Promoting Work Supports: Background, Issues, Opportunities

1. Promoting Work Supports:Background, Issues, Opportunities June 17, 2005 Mark Greenberg Director of Policy Center for Law and Social Policy 1015 15th St., NW, Suite 400 Washington, DC 20005 (202) 906-8004, mgreenberg@clasp.org www.clasp.org

2. Employment Rates of Mothers With Children Under 6, 1988-2004 Source: Estimates based on analysis of March 1988 to 2004 Current Population Survey (CPS) data.

3. Share of poor children with a working head of household or spouse Source: Current Population Survey, Selected Years

4. Share of Poor Children With Working Family Head or Spouse, 2003 Source: Congressional Research Service, Children in Poverty: Profile, Trends, and Issues, December 2004.

5. Food Insecurity, By Household Income Relative to Federal Poverty Level Source: US Department of Health and Human Services, Measures of Material Hardship, April 2004

6. Medical Hardships, By Household Income Relative to Federal Poverty Level Source: US Department of Health and Human Services, Measures of Material Hardship, April 2004

7. 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? Corporate Voices for Working Families Survey, July-Aug 2004

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

9. 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.

10. 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.

11. 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.

12. 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?

13. 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?

14. 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.

15. 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.

16. 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

17. 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.

18. 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.