Work disincentives hit the near-poor hardest (2022)

Summary

In many ways, America’s social safety net falls short of those of our liberal democratic peers, yet we have no shortage of policies intended to provide social protections. We have programs at all levels of government that offer help with family income security, child care, nutrition, health care, housing, education, unemployment, disability, and other needs. But too often, each program has been developed in asilo, with little thought to how it interacts with others. The result is a social policy landscape that is hard to navigate for families needing help. Along the road from dependency to self-sufficiency, they encounter benefit cliffs, disincentive deserts, eligibility barriers, and other obstacles. Too many fall wayside and remain poor, despite all the programs that ought to make their lives easier. This commentary explores this social policy landscape. It reveals a pattern of work disincentives that bear hardest on the near-poor, that is, on households that are almost at the point of achieving full economic self-sufficiency, but are not quite there yet. After an overview of the terrain, it offers ways to make the social safety net more helpful and more work-friendly. The working poor and near-poor Designing a safety net would be much easier if income support policies affected only people who could not work or could not find work. However, as the data charted in Figure 1 shows, half of all poor families have at least one member who has worked full- or part-time for at least part of the previous year. Among those between 100 and 200 percent of the federal poverty level, three-quarters of families have at least one worker. The Census Bureau has official definitions for working poor (below the poverty line and at least 27 weeks a year in the labor force) and near-poor (100 to 125 percent of the poverty line). Journalists and academics often treat those terms more broadly, however. One source speaks of the near-poor as people “who drive cars, but seldom new ones; ear...