Research by Author & Topic

Publications by Signe-Mary McKernan on Low Income Working Familes

The Census Bureau released its annual report on income, poverty, and health insurance coverage for the U.S. population on August 26, 2008. According to the report, median household income increased by 1.3 percent in 2007, while the overall poverty rate dipped slightly and the number and percentage of people without health insurance decreased. While the overall numbers were positive, not everyone shared in the economic gains. The number and percentage of children in poverty increased, and households in the lowest 40 percent of the income distribution had no significant income gains.

Low-wage jobs can be unstable, leaving families struggling to cope with employment gaps and financial emergencies that can strike without warning. About four in five low-income families are "asset poor," lacking enough liquid savings to live for three months at the federal poverty level without earnings. In this essay, McKernan and Ratcliffe suggest a cluster of policies that would improve financial markets and savings opportunities for low-income families across the life cycle.

Low-wage jobs can be unstable, leaving families struggling to cope with employment gaps and financial emergencies that can strike without warning. About four in five low-income families are "asset-poor," lacking enough liquid savings to live for three months at the federal poverty level without earnings. In this summary, McKernan and Ratcliffe suggest a cluster of policies that would improve financial markets and savings opportunities for low-income families across the life cycle.

This brief presents an empirical analysis of how asset tests affect families’ asset holdings. The findings suggest that more lenient asset tests and more generous IDA program rules can lead families to increase their asset holdings. Relaxed vehicle asset limits, for example, are associated with increased vehicle ownership. Since people often need a reliable car to get to work, this finding suggests that exempting at least one vehicle in all states may increase employment and job stability among low-income families. The findings also suggest that restrictions on withdrawals and incentives built into restricted asset accounts and IDA programs may provide families with motivation to build assets.

This report synthesizes current research and other available information on the assets and liabilities of low-income households into a variety of portraits. These data allow practitioners and researchers to begin to form a comprehensive representation of the balance sheets of low-income households and sets the stage for future research and policy discussion around the finances of low-income households.

This report examines the effects of a comprehensive set of 13 welfare, Food Stamp, individual development account (IDA), earned income tax credit (EITC), and minimum wage program rules on the asset holdings of low-education single mothers and families. This report finds empirical evidence that more lenient asset limits in means-tested programs and more generous IDA program rules may have positive effects on asset holdings of low-education single mothers and families.

Cash welfare and food stamps are means tested: assets and income must fall below set limits for families to qualify. While this ensures that benefits go to the neediest families, asset limits may also discourage asset building. This Opportunity and Ownership fact sheet examines allowance changes for restricted and unrestricted accounts at the federal and state level. It tracks the different allowances for IDAs, food stamps, and welfare programs from 1992 to 2003.

Signe-Mary McKernan and Caroline Ratcliffe, both senior research associates in the Urban Institute's Center on Labor, Human Services, and Population, study the intersection between welfare policy changes and poverty trends. Their recent report, The Effect of Specific Welfare Policies on Poverty, shows how some welfare policies boosted families' economic well-being-while others pushed mothers and children deeper into poverty.

This paper uses monthly SIPP data from 1988 through 2002 and monthly state-level policy data to measure the effects of specific policies on the deep poverty and poverty rates of ever-single mothers and children of ever-single mothers. The 19 specific policies included in the model are grounded in a conceptual framework. More lenient eligibility requirements for welfare receipt and more generous financial incentives to work generally reduce deep poverty, as hypothesized. Welfare time limits are hypothesized to have ambiguous effects on poverty and our results suggest that some stricter time limit policies may decrease deep poverty and poverty rates.

This study uses SIPP data to describe the employment characteristics of working food stamp recipients and estimate the effect of these employment characteristics on Food Stamp Program (FSP) participation. We find that work schedule (i.e., working traditional daytime versus non-traditional hours), number of jobs, number of hours worked, and number of employer changes are all significantly related to FSP participation. Our findings suggest that the cost of FSP participation may lead to reduced participation in the FSP and that federal and state efforts to reduce the cost of participating in FSP may increase FSP participation of low-income working households.