Promoting Work Supports:Background, Issues, Opportunities

June 17, 2005

Mark GreenbergDirector of Policy

Center for Law and Social Policy1015 15th St., NW, Suite 400

Washington, DC 20005(202) 906-8004, mgreenberg@clasp.org

www.clasp.org

Employment Rates of Mothers With Children Under 6, 1988-2004

35%

40%

45%

50%

55%

60%

65%

70%

MarriedSingle

Source: Estimates based on analysis of March 1988 to 2004 Current Population Survey (CPS) data.

Share of poor children with a working head of household or spouse

Year Some WorkFull-Year/Full-

Time

1989 58.0 22.4

1993 56.2 21.5

1995 61.3 25.5

2000 72.0 35.4

2003 66.5 30.0

Source: Current Population Survey, Selected Years

Non-Worker, 33.5%

Full-time part year,

18.7%

Part-time full year, 7.5%

Part-time part year,

10.4%

Full-time full year,

30.0%

Share of Poor Children With Working

Family Head or Spouse, 2003

Source: Congressional Research Service, Children in Poverty: Profile, Trends, and Issues, December 2004.

Food Insecurity, By Household Income Relative to Federal Poverty Level

12.6

19.5

7.65.4

1.7

32

0

5

10

15

20

25

30

35

Food Insecure Food Insecure with Hunger

Per

cen

t

Under 100%

100-200%

Over 200%

Source: US Department of Health and Human Services, Measures of Material Hardship, April 2004

Medical Hardships, By Household Income Relative to Federal Poverty Level

14.916.8

11.1

16

4.46.9

0

5

10

15

20

25

30

35

Needed to See Doctor/ Go toHospital but Did Not

Needed to See Dentist But DidNot

Pe

rce

nt

Under 100%

100-200%

Over 200%

Source: US Department of Health and Human Services, Measures of Material Hardship, April 2004

In your view, about how much per year does a person living in your area need to earn to support a family of four at a decent level?

Less than $15,000 -

$15,000-$20,000 per year 1%

$20,000-$30,000 per year 10%

$30,000-$40,000 per year 22%

$40,000- $50,000 per year 20%

More than $50,000 per year 39%

Not sure 8%

Corporate Voices for Working Families Survey, July-Aug 2004

In 2002:

– 24 million jobs (1/5 of all jobs) paid a median wage below $8.84/hour (generating earnings below $18,387, poverty level for family of four).

– 9.2 million working families (27.4% of all working families) earned less than 200% of poverty ($36,784 for a family of 4).

– 52% of working families with incomes below 200% of poverty spent more than a third of their income on housing (10% for working families with higher incomes);

– 37% of working families with incomes below 200% of poverty had a parent without health insurance (8% for families with higher incomes).

Working Hard, Falling Short

Source: The Working Poor Families Project, Working Hard, Falling Short, October 2004.

Work Supports, Labor Force Participation, Employment Retention

• Earned Income Tax Credit: strong evidence that EITC expansions played major role in employment growth for single parents in 1990s.

• Income Support: Experimental research finds providing cash supplements to low-earning working families:Raises employment rates; and Improves employment retention.

Work Supports, Labor Force Participation, Employment Retention

• Health Care: Having employer-provided health insurance

correlated with longer employment durations. Returns to welfare lower for those continuing to

receive Medicaid.

Child Care: Controlling for other factors, mothers of young

children who received help more likely to be employed after 2 and 3 years than those who didn’t;

3-state study of welfare recipients and leavers found those who received a subsidy were 25 to 43 percent less likely to end employment.

A Policy Agenda

• Help low-earning families get better jobs– Stronger job matching efforts– Education and training access– Advancement initiatives– Work with employers.

• Improve work support system for families in jobs that fall short of meeting family needs.

Improving the Work Support System

• What are the benefits?

• Who should be eligible?

• Are benefits available to those who are eligible?

• How can accessibility be enhanced?

• Do components work together as a system?

What benefits?

• EITC• Medicaid/SCHIP• Child Care• Food Stamps• TANF-funded supports?• Child Support• Housing• Transportation? Individual Development

Accounts? Education/training assistance? Unemployment Insurance? Paid Leave? Other?

Eligibility• For some, eligibility set by federal law:

– EITC– Food Stamps– Required Medicaid coverage.

• For others, substantial state flexibility:– Child Care– Medicaid options, SCHIP– TANF-funded supports.

• State flexibility may include:– income eligibility levels;– treatment of earnings, other income;– asset requirements, and whether to have asset limit;– family composition rules/treatment; – immigrant eligibility rules;– other eligibility conditions.

Availability

• Some work supports may have seemingly broad eligibility but restrictions on availability due to limited funds:– In 2004, 27 states reported waiting lists or

closed intake for child care assistance for working families with no recent TANF connection.

Accessibility

• May be limited by:– Lack of knowledge– Complexity of process of applying, establishing

eligibility, retaining eligibility– Stigma– Program rules/restrictions/funding.

• Strategies:– Outreach– Simplification– Multiple entry points– Employer engagement

A Working System?

• The issue:– Unless a benefit is universal, it must eventually phase

out.– If benefit phases out rapidly, result is high marginal

tax rate.– If multiple benefits are phasing out simultaneously,

result can be marginal tax rate exceeding 100%.– If benefits phase out slowly, costs may be higher.– If benefits start phasing out sooner, underlying goals

of providing the benefit could be defeated.

A Working System

• Strategies:– Universal programs– “Progressive universalism”– Analyze benefits together, identify and

developed sequenced phase-outs– Transition periods– Financial education that includes

understanding benefits consequences of earnings gains.