2011 Reports

Making Work Pay in Montana

Chau, Michelle M.

In Montana, 44 percent of children live in low-income families — defined as income below twice the federal poverty level (FPL). Despite 86 percent of these children having at least one parent who is employed, many of their families struggle to make ends meet on earnings alone. Work support benefits such as the Earned Income Tax Credit, child care assistance, and public health insurance can help families close the gap between earnings and the cost of basic expenses. While work supports help parents get by on low wages, families who receive them often face difficulties getting ahead. Many encounter "benefit cliffs" where small increases in earnings lead to abrupt work support losses. As a result, families are often worse off after a small wage increase. To encourage employment as the primary path to economic security, a comprehensive work support system should accomplish two goals: Provide adequate family resources. If parents work full-time, their earnings combined with work supports should provide the resources necessary to cover basic family expenses. Reward progress in the workforce. When parents‘ earnings increase, their families should always be better off Using results from NCCP‘s Basic Needs Budget Calculator and Family Resource Simulator, this brief highlights findings on the effectiveness of work support policies in Montana.