Hopes for TANF Work-Related Provisions That Work for Poor Families

August 29, 2016

The 20th anniversary of Temporary Assistance for Needy Families has occasioned more than the usual bashings, as my own bashing post noted. We’ve had a spate of proposals for reform — and not only from progressives.

I see a glimmer of hope for TANF, assuming, as I think we must, that the time isn’t ripe for ending welfare reform as we know it. The glimmer is what seems an emerging consensus on some of the program’s major flaws and fixes — not unanimity, mind you, but we don’t need that.

One big exception here, which I’ll return to. But here’s the first part of an overview of what might bring enough Democrats and Republicans together to pass long-overdue changes in the law.

I’ll focus on what everyone, left to right, views as a core TANF purpose — moving families from welfare to gainful work — and on what’s already percolating in Congress.

We now have not only the House committee draft I earlier blogged on, but a bipartisan bill recently introduced in the Senate. No votes on either this year, of course, but blueprints perhaps for the next Congress.

Broader Work Preparation Options

The law and related federal rules have created a very complex work activity system. Basically, states must have a certain percent of parents participating in work activities for a certain number of hours per week — an average of 30 for most single parents, for example.

But not all activities that might prepare a parent for work count. And only nine of the dozen that do can count for all the required hours. The other three can count for only a third of them in any given month.

You can see, I think, what a bookkeeping burden this is for caseworkers. And it’s actually worse because one of two different minimum hours per week apply when both parents live together.

Both the draft House bill and the Senate bill would eliminate the distinction between core, i.e., fully-countable, and non-core activities.

This wouldn’t only relieve caseworkers to focus on working with families. It would effectively enable parents to focus on activities that surely can prepare them for gainful work — job skills training, for example, and postsecondary education.

The current law hamstrings states in another way. They can count participation in a vocational education program for only twelve months — a very short time for gaining in-demand skills.

Still another limit prevents states from assigning as many parents as might benefit to these programs. They can count no more than 30% toward their required work participation rate. But they’ve also got to count teen parents in high school or a GED program.

For teens, that’s a core activity. Not so for older parents whose job prospects are equally dismal because they lack a diploma or the equivalent.

Both the House draft and the Senate bill would lift both the age cap and the WPR cap on participation in a vocational or postsecondary education program. They’d also extend the time limit for the latter, though not equally.

The bills also loosen up two further limits — one for parents by no means ready for training, the other for those ready to work.

The current law allows states to count only six weeks a year — and only four at a time — for “job readiness assistance.” This is a catchall term for services to help parents overcome certain high barriers to work, e.g., drug or alcohol addiction, a mental health problem.

Needless to say (I hope), a month is hardly enough time for anyone so disabled to start engaging in regular work activities for at least 20 hours a week.

But the WPR is all-or-nothing. No partial credit for fewer hours — either for these parents or for others who may miss too many for all sorts of reasons, e.g., a child too sick to go to school, an auto accident. Both the House draft and the Senate bill would let states take partial credits.

The law applies the same countable limit to job searches, except when a state’s unemployment rate is much higher than the nationwide rate or it qualifies as “needy,” based on its SNAP caseload.

This limit doesn’t make good sense either. Some parents, after all, just need some financial support while they look for another job or a job they’re now qualified for because of the education and/or training they’ve received.

Why then constrain states to put them into something else (and pay for it)? Why make it even harder for job-ready parents to move to work?

End to One Perverse Incentive

States, as I said, face a penalty when they don’t meet their WPR targets. This, in itself, gives them an incentive to limit enrollment to families headed by parents who seem likely to consistently put in their required hours on activities that count.

But they’ve got another incentive to get families out of their programs — and keep other needy families out. They can get a credit against their potential penalty by reducing their caseload. And they’ve responded accordingly.

Some have imposed lengthy pre-enrollment job searches or other work activities, for example. Some require humiliating drug tests. Many offer parents a relatively small lump sum instead of ongoing TANF benefits.

