uring the 1990s, the ederal government prom-ised low-income amilies that work would pay.Parents moved into jobs in droves in responseto new welare rules requiring work, tax credits,and other work supports that boosted take-home pay. Thesepolicy changes were enacted during one o the strongestlabor markets on record. A decade later, the labor market istepid, and policies have to be re-evaluated keeping in mindthe circumstances o today’s amilies.Low-income working amilies ace the greatest risks intoday’s unpredictable economy. The proverbial economicladder has largely disappeared: the wages o less-skilledworkers have on balance either stagnated or allen over thepast two decades, making it dicult or many amilies tomake ends meet. The loss o a job, a cut in work hours,a serious health problem, or an increase in housing costscan quickly push these amilies into greater debt, bank-ruptcy, or even homelessness. Most do not receive grouphealth insurance coverage rom their employers or qualiyor unemployment insurance i they lose their jobs. Neither the government nor employers give them much o a saetynet.With so many so vulnerable, the nation needs newpolicies that make work pay in today’s economy. This essaysynthesizes an integrated set o policy proposals designedto establish a new saety net or low-income amilies. Thepolicies are based on our principles:
everyday amily living. When ull-time work ails tocover these costs, basic needs should be subsidized inways that also promote greater work eort.
require quality day care and their parents must beable to combine a job with parenting so their childrendevelop ully.
A New Safety Net for Low-Income Families
By Sheila Zedlewski, Ajay Chaudry, and Margaret SimmsThe Urban Institute
ladder. This should include access to specialized sup-ports when their underdeveloped or outdated skills,their health problems, or other actors put even the rstrung o the ladder out o reach.
through unemployment insurance and accumulatedsavings.Policies built on these principles would enhance low-income amilies’ nancial stability, expand investment inchildren, and ulll the promise that earnings coupled withgovernment work supports would enable parents to pay or their amilies’ basic needs. Below, we prole specic policyrecommendations that would help to achieve these goals,each developed by authors o the “New Saety Net” paper series published by the Urban Institute.
Making Work Pay
For many workers, a living wage remains elusive. Thedisparity between minimum wage income and the ever in-creasing cost o basic needs places many amilies in nancial jeopardy. To help make work pay, Gregory Acs and MargeryAustin Turner recommend policies to enhance low-incomeamilies’ purchasing power and reduce household expenses,in particular unusually high housing costs.
With so many so vulnerable, the nationneeds new policies that make work pay intoday’s economy.
Minimum wages and poverty
The ederal minimum wage increased to $6.55 per houron July 24, 2008. At this rate, a person working a 40-hourweek or all 52 weeks in a year would earn $13,624. Ac-cording to the Department o Health and Human Services,the 2008 poverty line or a single parent with one child was$14,000, and or a single parent with two children, it was$17,600. A single parent trying to support a amily on a ulltime minimum-wage job would qualiy as poor.The ederal minimum wage was constant or a decade,rom 1997 to 2007, at the rate o $5.15 per hour. Wagesincreased in 2007 to $5.85, then again to the current rateo $6.55 earlier this year. The minimum wage will increaseto $7.25 per hour eective July 24, 2009.