The Rising Cost of Living in Dane County is a Key Factor Adding to Poverty in Dane County

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The cost of living, childcare, healthcare, education and lack of access to social benefits are the main factors that limit the ability of Dane County residents to get ahead financially, according to people interviewed as part of the DreamUp Wisconsin initiative.

(Thomas Yonash/Madison Commons)

The initiative, part of UW-Madison’s implementation of The Alliance for the American Dream, which is a community-university collaboration funded by Schmidt Futures, aims to promote shared prosperity and increase American competitiveness.

For people living in poverty in Dane County, unaffordable housing, food, utilities, health insurance and taxes prevent individuals from overcoming financial troubles. It is also hard to find affordable childcare services that have flexible scheduling. Post-secondary education and training, often seen as solution to poverty, are too costly for many and remain out of reach.

While cost of living rises in Dane County, residents living in poverty struggle to find jobs with good wages and chances for promotion. Wages remain stagnant, but the income limits make it difficult for many individuals and their families to qualify for social benefits.

A lack of affordable housing

One of the biggest factors that stops individuals and families from getting out of poverty is the lack of affordable housing.

Sarah Ceponis, director of United Way of Dane County’s Community Impact: Basic Needs, said that housing prices have soared in the past decade in Dane County, far outpacing the growth of wages.

According to RentJungle, the average rent price for a two-bedroom apartment has grown from $1,071 in January 2011 to $1,353 in January 2019. Data from RentCafe also supports this, as it shows that the rent price for a two-bedroom apartment has gone up from $1,152 in May 2015 to $1,246 in January 2019.

“We have a lot of folks that are working, sometimes two or three jobs, have an income, but can't afford housing here,” Ceponis said. “And it's putting a lot of constraints on our economy and on our community.”

Jim Schroeder, executive director of Community Action Coalition for South Central Wisconsin, agrees.

“Rents [in Madison] here are high, and a person who is working a minimum wage job and even the de facto minimum wage in Madison is really $11 to $12 an hour right now,” Schroeder said. “That is still not enough to secure safe, affordable housing.”

Joe Parisi, the Dane County executive, said that one reason for the rising housing costs in Dane County is due to income inequality and an increase in people moving to the county.

The population in Dane County increased by more than 60,000 between 2000 and 2010, when the population reached 488,075, according to the US Census Bureau. According to the latest 2017 estimations, there are about 50,000 more people, or about 538,000 people in total, that call Dane County home.

The influx of people is one cause for surging house prices, as demand outpaces supply. This pushes people to live further away from where jobs are located, which subsequently increases their commute time to work whether they use their own vehicle or public transportation.

Housing costs force people to live further away from job hubs

Transportation plays a major role in limiting families in their strive for financial success. The high housing costs push people to live further away from jobs, making good public transportation or owning a vehicle a necessity.

“It's kind of a scale, the further away you live from a hub of employment and resources, the cheaper it might be, but then your cost of transportation goes up,” Ceponis said. “So you have to strike a balance there.”

Wisconsin used to subsidize drivers education in high schools to students but this was discontinued in 2004. The end of the State Driver Education Categorical Aid Reimbursement Program has created a gulf between students who can and cannot afford commercial driver’s education classes.

“Drivers ed is not offered at school and the students have to pay for it — usually around $450,” Parisi said. “If you are middle class, upper-middle class, you can send your kids to drivers ed, you can write that check, it's kind of an inconvenience and money you would rather not spend, but at the end of the day life goes on. If you are a student, whose family is living in poverty, that $400 might as well be $4000 and you aren't going to get a drivers license.”

It isn’t only the lack of affordable housing that requires people to seek adequate transportation.

“If you don't have a driver's license, particularly if you are a person working in poverty and looking for work, you are immediately disqualified from a number of jobs that are out there,” Parisi said.

The fact that getting a driver’s license is out of the reach of many only serves to exacerbate the poverty that they are already living in, because it isn’t only about driving, but about getting a job, said Parisi.

Car ownership in Dane County is approximately the same as the national average, with an average of 2 cars per household. The average total cost of owning a car in Wisconsin is $11,524 per year, according to U.S. News. Annual insurance is $673, fuel costs $1,170 and repair costs are estimated at $357. These costs can be a large proportion of income for a person in poverty and will stop them from getting ahead financially.

The Arrive Together: Transportation Access and Equity in Wisconsin report published in October 2018 by 1000 Friends of Wisconsin together with the Sierra Club states that despite efforts by Metro Transit, many areas of Madison that are lower income have less frequent transit services because of their distance from the center of the city.

“For example, neighborhoods along Routes 21 and 22 on the north side and along Routes 50 and 51 on the west side are served once an hour; the routes end at a single transfer point,” the report states.