Virtually all states and the District of Columbia cut off benefits when parents don’t comply with their work activity requirements — in some cases even when they do, a report from Legal Momentum suggests. Full-family sanctions, as they called, eliminate the punished parents (and their children) from the caseload.

More generally, the caseload reduction credit is one, though not the only feature in the current law that encourages states to get parents into jobs as swiftly as possible — even if they’ll get paid a pittance, even if they’re likely to be jobless again soon. What we know suggests either or both are common.

Both the House draft and the Senate bill would do away with the caseload reduction credit. States that fail to meet their WPR targets would instead have to increase their own spending.

Only the Senate bill, however, requires them to invest their additional funds in what it, hearkening to many experts, defines as “core activities” — cash assistance, work-related programs and child care. We know what would happen otherwise.

Those of you still with me can see that the law gives states far too much flexibility in some ways and not enough in others. In both respects, it undermines at least one of the law’s express purposes.

More about needed changes to follow.

 


One Thumb Up for Washington Post Piece on TANF Benefits Cut-Offs

August 24, 2016

The Washington Post celebrated the 20th anniversary of Temporary Assistance for Needy Families with a well-meaning, but disappointing article on District of Columbia families who may soon lose what remains of their benefits.

It’s well-meaning because it focuses on what will happen unless the DC Council passes a bill to extend benefits for at least some of them. And it includes some potent warnings about costs the District will incur if it cuts off their cash assistance, thinking to save money.

But it doesn’t make the best case it could have for the extensions the Council is considering. And it leaves out an important piece of the cost issue.

First off, the TANF mom it chooses to focus on isn’t “the typical District welfare client,” as it claims. She and her partner live in a subsidized apartment. So her family’s receiving far more in safety net benefits than most who’ll lose what they get from TANF.

We don’t know how many TANF families are living with accommodating friends or relatives because they don’t have subsidized housing. But we do know that TANF was recently the most common source of reported income for homeless families the District counted, i.e., those in shelters or limited-term transitional housing.

More importantly, the profiled mother has worked in a series of jobs and has a certificate in emergency medicine technology. She says the couldn’t keep working because she couldn’t afford child care for the toddler she then had.

But if I understand correctly, she could have a childcare subsidy now — and for at least awhile longer if she found a new job. Both her work history and the unpaid work she’s doing now to comply with her TANF work activity requirement strongly suggest she could.

Many TANF parents have what are commonly referred to as severe barriers to work. We don’t have current public information on those who’ve exceeded — or will soon exceed — the rigid time limit the District imposes.

But a study of the caseload before the District set the time limit identified a range of barriers — some not swiftly (if ever) overcome, e.g., physical and mental health problems. At least one — learning disabilities — will last until the affected parents’ children are too old for the families to qualify for TANF.

Others, as I remarked before, could prove temporary if the parents have more time and the opportunities they need — a chance to complete high school or a GED program, for example, or to keep looking for a job so they won’t have to divert their energies and perhaps endanger their health the way some adults in extreme poverty must.

These are among the “hardship” cases that would gain extensions of their TANF benefits under the bill awaiting Council action — and, I should add, a formal response from the Bowser administration.

By far and away the largest number of District residents who’ll suffer extraordinary hardships if they lose their benefits have a work barrier they can’t possibly surmount in the near term because they’re children.

Plunging them into the deepest depths of poverty will put them at high risk of lasting mental and/or physical health damages.  So they’re like to have severe barriers when they’re old enough to work.

There’s a reason to refer to the potentially reprieved parents and children as hardship cases — one the Post article fails to mention.

The District could extend benefits for a fifth of its total caseload, based on a combination of domestic violence and “hardship,” however it defines that, and still use its federal funds for the families’ benefits. Benefits here include not only the cash assistance the article focuses on, but all the work-related services the program provides.

Any discussion of the cost of extensions should include this significant fact, as well as the costs of sweeping all the time-limited families out of TANF. Roughly 5,800 of them, including nearly 10,400 children will get swept out in October unless the Council and Mayor agree to reprieve at least some of them.*

But more families will reach the time limit every month unless and until the District adopts an extensions policy, as virtually every state already has. The cumulative impact is something else I’d like to have seen mentioned.

