2004 Reports

State Policy Choices: Supports for Low-Income Working Families

Dinan, Kinsey Alden; Fass, Sarah; Cauthen, Nancy K.

Over 26 million American children live in low-income families. Nearly 60 percent of these children are not officially poor but live in families with incomes between one and two times the federal poverty level. Research suggests that most families need income of at least double the poverty level—nearly $38,000 a year for a family of four—to make ends meet. About 85 percent of children in low-income families have at least one working parent, and the majority has a parent working full-time, year-round (see Figure 1). However, low wages, taxes, and work-related expenses mean that many of these families cannot get ahead simply by earning more—in part because they quickly lose eligibility for public benefits. If policymakers want to ensure that work provides a route to family economic self-sufficiency, they need to get serious about making work pay. Refundable earned income tax credits to boost low wages and work supports such as child care and health care benefits can help.