The 2006 Federal Poverty Guidelines released this week highlight the importance to low-wage workers of adjusting the minimum wage for inflation each year, according to analysts at the Oregon Center for Public Policy (OCPP). New poverty guidelines for 2006 were published in the Federal Register on Tuesday.
“As the cost of living rises, families need to earn more income to cover their basic needs,” said Chuck Sheketoff, executive director of the OCPP. “That’s why the poverty guidelines are adjusted each year to account for inflation. It is also why voters did the right thing in 2002 when they required the minimum wage to rise as the cost of living increases.”
Following the 2002 ballot measure, the value of Oregon’s minimum wage was increased in 2003 and each year since has been adjusted for inflation. On January 1, 2006, Oregon’s minimum wage rose from $7.25 to $7.50 an hour.
Despite the annual adjustment, a minimum wage worker in Oregon supporting a three-person family by working full-time, year-round in 2006 will not escape poverty. Such a worker will earn $15,600 in 2005, $1,000 less than the poverty line for a family of three.
The poverty guidelines, sometimes referred to as the “federal poverty level,” define who is officially considered “poor.” State and federal agencies use the guidelines to determine eligibility for a range of programs, such as National School Lunch Program, Legal Services, Food Stamps, and the Oregon Health Plan. The guidelines are not used for the state’s cash assistance welfare program, called Temporary Assistance to Needy Families (TANF), or for determining eligibility for the federal or state earned income tax credits.
The Federal Poverty Guidelines are based on the size of the family and are applicable to the 48 contiguous states and the District of Columbia; the federal government sets different guidelines for Alaska and Hawaii. “The poor” are families with incomes at or below the poverty guidelines. While the term is not officially defined, “low income” often means families with incomes at or below 200 percent (twice) the poverty guidelines.
The Oregon Center for Public Policy uses research and analysis to advance policies and practices that improve the economic and social opportunities of all Oregonians. The new study is available at www.www.ocpp.org.