The proportion of structurally income-insufficient and economically insecure households is substantial. In fact, it is built in to the way the American economy works and is administered – the high proportion of the job structure that underpays and under-provides is a systemic feature of the economy. With political will, the most effective way to fix the problem of income insufficiency is a fairer distribution of income. An example of what works simplest and best is the child allowance during the first period of COVID-19. Government should make this kind of income supplement permanent.

Until we get a fair incomes policy at the federal level, a less optimal but workable approach covering only the the areas of energy and water is currently addressed by utilities, states (and provinces), and local governments by working out structures for income transfers (subsidies) directly. We can’t solve poverty and wider income insufficiency without a fair incomes policy. But we can achieve and maintain household energy and water sufficiency. We cannot solve the continual creation and reproduction of poverty without federal incomes support. But solving household energy and water affordability is quite possible.

Affordability solutions take the form of payment assistance and low-income rates. These are currently the main approaches to meet the utility needs of households with insufficient incomes. There are many program and rate designs within these two approaches. The programs work best for households in the upper poverty ranges. Programs that work well “on average” usually do not work well or do not work at all for households in the lower poverty income ranges (below 25% of poverty; below 50% of poverty; below 75% of poverty). They may appear to work if all analysis is based on averages, but many have hidden problems that simply do not make sense from the perspective of a low-income household that is trying to cover the “please pay” amount on the monthly utility bills (gas, water, electric). If you hear people saying how well these programs work, look more closely. They do often work wonderfully well if the household income is, for example 150% or 200% or 250% of poverty. Look at the low end (below 25% of poverty; below 50% of poverty) and you will see that they do not work well at all in these ranges. In the range of 0-75%, the programs start to work to some degree. In designing and evaluating these programs, analysis and reporting in the form of program averages leads to missing real problems. Instead, we use a Reichmuth Sector Map (see the Sector Map Methodolgy link on the “Verification” tab) that lets you see the whole distribution including behavior of bills and payments within each poverty range. In planning a new program or rate design, be sure not to start analysis with a range from 0-100% of poverty at the bottom – that wide a span, and working using averages will create more subsidy than needed at the top of the range and fail household in bottom of the range. And, to find the social reality of the problems, talk with the clients in the lower poverty ranges, or you will miss many of the real problems. The goal is that each “please pay” bill is comfortably affordable. If you cannot do that, then affordability has not been fully addressed, even though a design may work well for some households in the upper ranges of low-income or “on average”.