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Below are perspectives and highlights from our new Low-Income Working Families series and other relevant UI papers: Low-income working families face hurdles despite working regularly. Many families with children work long hours but remain low income. Starting at about $9 an hour, it could take nearly a dozen years for these hourly employees to reach middle income. About three-quarters of low-wage earners have high school diplomas, but many have health problems themselves or a child in poor health. Although earnings increased greatly during the 1990s, when a robust economy produced jobs, labor markets slackened in early 2001 and recovered only modestly in 2004. It's important to better understand how families with children fared in the wake of this recession and sluggish recovery. A two-day roundtable held at Urban Institute in May 2005 set the groundwork for developing an agenda. The premise was that working families' needs cut across multiple spheres: jobs that pay enough so families can make ends meet; some flexibility to balance work and family obligations (for example, paid leave); insurance coverage against the risk of unemployment; affordable and safe housing; health insurance; and stable child care. For more information:
Over the past 10 years, U.S. child poverty rates took two sharp turns: a major reduction from 1993 to 2000 followed by a slight hike from 2000 to 2004. Both shifts have been more dramatic for black and Hispanic children. New research shows that economic conditions, together with parental education and work, are the dominant factors behind recent changes in child poverty. In January 2006, the Urban Institute and Child Trends co-sponsored a roundtable titled "Trends and Policies that Affect Low-Income Children: What are the Next Steps?" In particular, discussion centered on risk factors facing these children, parental work and child care quality, children in immigrant families, and the children living in especially vulnerable families. For more information:
Comparisons between families on welfare, families recently off welfare, and those never on welfare show different outcomes. For instance, we found that work among current recipients increased dramatically from 1997 to 2002. In contrast, work declined among recent leavers and non-welfare families over that period. Likewise, we see improvements in income for current welfare recipients but little change in income and poverty for the other groups. In examining the effects of specific welfare policies on poverty and deep poverty among women and children, evidence points to some alleviation of poverty with more lenient welfare eligibility rules and more generous financial work incentives. For more information:
Low-wage workers' retention and advancement prospects are thwarted by such problems as poor skills, low wages, child care difficulties, and limited access to better employers. Unfortunately, there are no "magic bullets" offering certain relief. Some interesting evidence on policies that work for low earners is now emerging. For instance, financial incentives and supports, if permanent, seem to generate more steady employment. Temp agencies can connect workers to higher-wage employers. Education and job training can succeed when they provide workers with credentials that employers value. Many agree that comprehensive efforts to encourage firms to create more jobs that offer higher wages and advancement opportunities would have a significant payoff. For more information:
Medicaid and the State Children's Health Insurance Program (SCHIP), food stamps, child care subsidies, and the earned income tax credit (EITC) form the core work-support system for America's low-income working families. Federal and state governments spent $131 billion on these programs in 2002, nearly 30 percent more than in 1996—mostly because health costs soared. Yet, many low-income families do not receive help from the programs aimed at making work pay and easing the cost of living. Only 7 percent of working poor families with children (income below 100 percent of the poverty level) receives all four work supports. Many more former welfare recipients receive the supports than those never on welfare, who may be less able to navigate the complex system. For more information:
Despite the critical role child care subsidies play in welfare-to-work efforts, little research has examined how sites have approached putting these services together for families. The Urban Institute engaged in a multi-year study to help fill the information gap. Many complex processes and policies are used by states and localities to ensure child care assistance is available for families moving from welfare to work. The child care subsidy and welfare-to-work programs represent two devolved systems that differ in their goals, target populations, administrative structures, and policy frameworks. Funding for child care subsidies has grown dramatically since welfare reform, but children experience a wide range of child care settings, of widely varying quality. Typically, states spend about 91 percent of state and federal funding on child care subsidies and about 9 percent on quality improvement. For more information:
Two primary wage-support policies help low-income families: the minimum wage and targeted tax credits. The minimum wage serves as a floor on earnings for most low-wage workers. The earned income tax credit (EITC) and child tax credit target benefits almost exclusively to families with children. Tax changes can also hurt low-income working families. States often raise taxes during a recession, for instance, and cut budgets for programs that assist them. Our research on state tax changes between 2002 and 2006 can help states refine their choices in the future. For more information: |