Ah well, that’s what blogs are for.

* These are figures the Department of Human Service recently provided, not to me or for public consumption. They are substantially lower than figures the department has reported earlier, for reasons as yet undetermined.

 

 


TANF Turns 20, Still Failing Poor Families

August 18, 2016

Next Monday is the 20th anniversary of Temporary Assistance for Needy Families. The celebration, if we should call it that, has already featured more than the customary annual bashing. And I plan more than that too.

But I do think it’s worth a fresh look at how poorly poor families with children have fared since TANF replaced welfare as we knew it — and why it’s done so little to help enrolled parents move on to steady, decent-paying work.

These two are closely related, of course. And the evidence for both dates back to some time around TANF’s fifth anniversary, when parents with minimal marketable skills and little or no work experience could no longer get jobs because the very tight labor market loosened up.

Yet some leading Republican policymakers seem invincibly ignorant, as Catholic theology terms it, or willfully so, since they’re still proposing safety net program overhauls based on the TANF model.

A summary then of where things stand now — not for them, but for you who might advocate for a better TANF program, both nationwide and in your state (or would-be state if you live in the District of Columbia).

Fewer Poor Families Aided

The Center on Budget and Policy Priorities — my main source here, as often for TANF data — shows what’s happened to poor families and their children in several different ways.

We see, for example, that TANF served only a third as many families in 2014 as the program it replaced did in its last year.

We’re reminded that TANF enrollment barely grew during the Great Recession, while SNAP (the food stamp program) responded well to the large increase in households without the income jobs had provided.

Families With Benefits Still in Deep Poverty

CBPP also updates figures on cash assistance — basically, still shrinking as a percent of the federal poverty line, though some states and the District have increased benefits.

The maximum for a three-person family leaves it in deep poverty, i.e., below half the FPL, no matter where it lives.

Adjusting for inflation — and thus purchasing power — benefits have shrunk in all but three states. They’ve lost more than 30% of their value in nearly half.

These figures, recall, are based on the maximum a three-person family can receive. Very poor families may receive less because the parents — and necessarily their children — have been punished with benefits cuts.

The District has made three across-the-board cuts for families that have participated in TANF for 60 months or more. A three-person family up against the rigid time limit now receives $154 a month — 9% of the FPL.

Little Spent to Move Families From Welfare to Work

The assumption behind CBPP’s analyses (and others) is that TANF is supposed to reduce poverty among families with children. That’s not among the purposes the law specifies, however much it should.

But it does name reducing dependency. This means, among other things, enabling parents to get jobs that pay at least enough to push their families over the income eligibility threshold for their state’s TANF program.

The law requires states to have a set percent of parents engaged in “countable” work-related activities for a set number of hours each month. But states can spend whatever they choose on programs and services to prepare parents for work and help them find it.

They, by and large, choose to spend very little — on average, 6.5% of their block grant share, plus the funds they must spend to get it. This is even less than what they spent the year before.

They spent, on average, an additional 16.9% on subsidized child care — obviously a necessity for most parents who must participate in programs to ready them for gainful work.

But those childcare funds may not have benefited only TANF families, current or former. States may transfer up to 30% of their TANF funds to the Child Care and Development Block Grant.

They may use that block grant’s funds, plus (again) what they must spend to get them to subsidize child care for families with incomes up to 85% of the median for all families of the same size.

Needless to say (I trust), that’s a whole lot more income than any TANF family can have. Probably more than most who’ve moved into the workforce too.

A Lot Spent to Shore Up Other Programs

Child care is only one — and not the best — example of how states have used the flexibility TANF law gives them to fund programs and services that don’t help only poor families.

In 2015, states, on average, spent more than half their block grant, plus their own required share on things other than cash benefits, work activities and child care.

An average of 8.1% went for refunds from states’ own Earned Income Tax Credits — arguably a legitimate anti-poverty expenditure. But about a third shored up programs that have nothing to do with work or help for parents who don’t have it.

