A New Measure of Economic Vulnerability for Better Policymaking – Creating a Household Living Budget at the Census Tract Level Using Publicly Available Data

The importance of household budgets is hard to overstate, given their relevance for informing social issues such as minimum wage, targeted basic income, and measures of economic deprivation. The budget components must be relevant at small geographic levels to be effective. Previously, data of sufficient quality and geographic coverage to quantify adequacy standards were unavailable. Using publicly available data, it is now possible to construct budgets for different household combinations within census tracts. We define this Household Living Budget (HLB) as the income necessary to meet a household’s needs and function at a modest yet adequate standard of living. That is the minimum income needed to unlock opportunities and provide choices to participate in society. It is a benchmark against poverty. The budget components include housing, food, transportation, healthcare, childcare, broadband, and other necessities such as clothing, household supplies, personal care, nonprescription medicine, and school supplies, and federal and state income taxes. The HLB assumes the total cost of each need without government subsidies or nonprofit or informal assistance. Finally, using small area synthetic populations for households in Washington, DC, we demonstrate how component adequacy standards change for various household combinations as a percentage of the HLB and compare the living wage calculated using HLB to the Washington, DC minimum wage.