What does it really take for Nebraska families to meet their children’s basic needs? The Family Bottom Line is a tool that measures how much a family needs to earn in order to pay all of their bills without assistance. This tool estimates market costs based on the number of adults, number of children, and ages of children for families living in all counties across the state of Nebraska. Compared to the Federal Poverty Level, the Family Bottom Line provides a much more realistic picture of what it takes to raise a family in Nebraska.
The Self-Sufficiency Standard was most recently calculated for Nebraska in 2010. The data provided in this tool is updated for inflation to 2018 dollars. A brief description of how the Self-Sufficiency Standard calculates the cost of housing, child care, food, transportation, health care, miscellaneous items, and taxes/taxes credits is found below.
For housing costs, the Standard uses the most recent Fair Market Rents (FMRs). These rates are calculated annually by the U.S. Department of Housing and Urban Development (HUD) for each state’s metropolitan and non-metropolitan areas to set levels of housing assistance. FMRs include utilities (except telephone and cable) and reflect the cost of housing that meets basic standards of decency. In most cases, FMRs are set at the 40th percentile, meaning that 40% of the housing in a given area is less expensive than the FMR.
Since HUD calculates only one set of FMRs for an entire metropolitan area, in multiple county metropolitan areas the Standard uses U. S. Census data on median gross rents by county to vary housing costs within metropolitan areas.
To calculate the cost of child care, the Standard assumes market-rate costs (defined as the 75th percentile) by facility type, age of children, and geographical location. Most states conduct or commission market-rate surveys biannually for setting child care assistance reimbursement rates.
The Standard assumes infants (children 0 to 2 years old) receive child care in family day care. Preschoolers (children 3 to 5 years old) are assumed to be in center care. Costs for schoolage children (6 to 12 years old) assume they receive part-time care before and after school.
The Standard uses the U.S. Department of Agriculture Low-Cost Food Plan for food costs. The Low-Cost Food Plan was designed to meet minimum nutritional standards using realistic assumptions about food preparation time and consumption. As a conservative estimate of food costs, the Low-Cost Food Plan does not allow for any take-out, fast-food, or restaurant meals.
To vary costs within states, geographic differences in food costs are calculated using the ACCRA Cost of Living Index, published by the Council for Community and Economic Research.
If there is an “adequate” public transportation system in a given area, the Standard assumes workers use public transportation to get to and from work. A public transportation system is considered “adequate” if it is used by 7% or more of the working population in a given county. The cost of public transportation is calculated based on the price of a monthly adult pass.
If the area lacks “adequate” public transportation, private transportation is assumed. Private transportation costs are based on the average cost of owning and operating a car. One car is assumed for households with one adult and two cars are assumed for households with two adults (as both are working, but presumably at different places and/or different hours). Costs are calculated assuming that the car(s) will be used to commute to and from work five days per week, plus one trip per week per household for shopping and errands.
In addition, one adult in each household with young children is assumed to have a slightly longer weekday trip to allow for “linking” trips to a day care site. For per-mile costs, driving cost data from the American Automobile Association is used. The local commuting distance is computed from the National Household Travel Survey.
The auto insurance premium is the average premium cost for a given state, calculated by the National Association of Insurance Commissioners. To create within state variation (regional or county) in auto insurance premiums, ratios are created using sample premiums for the automobile insurance companies with the largest market shares in the state.
To estimate the fixed costs of car ownership, the Standard uses Consumer Expenditure Survey amounts for families with incomes between the 20th and 40th percentile. The fixed costs include expenses such as fire, theft, property damage and liability insurance, license, registration, taxes, repairs, monthly payments, and finance charges. The monthly variable costs (e.g., gas, oil, tires, and maintenance) are also included, but the initial cost of purchasing a car is not.
The Standard assumes that an integral part of a Self-Sufficiency Wage is employer-sponsored health insurance for workers and their families. The average health care premiums paid by workers are from the national Medical Panel Survey (MEPS) and vary for single adults and for a family.
To vary premium costs by county or regions within each state, the Standard uses average premiums from the health care insurance companies with the largest market shares or with the widest coverage. Health care costs also include out-of-pocket costs calculated for adults and children by age, by region, obtained from the MEPS.
Miscellaneous expenses are calculated by taking 10% of all other costs. This expense category consists of all other essentials including clothing, shoes, paper products, diapers, nonprescription medicines, cleaning products, household items, personal hygiene items, and telephone service. It does not allow for recreation, entertainment, savings, or debt repayment.
TAXES AND TAX CREDITS
Taxes include federal and state income tax, payroll taxes (Social Security), and state and local sales taxes where applicable. Additionally, the Standard includes federal tax credits (the Earned Income Tax Credit, the Child and Dependent Care Tax Credit, and the Child Tax Credit) and applicable state tax credits.
Learn more about the Self Sufficiency Standard: http://selfsufficiencystandard.org/standard.html