In some cases, CBPP says, they’ve used their TANF funds to replace what they’d previously spent — or would have had to spend — for programs that may benefit poor families, but not them exclusively, e.g., child welfare services, pre-K.

Much More to This Story

This post, simple as it seems, was hard for me to write because the simple kept getting swamped in exceptions, explanations, etc.

On the one hand, the summary figures obscure wide variations among states. You can see some of them in the CBPP analyses I’ve linked to and in this core-purpose spending map from HHS.

On the other hand — and what you can’t see — is that the federal law gives states more perverse incentives to cut their caseloads than the flexibility to use TANF as a slush fund, e.g., a way to avoid penalties for not meeting their work activity targets.

At the same time, it effectively deters them from letting parents pursue a work activity that would lift a goodly number of families out of poverty — participation in a postsecondary education program for long enough to get a degree or specialized certificate.

And, as I’ve written, who knows how often, Congress has put the squeeze on all states by funding the block grant at the same dollar level for what’s now 20 years. It’s now lost a third of its real-dollar value.

In short, it’s well past time to reform welfare reform. Perhaps we’ll have something real to celebrate next year.

 


Safety Net Programs Lift Many Thousands of DC Residents Out of Poverty

August 4, 2016

I’ve recently blogged on several pieces of the safety net — in all cases, what they do and/or could do for low-income people nationwide. The Center on Budget and Policy Priorities drills down to state-level anti-poverty effects for six major federal programs.

Here’s what we learn for the District of Columbia, plus a bonus on the presumptive health effects of two related programs that the federal measure the Center adapts doesn’t count as part of household income.

The federal programs, plus what the District funds lift roughly 82,000 residents over the poverty line each year. Without them, nearly a third would fall below it, as would an eye-popping 47% of children.

Social Security reportedly accounts for an estimated 32,000 fewer poor residents — and a nearly 24% drop in the senior poverty rate.

This probably understates the program’s anti-poverty impacts because it doesn’t capture the number of children who don’t themselves receive Social Security benefits, but live in households where at least one other member does.

The report I recently summarized includes them. If its findings apply in the District, the total number of residents lifted out of poverty would increase by roughly 17%.

The Census Bureau’s better poverty measure consistently shows that Social Security lifts more people out of poverty than any safety net program. The Center, however, finds that housing assistance has a greater anti-poverty impact in the District.*

An estimated 43,000 more residents would count as poor without it, the fact sheet says. A random check of state fact sheets suggests that housing assistance has a far greater relative impact here.

Much as we want more local funds committed to housing for poor and near-poor residents, we can, I think, credit the District’s own housing voucher program for at least part of the difference — not only from individual states, but nationwide.

SNAP (the food stamp program) has the next largest anti-poverty impact in the District. It lifts an estimated 28,000 residents over the poverty line — and benefits roughly five times as many.

Here too, we can partly credit local policies. The District, for example, has opted for broad-based categorical eligibility, which makes more people potentially eligible. It’s also eliminated the cap on assets like money in the bank.

And it boosted Low Income Heating and Energy Assistance benefits when Congress raised the minimum required for a standard deduction from gross income, thus protecting some residents from benefits cuts.

Moving down the list, we learn that Supplemental Security Income lifts an estimated 17,000 residents over the poverty line. They’re all very low-income seniors and younger people with severe disabilities.

But SSI alone wouldn’t lift even a single person over the poverty line. The maximum benefit this year, like last totals $8,796 — $3,084 less than the applicable poverty line.

Last and (to me) surprisingly least, the refundable Earned Income Tax Credit and Child Tax Credit lift an estimated 14,000 District residents out of poverty. The former almost surely has the greater impact, for reasons I’ve recently explained.

And its impact may be greater than the figure that enters into the Center’s total because the source it pulls from apparently includes only the federal EITC. The District, like 22 states supplements that with its own refundable version.

You’ll note that the Center’s analysis omits a well-known safety net program. Good reason fro that. Cash benefits from Temporary Assistance for Needy Families wouldn’t lift any participant over the poverty line.

