In 1996, the United States reformed its welfare system, linking benefits more directly to labor force participation. When combined with the expansion of the Earned Income Tax Credit, which subsidizes low wage workers through the tax code, work has become a cornerstone of American anti-poverty policy. At the same time, rising income inequality and stagnant real wages among less-skilled workers mean that working one’s way out of poverty is more challenging than ever before.
With these trends as a backdrop, a number of new questions are emerging. For example, how can government programs best address poverty if full-time work itself does not provide sufficient income to move many families out of poverty? Given the evolving consensus that poor mothers should be expected to work, how will women’s employment, family structure and poverty evolve in the 21st Century?
Our Research Affiliates are tackling these questions, as well analyzing trends in immigration and related demographic changes that have important implications for labor market opportunities available to the poor.
The connection between poverty and labor markets is complex. High, stable wages and stable full-time employment can keep many out of poverty. However, the stagnation of wages at the bottom of the US wage distribution over the past several decades and continuing low rates of full-time work, especially in single-parent households, work will often leave families below the official poverty threshold.
Millions of workers experienced increased variability in the regularity and predictability of their working hours in the Great Recession. This volatility brings negative consequences for their economic security and family lives, which can be as profound as job loss. The growth of work variability was facilitated by the decline of labor market institutions protecting workers from such volatility, particularly the profound decline of labor unions.
Much attention has been given to the large increase in safety net spending, particularly in Unemployment Insurance and Food Stamp spending, during the Great Recession. In this paper we examine the relationship between poverty, the social safety net, and business cycles historically and test whether there has been a significant change in this relationship during the Great Recession. We do so using an alternative measure of poverty that incorporates taxes and in-kind transfers.
Over the past 45 years, the United States has experienced a rising standard of living, with real GDP per capita more than doubling between 1959 and 2004. In contrast, living standards among some groups seem to have stagnated. Although a number of studies have documented a correlation between macroeconomic conditions and poverty, the relationship is not as simple, or as strong, as one might think. What additional factors can explain the starkly different trends in economic well-being that are measured by overall GDP growth and the poverty rate?
A central question in public finance, one that has generated decades of research, is how tax and transfer programs affect labor supply. Treating food stamp benefits as an income transfer, Research Affiliate Hilary Hoynes uses a quasi-experimental approach to estimate the impact of the program on labor supply.
Does the Great Recession impact certain segments of the population more dramatically? Researchers find that the effects are not uniform across demographic groups, and have been felt most strongly for men, black and Hispanic workers, youth, and low education workers.
Is there a positive health impact to families receiving the Earned Income Tax Credit, a central piece in the U.S. safety net for families with children? Researchers conclude that the sizeable increase in income for eligible families significantly improved birth outcomes for both whites and African Americans, with larger impacts for births to African American mothers.