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.
