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Chapter 9. A Work in Progress
- Brookings Institution Press
- Chapter
- Additional Information
Although expansion of the work support system has increased the resources devoted to helping needy working families, observers have suggested that there is room for improvement.1 We have identified a variety of factors that limit the benefits that needy workers are likely to receive; some of these constraints reflect willful decisions by policymakers, while others appear to be unintended. In this chapter we review and discuss what we have learned about work support system performance and propose a series of reforms. To a great extent our research tells a story of unrealized potential. We have demonstrated that work support programs can be an important source of material benefits for needy working families. Benefits can be quite generous. However, although participation is widespread, only a small fraction of needy working families participate in numerous work supports, and they typically receive far smaller benefit packages than they could. We also have demonstrated that the states are key participants in the work support system. States contribute to benefit generosity and influence access to programs. States with high living costs play a constructive, compensatory role in the system. However , our evidence also demonstrates that these efforts come up short because the additional benefits that the high-cost states do provide fail to fully compensate for higher living costs, particularly in urban areas. This suggests that it is important to consider inequities across and within states when reforming the work support system. Beyond this, our research has shown that there are significant inequities in terms of the benefits that different groups of needy 161 9 A Work in Progress 1. Congressional Budget Office (1998); Sawhill and others (2002); Sawhill and Haskins (2002a, 2002b); Zedlewski (2002); Haskins (2001); Greenstein and Guyer (2001). 09-8191-1 ch09 11/2/05 4:22 PM Page 161 workers are likely to receive. In particular, people making the transition from welfare to work are most likely to receive work supports and are likely to receive the most generous package of benefits. Inequity between groups is also an important matter to consider for work support system reform. The work support system is a work in progress. Benefit Generosity Our analysis of work support benefits has demonstrated that full participation in work support programs could lead to remarkable material gains for needy working families. Chapters 4 and 5 also showed that there is significant variation in both the nominal and the cost-adjusted values of earned income from minimum wage work and work support benefits in the fifty states and the District of Columbia. Variation in state benefit generosity for nominal benefits reflects differences in state-level policies. Variation in cost-adjusted benefits reflects the greater purchasing power in low-cost-of-living states of benefits from work support programs governed by national benefit and eligibility standards. Although benefits vary with location, earned income, family size, family composition, and program participation, the material rewards of extensive participation in the work support system exceed the federal poverty standard by a wide margin. However, extensive participation is not necessary to escape poverty; a full-time minimum wage worker can enjoy an income above the federal poverty standard for a family of three by receiving the federal earned income tax credit (EITC) and food stamps. This is true in all fifty states and the District of Columbia, regardless of state policy choices. Even when states do nothing to enhance work support benefits, the combination of federal EITC benefits, food stamps, and full-time, year-round minimum wage work exceeds the federal poverty standard for a family of three in the average state by approximately 12 percent. Nevertheless, states’ discretionary policy decisions are important to work support generosity. It is common for high-cost-of-living states to use their discretion to compensate for higher living costs by providing additional work support benefits. This enhances the rationality of the work support system by reducing real benefit differentials between states. However, place of residence does matter a great deal in regard to what needy workers can expect to get from the system. Our comparison between work support benefits and basic family budgets demonstrated that work supports are less adequate in highcost states and in high-cost areas within each state. 162 Conclusion 09-8191-1 ch09 11/2/05 4:22 PM Page 162 [35.168.113.41] Project MUSE (2024-03-19 12:19 GMT) Program Participation Many needy working families receive work support benefits. The program participation analysis in chapter 7 showed that about...