.98 13.94 16.99 13.78
3 T-shirts 3.00 1.80 14.97 9.00 9-00 7.55
1 sweater 3.00 2.50 2.00 6.99 8.99 6.99 12.00 6.07
3 long-slv. shirt 9.00 6.00 7.50 14.97 9-00 26.91 32.97 15.19
2 dress shirt 5.00 1.60 13.98 13-98 19.94 21.98 12.75
2 pr. shoes 5-00 4.00 49.98 9-98 19.94 45.98 22.48
. 2 pr. sneakers 5-00 25-98 . 25.98 21.80 33-98 22.55
1 pr. boots 3.00 ' *1.00 3.13 15.95 17.99 16.97 16.99 11.15
3 pr. shorts 14.97 17-97 16.4?
10 pr. socks 8.30 11.60 9.60 10.00 9-88
6 pr. underpants 7-98 12.00 9-96 9.00 9-74
1 hat 0.50 1.00 0.80 3-99 1.00 2.35 3-99 1.95
1 pr. mittens 2.10 3-00 3.99 3.49 2.07 2.99 2.94
1 belt 2.99 3.00 2.97 5-99 3-74
1 pr. pajamas 2.50 7.99 6.99 6.88 8.99 6.67
1 pr. slippers 7.99 - 7.99 7-99 8.99 8.24
1 back-pack 7-99 7-99 10.99 8.99
1 winter jacket 3.00 3-00 6.95 24.99 24.99 26.97 23.00 16.13
1 pr. snowpants 5.00 6.50 13.99 16.95 15.97 12.99 11.91
1 bathing suit 0.80 0.80 0.80 0.80
Sales Tax 18.98
Total Annual Cost . 290.15
Total Monthly Cos w 24. IS
Source: Herb urn, Suzanne W., Morris, John R., and Augostine,
Daurie R. "Denver Cost-of-Living Study, 1987: Part II,
Lov-Income Minimum Adequacy Budget for a Single Parent
Working Mother and Two Small Children." (unpublished)
31 March 1987.


90
TABLE 3-lU
Estimate of Yearly Clothing Purchases
New and Used Clothing Tor a 4 Year Old Girl
Quantity Item Prices Goodwill ARC 1 ARC 2 Yellow Front 1 Yellow Front -2 K Mart Pennys Average
3 pr. jeans 9.00 15.00 1.80 38.97 14.97 23.01 38.97 20.25
1 pr. slacks 3.00 2.50 8.99 8.99 8.99 8.99 10.99 7.49
1 sweatshirt 3-00 3.00 3.00 5-99 5-99 5-97 7.99 4.99
1 pr. sweatpants 4.00 12.99 12.99 10.94 16.99 11.58
3.5 T-shirts 3.50 2.10 1.75 17.47 10.47 10.50 ' 13.65 8.49
1 sweater 3-00 2.50 6.99 6.99 6.99 6.99 10.00 6.21
2 shirts 6.00 4.00 6.00 9-98 13.98 11.14 15-98 9-58
1 dress 4.00 12.97 11.99 9 65
2.5 pr. shoes 10.00 24.93 12.99 15-97
2 pr. sneakers 5.00 25.98 21.98 * 15-94 33-98 20.58
7 pr. socks 5.81 7.70 5.32 7-00 6.46
1 pr. shorts 0.10 4.99 4.99 4.99 . 5-99 4.21
6 pr. underpants 7-98 5.94 6.60 9.00 7.38
1 hat 0.25 1.20 3-99 1.00 . 2.97 3.99 2.23
1 pr. nittens 0.25 3.50 3-99 3.99 0.97 3-99 2.78
1 pr. boots 3.00 4.00 1.81 15.99 15.99 12,97 15.99 9-96
1.3 pr. pajamas . 3-75 0.98 11.99 11.99, 6.52 13.49 8.12
1 winter jacket 3.00 3-00 23.00 24.99 23.00 23.00 26.00 18.00
1 pr. sr.owpants 5.00 13-99 12.99 12.99 12.99 9.00 .11.16
Sales Tax 12.9-:
Total Annual Cost 198.06
Total Monthly 1 -ost 16.50
Source: Helbum, Suzanne W., Morris, John R., and Augostine
Daurie R. "Denver Cost-of-Living Study, 1987: Part II,
Low-Income Minimum Adequacy Budget for a Single Parent
Working Mother and Two Small Children." (unpublished)
31 March 1987.


91
monthly cost of transportation involving car ownership is $148.66
per month.
A variety of factors were considered for the long run study
in deriving the total cost for this budget component. The main
assumptions regarding car ownership were: (1) the mother buys a
four year-old economy, sub-compact car and keeps it for five years;
(2) the amount of insurance is minimal or just enough to satisfy the
lending agency and the Colorado law; (3) the car would be maintained
well to protect its reliability and resale value, but the woman
would not perform her own maintenance. Many of the costs of car
ownership are fixed annual costs that do not change regardless of
mileage. These costs include insurance, depreciation, interest on a
loan, and license fees. Variable costs depend on the number of
miles driven. These costs include gasoline, oil changes, tires, and
maintenance. For more detail about the costs of car ownership, one
should consult part II of the actual Denver area study.
Child Care
Child care costs are a major expense for employed mothers.
Even though child care fee reductions and tax subsidies exist, a
high proportion of family income must go to pay for child care. In
part II of the Denver study, the cost of child care was estimated to
be $390 per month: $238.33 per month (6l percent of total) for the
full time care of the four year-old girl and $151.67 (39 percent of
total) for before and after school care of the six year-old boy.
These estimates were based on the March 1987 Child Care Rate Report