The District, which recently increased its TANF benefits, will soon provide a three-person family with a maximum of $504 per month — or 30% of the applicable poverty line.

I’m stressing, as I often do, the over-limited cash and near-cash assistance our major safety net programs provide. But we’ve got two brighter spots in the picture.

One is the bonus I mentioned. That’s the health insurance the District provides through Medicaid and the Children’s Health Insurance Program, which it’s converted to part of its Medicaid expansion.

Medicaid or CHIP cover an estimated 270,000 District residents, including roughly 58,000 children. That’s slightly over half of all under-18 year olds.

What’s missing here are the low-income residents covered, though with fewer benefits by the DC Healthcare Alliance, a program funded solely by the District.

Alliance participants are mostly undocumented immigrants now, plus some who’ve got the paperwork, but haven’t lived in the country long enough to qualify for Medicaid. Including them would add roughly 14,500 to the total in the healthcare safety net.

The second bright spot is that the safety net programs do more than relieve specific hardships — hunger, for example, and homelessness. They provide a modicum of the stability that everyone needs to focus their minds and energies on gainful work, job searches, training or education.

At the same time, they give children a better start in life. Kids in families with benefits do better in school. They’re more likely to go on to college, some studies show, and for this and others reasons are less likely to join the ranks of poor adults.

Research and advocacy organizations have made this case for a long time. What’s new, to my knowledge, are the state-specific figures that provide a basis for defending Social Security and our major safety-net programs as demonstrably effective anti-poverty measures.

The Center didn’t crunch all those numbers now just because it’s got the expert staff to do it. “We’re in the midst of big policy debates,” as a letter I got from its president says. He’s referring to the upcoming elections — for state-level offices, as well as national.

I’ll resist the temptation to elaborate. Will just note what the Center’s fact sheets drive home. There’s a lot at stake for poor and near-poor people in America this November. Some very progressive folks would do well to consider them.

* The fact sheet says that Social Security lifts more District residents above the poverty line than any other program. This is boilerplate that apparently escaped the editor’s eye.

 

 

 


Lots of Progressive Ideas for Strengthening Working Family Tax Credits

July 28, 2016

The Child Tax Credit today is a more effective anti-poverty measure than it was before the Recovery Act made more parents eligible to claim it. But it’s still got limits that make it less effective than it could be, even given the practical constraints of public policy reforms.

My last post summarized the limits and a pair of Republican proposals for boosting the credit. Here, as promised, are proposals from more progressive quarters, plus a couple that go at child-raising costs through a different tax credit.

The Democratic party platform supports expanding the CTC, either by making more of it refundable or by indexing it so that it won’t continue losing real-dollar value. The latter presumably refers to the maximum parents can claim — frozen at $1,000 per child since 2001 and thus worth about a third less.

Democrats in Congress have proposed more ambitious reforms. Colorado Senator Michael Bennett introduced a bill last year that’s, to my knowledge, the most ambitious.

It would eliminate the $3,000 earned income threshold for claiming the credit and index the credit to inflation, making it, in both respects, like the Earned Income Tax Credit. It would also triple the value of the credit for children under six.

These reforms borrow from recommendations by the Center for American Progress. CAP, however, would restrict the more ample credit to children under three and boost it less.

The boost,  it says, will help families “when their needs are greatest.” A two-pronged rationale for this. First, parents are in the early stages of their careers and perhaps saddled with student loan debt.

Second, they’re suddenly faced with substantial new expenses, e.g., diapers, cribs, car seats. Perhaps also, though unmentioned, with the inordinately high cost of childcare for infants and toddlers — on average, $11,666 a year nationwide for those in centers.

More recently, Congressmember Rosa DeLauro and two cosponsors introduced a bill that also adopts some of CAP’s recommendations. It would provide the same boost — one-and-a-half times the regular CTC to parents with children under three.

And they’d receive it as a sort of cash allowance, paid monthly or as often as the Treasury Department deemed feasible. So they’d have the extra money when they needed it, rather than a lump sum once a year.

