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Making Work Supports Work
A Picture of Low-wage Workers in America

Author: Jessica Purmort
Publication Date: January 2010

This is an excerpt from the full report

Summary

Many full-time workers in the United States are unable to make ends meet. Government “work support” policies – benefit programs such as earned income tax credits, public health insurance, child care assistance, and SNAP/food stamps – can help some families close the gap between low earnings and the high cost of basic expenses. While federal government guidelines provide a framework for work support policies in the United States, there is wide variation in how these policies are implemented across states. This report analyzes the effectiveness of these policies. Findings from this report show that the current patchwork of state policies fails to ensure that workers are able to afford their families’ basic living expenses, leaving a number of low-wage workers and their families without adequate support. A greater federal investment is needed to create a comprehensive work support system that is designed to encourage and reward employment as well as provide workers with enough resources to care for their families. Federal priorities should include addressing the high cost of basic needs with an increased investment in affordable child care, subsidized health insurance, and housing assistance as well as structuring the work support system to better support workers’ advancement toward financial self-sufficiency.

Introduction

The American Dream has grown increasingly out of reach for many of our nation’s families. A growing number of workers in the United States are employed in low-wage jobs without adequate pay and benefits. In addition to insufficient wages and lack of benefits, rising household costs threaten families’ bottom lines. Basic living expenses, including housing, medical care, and child care, have increased substantially in recent years. The result is a widening gap between family income and expenses that affects a large number of low-income parents and their children. Previous analysis by the National Center for Children in Poverty (NCCP) has found that parents across the United States need earnings well above the federal poverty level ($18,310 a year for a family of three in 2009) to cover their family’s basic living necessities. Data from 2008 show that 41 percent of America’s children live in low-income families with income below twice the federal poverty rate. With the current economic crisis, the number of families struggling to make ends meet is only increasing.

Government “work support” programs – such as earned income tax credits, child care assistance, public health insurance coverage, and housing assistance – can help low- and moderate-income workers close this gap between earnings and basic living necessities. By providing additional resources and subsidizing the cost of living, these work support benefits can make a tremendous difference in families’ lives. However, the current work support system falls short of adequately addressing the gap between families’ income and expenses. Results from extensive state-level analyses conducted through the Making Work Supports Work project demonstrate that within the current system, many parents cannot get ahead simply by earning more.

Using results from two policy analysis tools developed through the Making Work Supports Work project – the Basic Needs Budget Calculator and the Family Resource Simulator (see box) – this report illustrates the importance of work support benefits in low-income families’ lives and the need for federal work support reform to better meet the needs of America’s low-income working families. Examples in this report are drawn from cities and counties in more than a dozen states across the country. Most examples are based on single-parent families with two children because a majority of low-income and poor children live in single-parent families. Currently, 52 percent of low-income children and 64 percent of poor children live in singleparent families. However, many of the findings in this report can be applicable to other types of families. Results for additional states and localities as well as other family types are available through the data tools located on NCCP’s website.

Tools for Policy Analysis

NCCP’s Family Resource Simulator is an innovative, web-based tool that calculates the impact of federal and state work supports on the budgets of low- to moderate-income families. The Simulator illustrates the effectiveness of current policies that reward and encourage work. NCCP also uses this tool to model potential policy reforms. Family Resource Simulators are available for 21 states, with more than 100 localities. See www.nccp.org/tools/frs.

The Basic Needs Budget Calculator is a related tool that shows how much a family needs to make ends meet without the help of work supports. Users can select different household scenarios, and the Calculator adjusts the family’s tax liability and budget. Budgets are provided for nearly 100 localities across 14 states. See www.nccp.org/tools/budget.