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Learning to Live with Little





Low-income families are not unmotivated. On the contrary, they are inventive, managing basic living expenses with few resources. What challenges do low-income families face and what internal and external supports keep them moving toward greater stability?
Many people believe that the dark days of 2008-2010 are finally behind us. The auto companies are profitable, employment is up, and the housing market is starting to rebound.
But there is an untold story in those numbers. It’s the story of the laid-off middle manager who has never recovered her previous income, the family that lost its home in the foreclosure crisis and fear a call from the landlord that rent is going up, and the working poor who are increasingly squeezed by rising gas and food prices.
We all know those people, whether we think we do or not. And despite the stereotype that people who need aid are lazy, unmotivated, or unwilling to work, the fact is that dealing with life as a low-income person requires creativity, resourcefulness, and effort at a level of which most people remain blissfully ignorant.
Wage Gap
Part of the problem, say advocates for low-income families, is that wages have remained stagnant while expenses have risen. The buying power of the minimum wage worker has dropped by $3 an hour since 1968, according to the Michigan League for Public Policy. The League issues a report every year on the Basic Needs Income Level – how much four different types of households would have to earn in order to meet basic monthly expenses.
This year’s report found that a single person with no children needs to earn at least $10.37 an hour, or $21,570 a year to meet their basic needs while a two-parent family with two children in child care would need to earn $12.58 per hour each, or $52,330 per year. Of course, many of the jobs in the economic recovery do not offer full-time hours or wages close to that level.
Gilda Jacobs, president and CEO of the Michigan League for Public Policy, says that legislators and the public need to change their perceptions of people who are struggling. “Our economy is starting to get better, but it’s not getting better for everybody,” she says. "This Legislature needs to start addressing the fact there are huge disparities and wage gaps in our state that they
really can help to try to close through policy changes. There has to be a will, but the will of the Legislature seems to be vilifying
Gilda Jacobs, president and CEO of the Michigan League for Public Policy, says that legislators and the public need to change their perceptions of people who are struggling. "Our economy is starting to get better, but itís not getting better for everybody," she says.
people who are low income.”
One policy change the MLPP recommends is restoring Michigan's Earned Income Tax Credit to its former level. The Earned Income Tax Credit is aimed at easing the tax burden on the working poor and is a refundable credit. In 2014, for example, a family with two married parents filing jointly and two children will get a $5,460 federal credit if they earned less than $49,186. When the Michigan Legislature passed sweeping changes to the tax code in 2011, it capped the maximum credit a person could earn on their state taxes at six percent of the federal Earned Income Tax Credit, down from 20 percent. In 2011, before the changes took effect, the average Michigan tax refund to low-income working families was $446; in 2012, after the changes, it was $138.  
Many families used that tax refund as a cushion against unexpected expenses, and for thousands of families it was the difference between living in poverty and being lifted out of it. “The EITC is one of the best anti-poverty tools for working families,” Jacobs says.
Jacobs says the MLPP would also like to see that the assets test for food assistance be removed, because some people have lost assistance due to the test, but still need it to keep their families fed. Assets can be something like a nicer car bought during sunnier economic times or a retirement account that remains untouched.
Similarly, improving the state’s public transportation system would help people get to work or school efficiently. "If we have people who have to take their kids to daycare and then go to work, they can be on a bus for hours,” she says. “We’re really talking about investments in people.”
Resiliency and Resources
Often, people who have never needed aid before don’t even know where to look or what they might be eligible for. Paula Wethington hears that story often in her work as a reporter for the Monroe Evening News. She started a blog called Monroe on a Budget back in 2007. It was drawn from her own experiences as a onetime single mother who was working full time in a professional, bachelor’s degree-required job and still could not make ends meet. Although this was a long time ago, she remembers clearly laying out her monthly expenses and realizing that she was still short a good bit of money every month, even with all expenses cut to the bone.
Her blog provides information to families who are caught in a cycle of always struggling to stay afloat. She’s lived that, as either she or her husband contended with periodic layoffs while raising her daughter, who is now a college student.
