Income-to-needs ratios using poverty level income guidelines. Income-to-needs ratios, based on a denominator of poverty level income guidelines, reflect the lowest standard for the amount of income needed for a family to survive at the minimum subsistence level of consumption. For 1999, the poverty level guidelines indicated that the minimum subsistence level of consumption for a household of one was $8,240, a household of two was $11,240, a household of three $13,880, four $16,700, five $19,520, six $22,340, seven $25,160, eight $27,980, and an additional $2,820 was added for each additional person (Federal Register, March 18, 1999).
Experts have suggested that poverty level income guidelines underestimate the income needed for a minimum level of consumption in the United States (Bernstein, Brocht, & Spade-Aguilar, 2000). The poverty level guidelines have received a significant amount of criticism, and alternative measures have been suggested but not implemented (Citro & Michael, 1995). Poverty level income-to-needs ratios have continued to be the standard of choice used by most researchers when comparing pre-divorce to post-divorce levels of living (Braver, 1999).
Perhaps the popularity of income-to-needs ratios is due to wide acceptance of the poverty guidelines for program qualifications for school lunch, food stamps, and many other federal programs. However, federal programs now use 125% to 130% of poverty income guidelines as the amount to qualify applicants for several programs (Citro & Michael, 1997). Calculations of poverty level income-to-needs ratios Income-to-needs ratios based on poverty level guidelines were calculated by dividing gross household income by poverty level income for the household size (Federal Register, March 18, 1999).
An income-to-needs ratio of less than one indicates that the household is living below poverty level income. A ratio of one indicated that the household was just meeting poverty level income needs, and a ratio of more than one indicated that the household was living above poverty level income. Income equivalence was calculated by comparing income-to-needs ratios for the two post-divorce households. If the ratios were equal, then the households were estimated to have equivalent levels of consumption.
Income-to-needs ratios based on poverty level guidelines were calculated for each case, based on six strategies for allocating income at the time of divorce: The actual decisions made by the Minnesota courts in 1999, and five strategies for dissolving economic partnerships at marriage. The five strategies included: Maricopa (Ellman, 1999); Kansas formula (Thompson, 2001); Singer (Singer, 1989); Premarital Security Agreements (PSA) (Ertman, 1998); and the Income Sharing formula (Rutheford, 1990).
The unit of analysis was the divorce case, which had two households at the date of the final decree. Six income-to-needs ratios were determined, for both the female-heade and male-headed households, for a total of 12 income-to-needs ratios, based on the six specified calculations. The alternative strategies listed above were selected to represent varying criteria for dissolving the martial economic partnership. It was the researcher’s intention to select strategies/formulas that were currently used as guidelines, as well as some that were theoretical proposals.
It was necessary to select strategies that used gross, rather than net income in order to keep the measures consistent and to make comparisons among strategies most accurate. Income-to-needs ratios for the actual court order were calculated by subtracting any child support or spousal maintenance amounts ordered in the 1999 Minnesota final decrees, and adding it to the other household’s post-divorce total gross income. Each household’s post-divorce total gross income was divided by the appropriate poverty level income guideline, based on the households size.