As Congress considers whether to increase the federal minimum wage from $5.15 to $7.25 an hour, data from the National Center for Children in Poverty (NCCP) shows that a full-time job at low wages often does not provide nearly enough to support a family.
NCCP releases a report, “When Work Doesn’t Pay: What Every Policymaker Should Know,” that reveals that even though the government provides “work support” benefits to help minimum-wage and other low-wage workers provide for their children, the structure of these benefits can result in unintended consequences – families can actually end up worse off when they earn more. This is because extra income can cause a family to lose a benefit that’s of greater value than additional earnings.
“It’s time for Congress to acknowledge that the minimum wage is fundamental to the survival of many families. It is a lifeline to help hard-working parents provide for the basic needs of their children,” said Dr. Nancy K. Cauthen, report author and Deputy Director of NCCP. “After nearly a decade of inaction, we urge policymakers to increase the minimum wage and to ensure that other supports for working families actually reward work rather than take away from their income.”
Work supports such as earned income tax credits, child care subsidies, health care coverage, food stamps, and others are means-tested benefits, so as earnings increase- particularly as they rise above the official poverty level- families begin to lose eligibility even though they are not yet self-sufficient. For example, a single mother with two small children living in Philadelphia and earning $8.00 an hour – more than the suggested new minimum wage – would still be at the official poverty level, even though this level is widely acknowledged to be an outdated and inadequate standard of need. NCCP’s Family Resource Simulator (available online at http://www.nncp.org) reveals that the same single mother of two would need to earn $40,600 a year to cover her family’s most basic expenses without the help of government benefits, or work in excess of 90 hours a week.
Policymakers should use this data to understand the dilemmas faced by low-income parents who may be forced to:
Select cheaper child care that may be less safe or less stable
Go without health insurance or medical care
Live in an unsafe neighborhood or in overcrowded housing
Go hungry at the end of the month
