The annual State of the Union address is a grand event abundant with pomp and tradition. Along with all its political implications, it’s primarily a showcase of, and love letter to, public policy. President Biden used the occasion to lay out his vision for numerous policy proposals, including major investments in housing, changes to the tax code, and raising the minimum wage.

As attention turns beyond the speech and Congress begins to evaluate the president’s proposals, policymakers should be guided in their decisionmaking by evidence and research, not fear and fervor. Urban Institute research sheds light on three key issues President Biden raised in his address to the nation.

1. Housing affordability

   To address the housing affordability crisis, the president proposed major steps to increase supply. 
   
   “We’ve cut red tape so builders can get federally financing, which is already helping build a record 1.7 million new housing units nationwide. Now pass and build and renovate two million affordable homes, and bring rents down.”

   A recent Urban analysis underscores the need to address the mismatch between supply and demand. It asserts that the primary path to reduce the high cost of shelter is to build and restore millions more homes and apartments. But it isn’t enough to simply build without consideration. Data show the supply of homes under $200,000 fell 74.5 percent from 2019 to 2024, suggesting building and restoring affordable units—and pairing them with adequate subsidies—is especially critical for households with the lowest incomes.

   President Biden also affirmed, “I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down, to put toward their mortgage when they buy a first home or trade up for a little more space.”

   Urban analysis shows the tax credit could reduce the financial burden rising interest rates have had on buyers, especially for homebuyers with low incomes and homebuyers of color whose homeownership opportunities have been limited due to systematic barrier. Both these analyses find that these groups of borrowers experienced greater-than-average rates of mortgage origination during 2020 and 2021 while mortgage rates were at near-record lows. In fact, the Black and Latino homeownership rate grew faster than the white rate during those years. However, as rates began to increase in 2022 and beyond, mortgage origination rates fell for these borrowers. For example, borrowers earning less than 80 percent of the area median income experienced a 22 percent decline in mortgage originations between 2021 and 2022. 

   The research shows that lower interest rates, or a tax credit with a similar impact, could boost homeownership for these groups who continue to face long-entrenched institutional barriers to the financial security and intergenerational wealth that accompany homeownership.

2. Child poverty

   President Biden called on Congress to restore the expanded child tax credit (CTC) he originally signed as part of the American Rescue Plan Act.

   “In fact, the child tax credit I passed during the pandemic cut taxes for millions of working families and cut child poverty in half. Restore that child tax credit. No child should go hungry in this country.”

   In a recent Urban report, Urban researchers highlighted the scale of the hardship families are facing without the expanded CTC, which currently excludes more than 19 million children from receiving the full benefit. They found that working-age adults with children were more likely than adults without children to face difficulty meeting basic needs in 2022, despite having higher family employment rates. For instance, 27 percent of adults living with children younger than 6 reported household food insecurity, compared with 23 percent of adults who were not living with children.

   Another recent study found an expanded CTC wouldn’t just yield short-term benefits, it would increase children’s lifetime earnings. If the expanded CTC were made permanent, all children from families with low incomes who received the CTC growing up would earn between 7 and 12 percent more annually by the time they are 30 years old. The annual earnings increase would be even greater among Black and Latino children.

3. Wage stagnation

   Although wages have been rising steadily across the country over the past few years, the federal minimum wage has been stagnant now for a decade and a half, and a full-time worker at the current rate would earn total wages under the federal poverty level. President Biden called on Congress to address the issue.

   “Raise the federal minimum wage because every worker has a right to a decent living, more than seven bucks an hour!”

   Urban researchers show the effects raising the federal minimum wage to $15 an hour would have on income, employment levels, and poverty measures. In a simulated scenario where the rising wage does not result in any job displacement, the research found average earnings for families with affected workers would rise by $5,600, and the overall poverty rate, as measured by the Supplemental Poverty Measure, would fall by 2.4 percentage points. In a different simulation where some workers would lose their jobs because of an increase in the minimum wage, the analysis found that about 3.2 million workers could lose work for at least part of the year, but average earnings would increase by $5,000, and poverty would fall by 2.1 percentage points, with 6.9 million people being lifted out of poverty.

Looking ahead

As Congress debates future legislation, rest assured that Urban researchers have even more to say on the president’s proposals, including key federal actions for violence prevention, the ways access to legal abortion improves woman’s lives, the importance of the Affordable Care Act. Even during an election year, where thoughtful analysis and contextualized data often take a backseat to rhetoric and anecdote, there should always be attention paid to the impact and potential of evidence-based public policy to meaningfully improve people’s lives.