Millions of Americans in Economic Battle to Make Ends Meet

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Heather Boushey
Alternet, October 13, 2007

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The Bush recovery has been good for Wall Street, but not Main Street. The economic recovery that began in 2001 has brought slow job growth, limited wage gains, and continued rising inequality. While families at the top of the income ladder have seen their incomes rise faster than inflation, those in the middle and bottom have seen theirs fall.

Millions now work in what we call "bad jobs." While higher-wage workers take for granted that their jobs come with employer-based benefits like health insurance, a retirement plan, and maybe some paid time off, just over one-in-five workers (22.1 percent) are in a bad job -- a job that pays low wages and provides no benefits.

That's where government work supports -- programs that ensure that families can access basics such as healthcare, childcare, food, and housing -- are supposed step in and fill in the gaps.

The reality, however, according to research we released this week, is that nearly 41 million people live in families that don't earn enough to make ends meet, and government benefits do not fill in the gap. These families work, but their earnings aren't enough. Most low-wage workers don't get the kinds of employer-sponsored benefits common for higher-waged workers, so without government help, these families are left out in the cold, often unable to afford health insurance, decent child care or other necessities.

We do have work supports to help people. Child-care assistance, the Earned Income Tax Credit (EITC), food stamps, public housing and Section 8 housing programs, Medicaid, the State Children's Health Insurance Program (SCHIP), and Temporary Assistance to Needy Families are all available across the United States.

When families get these work supports, they help bridge the gaps left by low wages and lack of employer-sponsored benefits. Across nine states (Illinois, Iowa, Massachusetts, Minnesota, New York, North Carolina, Ohio, Texas, and Washington) and the District of Columbia, for example, work supports close nearly half (44 percent) of the gap between a family's earnings and what it takes to make ends meet.

But these policies leave out just as many as they help. Most of these work supports were initially intended to serve poor, unemployed families. The eligibility criteria require families to be very poor, earning so little in most states that many of those who are in need still earn "too much" to be eligible. The EITC and SCHIP were both designed to help working families, but even these programs leave many families out in the cold.

After decades of little or no growth in earnings for millions of workers, and with employers simultaneously paring back benefits, too many working-class families are being left out in the cold, without access to employer-sponsored benefits or government work-supports.

For nearly a century, the goal of U.S. social policy has focused on aiding the poor, while leaving workers -- regardless of their earnings -- to access benefits from their employer or the private sector. When a significant share of the labor force was in a union and economic growth was providing widespread income gains, this strategy might have made sense. But as employers pull back from their historic role as benefit providers, we need to refocus our attention on how to ensure that working families can make ends meet.

The U.S. work-support system was not set up to solve this problem and, as a result, does not reach most working families. Our research found that across ten states, just under half of people (46.9 percent) living in working families with income below that necessary to purchase a basic standard of living are eligible for Medicaid or SCHIP. Similarly, just over half (55.4 percent) are eligible for the EITC.

Many of those eligible do not actually receive benefits. Across the ten states we studied, about a quarter of children meeting the eligibility requirements for childcare actually received any child-care subsidy. The programs that reached the most people -- the EITC -- was the one that is fully funded and has the easiest application process.

It's not just the very poor who need our attention. As members of the middle class have been squeezed, more and more of us are struggling to maintain our standard of living. The past 30 years have brought rising wage and income inequality and an increase in low-wage, no-benefit jobs. If we want to see an economy that works for everyone, then we -- and our representatives in Washington -- must work for labor standards that support all workers.


Heather Boushey is a senior economist with the Center for Economic Policy and Research.