Low-Wage Workers Earning $8/Hour Can Be Better Off Than at Twice the Pay
A single working parent with two children in Greater Boston earning $16,000 a year, the state’s minimum wage, and receiving all the major public support programs available to her can better support her household than she could earning $16 an hour ($32,000 a year) and receiving aid because of the disjointed public work support system, according to a new study released today by Crittenton Women’s Union and The Center for Social Policy at the John W. McCormack Graduate School, UMass Boston.
“Fits & Starts: The Difficult Path for Working Single Parents” also reports that a single parent not receiving housing and child care aid will find herself up to $1,666 a month short of meeting her basic living costs when making the $8 an hour minimum wage, and will not earn enough to meet all her family’s living expenses until she earns $29 an hour or $58,000 a year. Two-thirds of eligible families do not receive housing and child care assistance, primarily because of lack of available funding to meet the demand, though they may be more likely to receive some public supports.
“Fits & Starts” highlights the tough choices Massachusetts low-wage workers must make between taking higher paying jobs and losing critical work supports before they can afford to meet their basic living expenses. Among the report’s key recommendations is a call for greater, more sustained investments in critical work support programs, chiefly by pegging eligibility to the real cost of living for low-wage workers in the state. The report also recommends improving access to financial aid for education for low-income adult students, in combination with expanded child care and housing supports.
“The current fragmented system of state and federal work supports, with its varying eligibility criteria and funding shortfalls, means that working parents can easily find themselves in worse financial straits even as they work toward economic independence,” said Donna Haig Friedman, director, The Center for Social Policy, UMass Boston. “This research shows that housing and child care assistance can provide the greatest benefit to low-income families in meeting their basic family needs, yet these programs remain woefully underfunded.”
“In Massachusetts, a family of three needs to earn about 300 percent of the federal poverty level to make ends meet. However, most public assistance program thresholds don’t reflect that reality,” said Elisabeth D. Babcock, president and CEO of Crittenton Women’s Union and a report co-author. “We need a system of increased graduated supports that will sustain low-skilled working parents as they pursue the education and training necessary to get jobs paying wages high enough to eliminate their need for public assistance altogether.”
Those receiving public assistance find that their “net monthly resources”–their after-tax income from earnings plus the value of work supports minus the cost of all basic needs–do not rise in step with wage increases for full-time workers earning between $11 and $29 per hour. Instead, workers at higher wages levels can be left with fewer resources than when they earned less.
“Fits & Starts” reviewed the eligibility thresholds of seven public work support programs: child care assistance, Child Tax Credit (CTC), Earned Income Tax Credit (EITC), Food Stamps, MassHealth, Section 8 rental housing assistance and Special Supplemental Nutrition Program for Women, Infants and Children (WIC). Applying these programs’ varying criteria, the report tracked the net monthly resources of a Boston family of three (single parent with two school-age children) receiving all eligible work supports as its earnings increased. A single parent making $8 per hour ($16,000/yr) nets $439 a month. However, at $16 ($32,000/yr) this is reduced to $391, and at $21 per hour ($42,000/yr), she’s left with $440, about the same as at $8 per hour.
Using the Massachusetts Family Economic Self-Sufficiency Standard (FESS) published by Crittenton Women’s Union, the Center for Social Policy found that close to 900,000 people in Massachusetts families with earnings–one out of every four–fall far short of meeting their basic needs, even with whatever work supports they receive. FESS indicates that, depending where they live in the state, a family of three requires an income of between $44,000 and $58,000 annually (between 266 percent and 350 percent of federal poverty level) to afford basic needs without public assistance.
The “Fits & Starts” report makes additional recommendations including training case manages to provide in-depth financial and educational counseling and introducing work support “calculators” to help families anticipate and plan for benefit loss.
About The Center for Social Policy at UMass Boston’s McCormack Graduate School
The Center for Social Policy, within UMass Boston’s McCormack Graduate School, seeks to positively impact the public/private/nonprofit policies and practices that affect the lives of those with the lowest incomes in Massachusetts and elsewhere. The focus of our applied policy research participatory evaluation and action research, technical assistance and strategic messaging/outreach is on system-level changes targeted at the structural causes for poverty and social exclusion in low income communities. For more information go to: www.mccormack.umb.edu/csp and www.umb.edu/bridgingthegaps
About Crittenton Women’s Union
Crittenton Women’s Union, a Boston-based nonprofit organization, combines direct service programs, independent research and public policy advocacy in its mission to transform the course of low-income women’s lives so that they can attain economic independence and create better futures for themselves and their families. Each year CWU helps more than 1,600 people through its safe housing, education and training programs, and family support services. For more information, visit www.liveworkthrive.org and www.liveworkthrive.org/reports.php.