One of her aims with the blog is to take the shame out of struggling and give people practical tips. “I think when you’re in the middle of it, you really are very isolated,” she says. “I don’t think I would have started writing the blog when I was in the middle of our financial crisis.”
She has posts on everything from how to put on a First Communion party for your child when money is tight to how to apply for aid. One thing she emphasizes is the need to cut monthly expenses as much as possible, so when those big and ill-timed expenses occur, like a car or home repair, they don’t send families under.
For example, she wrote a post about using tax refunds to pay off car notes or pay down credit card bills instead of splurging on
Cooking skills also empower people to make healthier food choices for themselves and their families in the face of declining aid and rising food prices.
a vacation or a shopping spree. “In most families, financial emergencies can eat up one week's paycheck, and they can handle it, but when it’s repeated over and over that’s when they can get into trouble fast,” she says.
Stretching the Food Budget
Studies have indicated that Americans waste about 20 percent of the food they buy. For those on food assistance or who simply have trouble making ends meet, every dollar counts and knowing how to use everything that’s in the cupboard is crucial to getting through a month.
Gleaners Community Food Bank in Detroit runs a program called Cooking Matters, which shows people how to cook nutritious, tasty meals that have been costed out for a food stamp budget of $4.40 per person per day.
Cooking Matters involves a six-week nutrition education class, including a grocery store tour, helping people learn to stretch their food dollars and get the most nutrition for the least cost.
“We show them how to make a meal last for a week so a hunk of cheese doesn’t turn into an unidentified object in the fridge,” says Rochelle Bonelli, who oversees the program for Gleaners. The program has an exercise that challenges participants to buy food for breakfast, lunch and dinner for a family of four for one day, touching on all five food groups, for $10 or less. Most people can do it, but it points out the challenges inherent in shopping on a low-income budget.
Cooking Matters also teaches people basic, fresh-food cooking skills, giving them lessons from a professional chef who can show them how to hold a knife, cook things at the right temperature and combine flavors. It’s a skill many people never picked up growing up, but unprocessed ingredients tend to cost less than convenience foods and are healthier.
Cooking skills also empower people to make healthier food choices for themselves and their families in the face of declining aid and rising food prices. “I think it gives them hope,” Bonelli says. “Once they learn and are able to put it into practice, it is life changing for them.”
Financing Dreams
One often-overlooked aspect of financial need is that people who grew up poor often don’t have the financial planning skills people from more comfortable backgrounds picked up as a matter of course. When every dollar needs to be carefully managed, a lack of knowledge about how to avoid ruinous overdraft fees or credit card interest can keep families from getting ahead.
The United Way of Southeastern Michigan offers a Family Financial Empowerment program, which is a unique mix of financial planning education and life coaching that helps families learn to manage their money and to identify goals that they can work towards that will better their situation. “Sometimes the only way families will get it is by failing a lot and learning from those failures, but a lot of those failures can put them thousands of dollars in debt,” says Matthew Cunningham, program director for the Family Financial Empowerment site at the YMCA of Metropolitan Detroit, one of the local providers.
The Y recruits people for the program from their childcare centers, and families can earn a discount off their childcare bill for completing the program. “It’s where we see the greatest level of financial need, with families making between $7 and $10 an hour,” Cunningham says. “Without the DHS childcare subsidy and Y scholarships, there is no way they would be able to afford childcare.”
If families have to put their children in substandard childcare, that has the further effect of leaving children unprepared for school. It’s a cycle the Family Financial Empowerment program wants to break; instead, the program wants to move families to a place where they can believe they can do better. The life coaching aspect of the program talks them through goals and challenges the negative beliefs parents may have about their own capacity for success. “Where we see the greatest personal growth is an increase in confidence,” Cunningham says. “We are helping them to challenge those ideas.”
Because of the lingering effects of the recession, an oft-stagnated political climate, and rising prices for housing and food, low-income families struggle to get on a firm financial footing. But creative approaches – from the nonprofit community and on a personal basis – can make the difference between having a few dollars to spare at the end of the month or running out of funds too soon. When people have the skills to use all the food they buy, plan their finances, and prepare for the unexpected, it makes mere survival less of a struggle.
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