“[For] people who are taking the bus and maybe they work two miles from the Capitol and take the bus down to the square it’s usually pretty reliable,” Ceponis said. “The further away that you get, though, the less reliable it becomes.”

Infrequent access to public transportation can lead to long commutes, and sometimes to unnecessary expenses, such as using a taxi, because the route a person needs to take may be riddled with long wait times. People living in poverty might be able to get to work by using several bus transfers, but in the end it will either take a lot of time, or cost a lot of money.

“While we have a pretty decent Metro system, the way that it runs isn’t conducive for the habits that people might have for commuting,” said Denise Jess, Madison transit user and executive director of the Council of the Blind and Visually Impaired, in the report. “If you were in a car that could be a three- to five-minute, ten-minute tops, drive. But if you’re bussing in, it could be up to an hour and a half to get to the other side of the [East Washington] corridor.”

The report said that Metro Transit would like to expand its bus fleet, but the current bus garage is over capacity and without capital investment to support a new one, it is limited in adding new lines that would better serve the city and surrounding municipalities.

Until policymakers prioritize investment in Metro Transit, long commutes will continue to lead to ancillary costs for people who cannot afford to own a car or live downtown, which limits the possibility of getting ahead financially.

Food insecurity and healthcare costs play a large role in restricting financial growth

According to the Economic Policy Institute’s Family Budget Calculator, which measures the income a family needs in order to attain a modest yet adequate standard of living, the monthly healthcare cost for a single individual should be $295 and food expenses should be around $266.  

Poverty increases the risk of food insecurity and hunger, and households that have uncertain access to food, because of a lack of money, may run out of food, cut back on the size of meals or skip meals altogether.

According to the 2014 Poverty and Food Security in Dane County, Wisconsin report by Katherine J. Curtis, Judi Bartfeld, and Sarah Lessem, hunger and food insecurity lead to other problems.

“For children, these include poor health, and behavioral, learning, and academic problems,” the report said. “Impoverished adults often report choosing between medication, rent, heat, transportation, or food.  Food-insecure seniors are more than twice as likely to report bad health as food-secure seniors.”

In Dane County in 2016, 10.8 percent of all people and 13.9 percent of children were food insecure, according to Feeding America’s Map the Meal Gap.

The Henry J Kaiser Family Foundation, a non-profit organization focusing on national health issues, as well as the U.S. role in global health policy, highlights that the cheapest unsubsidized bronze health insurance plan in Wisconsin cost $434 per month, while its subsidized counterpart was $68 in 2018. The premium tax credit that lowers health care costs has requirements for people to be eligible, such as a household income at or up to four times above the federal poverty level. The amount that can be received decreases the higher the income level.

The bronze insurance plan must include coverage of 10 essential services that have been deemed essential, such as hospitalization and pediatric services. Health insurance companies also have the opportunity to include additional coverage. If a person finds themselves in need of services not covered they will need to pay out of pocket. This can incur higher healthcare costs for individuals or families in poverty and further set them back financially.   

“People who have money and good jobs have access for the most part to good health insurance,” Parisi said. “People living in poverty for the most part don't.”

The Benefits Cliff Can Scare People Away from Better Paying Jobs

People that live below the poverty threshold rely on social benefits to make ends meet, and healthcare and food stamps are areas where government subsidies help people get their basic needs covered.

People living in poverty can be deterred from taking a better paid job because this could mean they lose some of the benefits that they rely on. For example, FoodShare Wisconsin, the state’s version of the Supplemental Nutrition Assistance Program, requires that the maximum income before taxes for a single individual be no more than $24,980 per year. This amounts to making $12.01 per hour, which is above the state minimum wage of $7.25.

“We often call that the benefits cliff. So its when people would essentially fall off of being able to qualify for benefits, but we want people to make more money,” Ceponis said. “That's how they can increase their upward mobility, but if they fall off the benefits cliff, sometimes it's not worth it to make, it doesn't seem worth it to make more money, because they lose access to programming.”

Berger said that although people can lose their benefits that isn’t the case for all programs, but it is for some.

“Unfortunately, there are cases in which if you earn a little bit more you will lose your childcare benefits, or you'll lose a bigger percentage of your childcare benefit than the extra earnings are worth,” Berger said. “The earning income tax credit program is very good at that. So essentially there isn't a big drop off where all of a sudden you lose the whole benefit. The benefit slowly fades out over time.”

People are limited in many ways in their strive for upward mobility and improving their financial standing, and there are safety nets that are in place to help. However, there is more that needs to be done both at a government level, and at a local community level.

“Those basic necessities that so many people take for granted can be such a daily struggle for people living in poverty, and just trying to meet those needs at an individual basis makes it a challenge to get to a point where you can get on an economic ladder and situation to get out of poverty. Be it housing, be it healthcare, be it wages,” Parisi said.

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