by Rose Larsen, Intern, Women’s Foundation of California
At the Women’s Foundation of California, we strive to advance equity and economic security for California’s women and families. But what exactly do we mean by “economic security”? Is it having enough money to put food on the table each night or does it mean being able to send your kids to college?
We find the Basic Economic Security Tables (BEST) Index, released by the Washington DC-based organization Wider Opportunities for Women (WOW), to be a very useful guide. The report seeks to define and measure—in dollars—economic security for American families.
Taking into account location (by county), family size and access to benefits such as healthcare and unemployment, the BEST Index lists budget items that are essential to a family’s wellbeing. These are items like housing, utilities and transportation. From that information, the BEST Index suggests a minimum hourly, monthly and yearly income that each working member of a family would need to earn in order to be financially stable and economically secure.
It is important to note that these minimum income requirements are generally significantly higher than the Federal Poverty Level (see bar graph). For one worker, for example, Federal Poverty Level is set at $10,830 per year, whereas, according to the Best Index, the minimum yearly earnings for a single worker should be at $30,012.
Part of the reason for this difference is that the BEST Index includes into its calculations—in addition to basic budget necessities such as food and housing—mandatory monthly savings for retirement and emergencies.
Only through savings, says WOW, can families achieve economic security in the medium- and long-term as well as pass on economic security to future generations.
“Economic security just isn’t possible without savings,” said Inger Brinck, the Director of Programs at the Women’s Foundation. “The last time I got a Social Security statement in the mail, it said that I could expect to receive 75 percent of what I’m actually entitled to by the time I retire,” said Inger. “For me, retirement is 30 years away. Workers who are younger than I am and who are even further from retirement can’t count on getting anything from Social Security.”
While WOW acknowledges that it is possible for families to survive on incomes below the recommended BEST Index number, without savings these families may not be able to make it through an emergency, like a job loss or health problem.
As a result, the BEST Index includes within the minimum needs of a family enough financial security to survive in the event of a crisis, effectively aiming to shift policy discussions from “survival” to “stability.”
We believe the BEST Index serves as a target for financial stability. “The index is a good wake-up call—we have to be thinking not just about jobs and incomes, but about the whole person,” said Inger.