Promoting Work Supports: Background, Issues, Opportunities June 17, 2005 Mark Greenberg Director of Policy Center for Law and Social Policy th St., NW, Suite 400 Washington, DC (202) ,

Employment Rates of Mothers With Children Under 6, 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 YearSome WorkFull-Year/Full-Time Source: Current Population Survey, Selected Years

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

Medical Hardships, By Household Income Relative to Federal Poverty Level 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 year1% $20,000-$30,000 per year10% $30,000-$40,000 per year22% $40,000- $50,000 per year20% More than $50,000 per year39% Not sure8% 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.