A broader anti-poverty bill just introduced by Senators Cory Booker and Tammy Baldwin would also index the CTC. It would make the tax credit fully refundable for all families, while targeting it the poorest. We’ll need to await a posting to learn the details.

Clinton herself has focused on childcare costs. She’d cap them at 10% of a family’s income through some combination of expanded subsidies and tax credits.

Wonkblogger Danielle Paquette thinks she’ll probably look to CAP’s recommendations for the latter. Perhaps, but a beefed-up Child and Dependent Care Tax Credit would seem a more targeted approach.

And Clinton can look to an advocacy organization for it too — the one she worked for as a new law school graduate.

Almost a year and a half ago, the Children’s Defense Fund proposed a multi-part plan for cutting the child poverty rate by 60%, without increasing the deficit, even briefly.

The Fund did propose making the CTC fully refundable, rather than keeping it capped at 15% of earned income over the threshold for claiming it. But it also proposed two expansions of the CDCTC.

One would increase the percent of care costs the credit offsets — for lower-income families only. The credit would phase down gradually, from 50% for the very lowest-income.

The other change would make the credit fully refundable for families regardless of income. It’s now only a way to reduce tax liabilities, not a potential source of extra income like the CTC and EITC.

A bill introduced only weeks ago by Congressmember Katherine Clark seems to borrow from this recommendation and from one of CAP’s — maybe by way of the DeLauro bill.

It too would provide monthly payments. But they’d serve as childcare subsidies and go directly to centers and home-based providers where eligible parents had their kids enrolled, though again only if quite young.

The credits would be higher for the youngest and also for low-income families. But even the better-off would get something if their adjusted gross incomes didn’t exceed 400% of the federal poverty line — $80,640 for a three-person family this year.

The credits would become refundable, even though the monthly payments would bypass parents. I don’t understand how this would work, not for want of asking Clark’s staff.

Stepping back out of the weeds, we can see that the next Congress and President will have no shortage of ideas for using tax credits to defray a greater share of the costs of child-raising — or at the very least, the costs of having some non-family member care for them part of the time.

Whether policymakers should focus strictly on very young children is an open question, CAP’s rationale notwithstanding. Working parents often need child care for their school-age children, though for fewer hours.

And those children have many other needs, of course — a case for making the CTC a more substantive help for low-income parents, as the Defense Fund proposes. That alone would reduce the child poverty rate by 12%, according to estimates the Urban Institute supplied.

On the other hand, we know that the experiences children have in their earliest years have singularly lasting consequences. The hardships and other stresses of poverty, for example, can impair normal brain development.

Conversely, high-quality early education has well-documented benefits, especially for low-income children, whose parents often have neither the time nor money to provide those enriching experiences that prepare children to do well in school and thereafter.

It all, I suppose, boils down to how much our country is willing to invest in the next generation. We know how we could invest more, with high returns. But we’ve known that for a long time. So it’s not lack of knowledge that’s stymied action, but lack of bipartisan political will.

 

 

 

 


Child Tax Credit Lifts Kids Out of Poverty, But Too Limited for Big Impact

July 25, 2016

Children are the single poorest age group in our country. More than one in five live in poverty, according to the Census Bureau’s latest report based on its official measure. The better measure still shows a 16.7% child poverty rate.

What these rates tell us, among other things, is that a great many parents don’t have enough money to pay for even their children’s basic needs. Nor their own, since the measures reflect household income.

We don’t have a good fix on how much they’d need. The U.S. Department of Agriculture does, however, provide rough estimates, based on a survey of what parents actually spend. Unfortunately, we get only a crude family income breakout — all families below $61,530 lumped together.

That said, USDA reports that the costs of raising a child from birth to age 18 totaled $164,160 three years ago for a single parent with one child in the lowest income bracket. Costs mount as children grow up — the total, of course, but also by their age.

