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Policies That Improve Family Income Matter for Children

Author: Nancy K. Cauthen
Publication Date: April 2002

This is an excerpt from the full brief.

With an unparalleled focus on employment, the 1996 federal welfare reforms changed the nature of cash assistance programs for low-income families. By the end of the decade, welfare caseloads had reached their lowest level since 1969. Prior to these changes, employment rates among single mothers had begun to rise, and the trend continued throughout the 1990s. At the same time, child poverty declined steadily, reaching its lowest level since 1979, and the percent of low-income children living in families with at least one working parent increased.

Although researchers disagree about the precise causes of these trends, the trends themselves have focused new attention on low-income families in the work force. Observers across the political spectrum have recognized that low-wage employment—even if full-time—may be insufficient to meet a family’s basic needs. This recognition has led to new thinking about the role of government policies in helping low-income working families move toward economic security.

This policy brief series focuses on state policy options that have the potential to improve children’s economic security by increasing family income. More specifically, the series examines policies that seek to increase family income by encouraging, supporting, and rewarding work. These include:

  • Earned income tax credits
  • Financial work incentives
  • Minimum wage standards
  • Unemployment insurance
  • Child care subsidies
  • Housing assistance
  • Public health insurance
  • Food stamps

The purpose of this series is to synthesize what is known from research about the effectiveness of each of these policies in increasing parental employment—either by increasing incentives to work or decreasing work disincentives—and increasing family income. Although income is only one component of family economic security, it is arguably the most basic. And research shows that income has critical implications for children’s development.

The series seeks to identify promising policy options for state-level policymakers and those who seek to influence them. Although some of the research examined focuses on federal policies—such as the federal Earned Income Tax Credit (EITC) and federal minimum wage standards—the findings have implications for state policies as well.

This introductory brief sets the stage for research syntheses on each of the eight policies listed above. The first section discusses how income fits into a broader concept of family economic security. It also addresses the role that public policies can play in helping families to achieve economic security. The second section summarizes research on the effects of family income on children’s development. This body of research strongly suggests that helping families to improve their incomes will benefit children.