Report Finds that New Policies Are Needed to Make Work Pay

Supporting Work in Illinois: The Challenges Ahead

In Illinois, as in other states across the country, even a worker employed full-time does not always earn enough to support a family. Millions of parents who work for low wages cannot make ends meet without the help of public “work supports”—benefits such as earned income tax credits, health insurance coverage, child care assistance, and food stamps.

While work should be a primary path to financial security, Supporting Work in Illinois: The Challenges Ahead, a new study released by the National Center for Children in Poverty and The Sargent Shriver National Center On Poverty Law finds that Illinois’ policies are generally successful in meeting the goal of providing adequate family resources but come short in rewarding progress in the workforce. 

When parents’ earnings increase, their families should always be better off. Using results from the Family Resource Simulator, a tool developed by the National Center for Children in Poverty researchers found that small increases in family income can trigger sharp reductions in benefits, leaving families worse off than before.

“Illinois work support policies make a huge difference in the lives of low-income families, said John Bouman, President of the Sargent Shriver National Center On Poverty Law. “But new analysis shows that getting ahead in the workplace means that you can fall farther behind in economic security.”
 
Eligibility for work support programs is typically based on income, so as earnings rise, families begin to lose eligibility for benefits. In some cases, eligibility rules mean that even a small raise can lead to a substantial benefit loss, which is often referred to as a “cliff.”

When a family’s total income exceeds 130 percent of the official poverty level, the family loses its entire food stamp benefit.

When a worker’s income rises enough to make the family ineligible for a child care subsidy, the family loses several thousand dollars worth of benefits.

When a parent’s earnings double from $8 to $16 an hour, the family actually loses ground.

“What we see in Illinois, and throughout the country, is that parents can work and earn more with no financial benefit for their families,” said Kinsey Alden Dinan, lead author of the report.  “Parents should not have to choose between long-term success in the workforce and their family’s immediate financial stability.”

For Chicago, a single-parent family of three needs about $36,000 a year to cover basic expenses, including housing, food, health care, child care, and transportation.3 That’s more than double the poverty level and the equivalent of fulltime earnings at about $17 an hour. In a two-parent family of four in which both parents work full-time, each parent needs to earn more than $9 an hour just to cover necessities. This leaves many low-wage workers facing a large gap between their earnings and the cost of basic family expenses.

The same basic findings hold throughout the state.  In all six localities analyzed in the report, a single parent with an $8 an hour job is unable to make ends meet without tax credits, food stamps, public health insurance, and child care assistance.

Illinois policymakers have made low-wage workers and their families a priority. Work support policies in Illinois help parents who work for low wages provide for their families.  The challenge now is ensuring that these policies also encourage and reward progress in the workforce.

See the full report at www.nccp.org for more details, including results for single- and two-parent families living in six Illinois localities.