Infants, on average, cost the least. But even they set low and moderate-income single parents back an estimated $10,436 in their first year. A single mother who worked full time, year round at the federal minimum wage would have only about $3,700 of her take-home pay left for all other expenses.

We do, of course, have publicly-funded programs to supplement what parents can afford to spend out of their own earnings, if any. Some are uniquely for children — the Children’s Health Insurance Program, for example, WIC and pre-college public education. Far more include both them and adults in the household.

Rolling the two kinds together, First Focus reports that this year’s federal children’s budget accounts for 7.83% of total spending — this after factoring out parents’ share of safety net benefits like SNAP (food stamps) and housing assistance.

So we’re investing relatively little in the well-being and future prospects of the next generation. No news here, though the fact that children’s share of spending has shrunk since 2010 may be. It wasn’t all that big a share then, however — just 8.45%.

What the First Focus analysis doesn’t capture is federal spending through the tax code, rather than annual budgets. The Urban Institute’s Kids Share analyses do.

The latest puts total federal spending on children at 10% of the 2014 total — roughly $463 billion. Two-fifths of that reflects tax deductions and credits for families with children.

Drilling down further, we find $53.6 billion in refunds from the Earned Income Tax Credit, i.e., money parents receive when the credit they’re entitled to, plus other gross income adjustments exceeds what they owe.

The refundable part of the Child Tax Credit was less than half that — $21.5 billion. And unlike the EITC, it was less than paid out in 2013.

The refundable tax credits together lifted roughly 10.6 million people, including 5.6 million children over the poverty threshold and made significantly more less poor than they would otherwise have been.

But clearly the EITC did most of the lifting, accounting for all but 1.7 million of the not-poor, but still low-income children. Several major reasons for this.

First off, not all parents with earned income can claim the refundable CTC. They have to have made at least $3,000 during the year, either together, if they file jointly, or alone if they’re single. The EITC, by contrast, kicks in at the first dollar of earned income.

Second, the tax credit for most working parents is capped at $1,000 per child. (No credit — and thus no potential refund — for very high-earners, who won’t concern us here.) Third, another cap limits per-child refunds to 15% of earned income above the threshold for claiming it.

These several constraints mean considerably lower tax benefits. A single parent with one child, for example, could receive $3,359 from the EITC this year. And the benefit is annually adjusted to keep pace with inflation, while the CTC isn’t.

Political leaders of various stripes have teed up proposals for boosting the CTC. Then-Presidential hopeful Marco Rubio, for example, included a $2,500 supplement to the current maximum in his tax plan.

That, said the Center for American Progress, among others, would have benefited higher-income families, while failing to protect low-income families from losing all or part of their benefits, as they would have if Congress hadn’t subsequently made the Recovery Act improvements permanent.

The House Republicans’ tax plan calls for increasing the CTC to $1,500 (presumably per child) and raising the maximum income eligibility for married couples.

The refundable part would still be capped at $1,000, however. And filers without Social Security numbers couldn’t claim it — a not-so-subtle attack on undocumented workers and their children that Republicans have repeatedly made.

Though the plan may seem more friendly to other parents with children, it actually isn’t because it would eliminate the exemption for children — $4,000 per child this year, except for very high-earners. So what the right hand giveth, the far-right hand taketh away.

Democrats have also seized on the CTC as an opportunity to strengthen support for working families. We’ve got several proposals languishing in Congress now. And we may see the issue develop in the last round of this seemingly endless Presidential campaign.

Too much for me to cover here. So I’ll reserve the more progressive approaches for a separate post. Will just note here that making child raising costs more affordable seems to have gained traction over the last several years.

Whether we’ll actually see tax credit changes will, like so many things, depend on what happens in November. Now, if poor and near-poor children could vote ….

 

 


Holes in the Unemployment Safety Net

June 30, 2016

Picking up where I left off on the instability that plagues so many low-wage workers and their families. The reasons I’ve cited are all rooted in those low wages — and at times, even lower pay because so few of these workers have any paid sick or family leave benefit.

