care, and personal care. To date, they have developed BNBs for single-parent and two-parent families with varying numbers of children (see Renwick and Bergmann, 1993; Renwick, 1993a, 1993b). Their budgets vary by whether the parent(s) work and by whether they receive such in-kind benefits as food stamps, school meals, free or subsidized child care, and medical care benefits. Their budgets also vary by region and type of place (central city, suburb, rural). The final step in their procedure is to determine the before-tax income required to be out of poverty on the basis of the BNB dollar level together with an estimate of payroll and income tax liabilities.

In constructing the basic needs budget, Renwick and Bergmann used previously defined standards whenever they considered them appropriate. Their food standard is based on the USDA Low-Cost Food Plan, the second least expensive of the four food plans, which incorporates some economies of scale for families of larger sizes. For housing, they assumed that parents have a separate bedroom from children and that no more than two children share a bedroom. For two-bedroom units they analyzed AHS data to determine the 25th percentile of the distribution of all such units, separately by the four regions and by central city, suburban, and rural locations. They allowed for a telephone and household supplies in the budget (updating the latter from the Bureau of Labor Statistics (BLS) lower level family budget—see below), but they did not allow for household furnishings or equipment, assuming that families would make do with what they had during a poverty spell. They assumed the use of public transportation by central city and suburban families and developed a weekly allowance for work trips for each adult earner plus an allowance for shopping and errands. In the budget for rural families, they allocated the cost of operating a second-hand car, using data from a 1977 survey on distance to work and the mileage allowances of the Internal Revenue Service (IRS) to estimate the cost of work trips for these families. They based their allowance for health insurance on the average total premium cost of group health insurance covering lower income families as reported in the National Health Care Expenditure Survey, and their allowance for out-of-pocket medical care expenditures was based on typical expenditures of moderate-income families with health insurance from the same source.14 They developed a child care budget (for the case of no parent at home) by using the IRS dependent care tax credit limits on eligible expenses in full or in part, depending on the assumed age of the children and an assumption about use of free or subsidized care. For the clothing portion of the budget, they updated the lower level family budget allowance from the BLS. Finally, for personal care, they updated the BLS lower level family budget allowance, omitting the services component (principally, haircuts) and adding an allowance for dispos-

14  

It is not clear, but presumably the survey they used is the 1987 National Medical Expenditure Survey.



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