Family Economic Well Being
Family economic well-being considers whether families have adequate, sustainable financial resources to meet their needs. This chapter considers indicators including poverty, homelessness, and the cost of meeting basic needs. While families with young children still face challenges to their economic well-being, Vermont is working to ensure the economic well-being of families through programs and policies like Reach-Up, 3Squares VT, WIC, the Child Care Financial Assistance Program (CCFAP), Early Head Start and Head Start, and Paid Sick Leave (effective January 2017).
Poverty in Vermont
Each year, the federal government releases information used to quantify at what income level a person or family is considered to live in poverty. Research shows that poverty is the single greatest threat to children’s well-being. Children who experience poverty in their early years are at higher risk for poor health, and poverty can negatively impact children’s early development. However, states can address these negative impacts by ensuring that workers receive a livable wage, lower-income families have access to high-quality early care and learning, and families have access to health and other social support. The good news is that the percent of families living in poverty in the US and Vermont has decreased.
The percent of Vermont families with children under the age of five who live in poverty showed a statistically significant decline from 19% in 2009 (the end of the Great Recession) to 9.6% in 2015, which coincides with an increase in median household income in Vermont. Additionally, while the percent of single parent, female head-of-household families who live in poverty is decreasing as well, it remains three times more than all families.
Vermont’s Basic Needs Budget
Even though a lower percent of Vermont families with young children live in poverty, many families face significant economic challenges affording basic needs such as food, transportation, housing, and child care.
Developed by Vermont’s Joint Fiscal Office, Vermont’s Basic Needs Budget estimates the level of income needed by an individual or family to afford basic needs in either urban or rural Vermont. As shown in Figure 19, the basic needs budget for two working adults with two children in an urban area is almost equal to the median four-person family income in Vermont in 2015, $91,793. This demonstrates that a family would need to earn wages significantly higher than Vermont’s current minimum wage of $9.60 an hour, well above the federal government’s poverty threshold.
The cost of housing, as a share of family income, has increased since the Great Recession. Households spending more than 30% of their monthly incomes on rent, mortgage payments, taxes, insurance, and/or related expenses have fewer financial resources to meet their children’s other basic needs and make other investments in their children’s development. According to the 2015 Out of Reach Report, the fair market rent in Vermont for a two-bedroom apartment is $1,075. In order to afford this level of rent and utilities—without paying more than 30% of income on housing—a household must earn more than $3,585 monthly or $43,017 annually.
Assuming a 40-hour work week, 52 weeks per year, this level of income translates to an hourly wage of $20.68 per hour. Consequently, a large number of Vermont families don’t earn enough to afford a two-bedroom unit. If they can afford a unit, Vermont’s low vacancy rates (sometimes as low as 1%), pose an additional housing challenge.
For families who own, rather than rent, many Vermont households still pay more than 30% of their income on housing. As seen in Figure 17, since 2010, the percent of Vermont owners and renters spending more than 30% of their income remains high. There was a statistically significant decrease of 12% for household mortgages between 2010 and 2015. No significant change occurred between those years for household rent.
When families can’t afford housing, they may become homeless. For families experiencing homelessness, there are a number of publicly-funded emergency shelters that offer safe sleeping space. While the number of children under the age of 18 who are sheltered has been variable over the past few years, increasing slightly in SFY 2016, the average length of stay in SFY 2016 has been steadily increasing to a record high of 39 days. Additionally, according to Vermont’s Office of Economic Opportunity, approximately 38% of children and 23% of families who used a publicly-funded shelter in SFY 2016, spent their stay at a domestic/sexual violence shelter.
Using information from the 2014 Child Care Market Rate Survey conducted by the DCF Child Development Division, the annual statewide median cost for a two-parent family with one infant and one preschooler in a full-time, center-based child care program was $20,280.94 For many families, this cost can pose an economic challenge. However, Vermont’s Child Care Financial Assistance Program (CCFAP) helps low- and moderate-income families afford quality child care programs, for their children who are between birth to 13 years old (or 19 years old in some cases), while parents work or attend school. CCFAP is also available for families with certain health needs and children who are currently in the care of the Department for Children and Families (DCF). In FY2015, CCFAP helped a total of 14,301 children access early care and learning and afterschool programs.
For families enrolled in the program, CCFAP pays 10% to 100% of a tuition assistance rate set by the state, depending on a family’s income and size. The family pays the remaining balance. The more a family earns, the less tuition assistance the family receives. CCFAP tuition assistance rates are set based on a program’s level of recognition through the state’s quality recognition and improvement system, known as STARS (STep Ahead Recognition System). The higher a program’s STARS level, the higher the tuition assistance rate. However, over time, the state’s tuition assistance rates have not kept pace with the cost of child care, leaving a gap between how much tuition assistance covers and the current market rates for child care programs. This gap creates economic challenges for families and for child care providers. Many providers cannot afford to lose the difference between CCFAP’s tuition assistance rate and the provider’s standard tuition, so providers may ask families to cover this difference. This means that families enrolled in CCFAP that qualify for 100% tuition assistance may still need to pay an additional co-pay to cover the difference between the CCFAP tuition assistance rate and the amount a provider charges for tuition.
For a family of four—two working adults and two children—this means that the share of a family’s income directed toward child care can range from 4.5% (for families with incomes of 100% or less of poverty, receiving full child care financial assistance, and choosing a high-quality 4-star program) to 37.8% (for families with incomes of 200% of poverty receiving the minimum subsidy of 10% and choosing a high-quality 4-star program).96,97
All content is from BBF’s 2016 publication of How Are Vermont’s Young Children & Families.
Citations, figures and tables available here