Which brings us to another wage-related source of instability. Households in the bottom fifth of the income scale have, on average, only enough money in the bank to cover nine days’ worth of expenses, the Pew Charitable Trusts report. What then if the breadwinners lose their jobs?

Unemployment insurance is supposed to serve as a safety net for them, as well as other workers who lose their jobs through no fault of their own — and would work at another, if they could find it.

But only about one in four of all jobless workers received any UI benefits last year — a record low, the National Employment Law Project reports. Various reasons for this, including the following.

Not Enough for Long Enough

All states have UI programs, as you probably know. All provide some workers some portion of their lost wages if, as I said, they lose their jobs through no fault of their own, according to how states choose to define that, and if they actively search for work, also a variable definition.

Most states provide eligible workers with 26 weeks of benefits. Nine, however, cut back the weeks they cover — a response to drains on their under-funded UI trust funds during the Great Recession.

So workers in Florida and North Carolina, for example, may receive benefits for as few as 12 weeks. Those in three other states will definitely receive them for no more than 20.

Most of the nine, as well as some other states replace, on average, very small portions of lost wages — only about a third in North Carolina and less in five of the other cutback states.

So we’ve got two sources of financial instability here — as we do for many workers and their families even in states that haven’t whittled down their UI programs. But at least these workers receive something for awhile.

Not Enough Earned

Virtually all states require that workers have earned a certain amount during a so-called base period — generally the last four three-month periods before the one when they lost their job.

Some set a flat minimum for the base period. Others set a minimum for the quarter the worker got paid the most and then apply a formula to come up with a minimum for all four. Some use other formulas, e.g., one based on the average wage in the state.

Even more complexity and variety than I’ve indicated here. The bottom line is that the bottom lines states draw will disqualify some variable number of workers because they didn’t earn enough — most likely those who worked only some of the time and for low wages when they did.

Involuntary “Voluntary” Job Losses

Workers generally can’t get UI benefits if they quit. A few iffy exceptions, plus some that aren’t. But the latter don’t apply to workers in all states, even though the Recovery Act offered all incentives to adopt as many as three for “compelling family reasons” — domestic violence, for example, or to follow a spouse who’s leaving the area.

Yet workers may feel they’ve no choice but to quit when constantly shifting schedules prove too difficult to manage — because of childcare needs, for example.

They may have no UI benefits to fall back on, however, especially if they knew they couldn’t count on regular hours when they took the job, as CLASP and NELP report.

They may also wind up with no benefits if they didn’t try to continue working after a job or scheduling change — or if they did for more than a very short time. A Catch 22 if ever there was one.

Workers who get their jobs through temporary agencies may face a different barrier — basically, the agency’s claim that they quit because they didn’t immediately call in when the assignment they had ended. This apparently even if they didn’t know they had to.

Other Workers on Their Own

All states generally limit UI benefits to jobless workers who are available for work. Twenty-one deny them to all workers who can’t immediately accept a full-time job, even if they’d worked only part-time.

People who work for themselves can’t get UI benefits. This may seem altogether reasonable. But those classified as self-employed include independent contractors.

Clearly more of them than there used to be, though we don’t have a good read on how many, as the latest contingent worker report from the Government Accountability Office shows.

What we do know is that some workers classified as independent contractors are independent only of employer-sponsored benefits and major legal protections. An old problem that’s gotten renewed attention with the rise of the so-called gig economy.

The Department of Labor, IRS and some state agencies have ramped up efforts to end misclassification. But truly independent contractors and other contingent workers, e.g., day laborers, will have no income to tide them over when they’re out of work.

The Center for American Progress and two other progressive research and advocacy organizations recommend a short-term jobseekers allowance for these and other workers who’d remain ineligible for UI benefits, despite other recommended reforms.

They’d get about $170 a week for up to 16 weeks. Hardly a safety net, though better than nothing.

The allowance is just one small (in both senses of the word) piece of the CAP et al. agenda, which takes on a variety of flaws in the system — some I’ve flagged and many that I haven’t. Most, if not all the proposed reforms would require federal legislation.

Don’t suppose I need to restate the obvious.


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