able diapers for children under age 2. They made no provision for other or miscellaneous expenses, thus excluding such BLS categories as reading materials, recreation, educational expenses, alcohol, and miscellaneous.

In the case of two-parent families with at least one wage earner, Renwick (1993a: Table 2, Appendix) made a further adjustment to the basic needs budget by deducting an estimated employer contribution to the health insurance premium. For a two-adult/two-child family in 1992, the resulting BNB (assuming the use of public transportation and weighted average housing costs) was $16,044, which was 113 percent of the official poverty threshold. For the same family with two adult earners (and hence higher work expenses and a need for child care), the resulting BNB was $21,132, or 149 percent of the official threshold.

Watts (1993) also proposed a categorical approach to the definition of poverty thresholds based largely on the work of Renwick and Bergmann. He concluded that the categorical approach is more feasible, understandable, and acceptable than either budgets with a large multiplier applied to only one or two categories or very detailed budgets.15 Watts' proposal differs from the Renwick and Bergmann approach in a number of ways. First, he recommended that actual work-related transportation expenses be deducted from family resources rather than accounted for in the budget. Second, he argued that adequate medical insurance should be assumed for people with coverage. For households that lack such coverage, the cost of a standard insurance package should be deducted from resources. Employee contributions to medical insurance should also be deducted from resources. That is, the budget itself should only allow for estimated out-of-pocket medical costs (other than premiums). Third, since child care is an expense of work, he recommended that it too be deducted from resources. Fourth, he proposed that a new look be taken at the BLS family budget standards for clothing and personal care.

To develop what he termed a ''modest proposal budget," Watts simply deducted the work and child care expense and medical insurance components from budget thresholds presented by Renwick (1993a). Implementing these calculations for 1992 produces a two-adult/two-child poverty threshold of $14,580, or 102 percent of the official threshold.

Watts' adaptation of the Renwick and Bergmann categorical budget approach has the advantage, in our judgement, of treating such expenses as child care that pertain to specific situations (namely, working) as deductions from family resources rather than as components of the budget. At the time Orshansky originally developed her thresholds, the treatment of such a category as child care expenses was largely not an issue because most families with

15  

Watts also found attractive the feature of the BNB approach that a budget is developed explicitly for each family type (in terms of the number of adults and children) rather than by applying a formal equivalence scale. We believe, however, that this feature is problematic, just as it is problematic for the official thresholds (see Chapter 3).



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