In this report, we use a microsimulation model to estimate the effects of a package of policies developed by the Community Advocates Public Policy Institute to encourage work and to reduce poverty. This report builds on previous work in this area and demonstrates the large antipoverty impact that a comprehensive package of policies can have.

Why This Matters

Policymakers have been grappling with ways to reduce the poverty rate for decades. For instance, during the COVID-19 pandemic, the government enacted cash assistance measures that research showed reduced poverty. This report analyzes a comprehensive package of several policies designed to work in concert to substantially reduce poverty. Additionally, many of the policies in this package encourage employment among people with low incomes, which is often an important consideration for policymakers when assessing antipoverty policies.

What We Found

In this report, we looked at a package made up of seven polices, which are outlined below:

• Create a transitional jobs program for unemployed and underemployed people
• Increase federal minimum wage to $13.75 an hour
• Expand the earned income tax credit
• Expand the child tax credit
• Create a child care purchasing accounts program to cover child care costs
• Increase Supplemental Security Income benefits and remove other program restrictions
• Increase Social Security benefits

We analyzed the effects the policy package if it had been enacted in 2018. We found the following:

• The overall poverty rate for the country would fall from 11.4 percent to 3.1 percent
• The poverty rate for children would fall from 11 percent to 2.3 percent
• The number of people employed would increase by over six million
• Government spending would increase by around $810 billion

How We Did It

To measure poverty, we use the supplemental poverty measure (SPM). This is a comprehensive measure of the total resources available to a family that considers more sources of income and costs than the traditional poverty measure. To analyze the policy package, we used a detailed microsimulation model based on data from the Current Population Survey. The model simulates all of the major individual tax and transfer programs in the United States. The model also corrects for underreporting of benefit receipt and captures interactions between different programs. Microsimulation allows researchers to estimate the effects of changes in different policies. Additionally, in the model we can change individuals’ employment and earnings, so that we can simulate the labor force effects of policies.