Bridging the Gaps: Structuring Benefits to Promote Mobility for Low Wage Workers A collaboration of the Center for Social Policy, University of Massachusetts Boston Center for Economic and Policy Research, Washington, D.C.

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Bridging the Gaps Structuring Benefits to
Promote Mobility for Low Wage WorkersA
collaboration of theCenter for Social Policy,
University of Massachusetts BostonCenter for
Economic and Policy Research, Washington, D.C.
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Overview of the current project

• The Bridging the Gaps project has several
  important research objectives surrounding
  low-wage workers and work support programs
  intended to help them get and keep employment.
• Which workers?
• For now we are looking at a single parent with
  two children whose annual earnings range from
  13,000 to 35,000 annually (corresponding to a
  full-time, year-round hourly earnings of 6.25 to
  17.00 an hour -- the minimum wage to median wage
  in Massachusetts).
• Which benefits/work supports?
• TAFDC, MassHealth/SCHIP, Child Care vouchers
  (CCDF specifically), Food Stamps, Section 8
  tenant vouchers and public housing, and the
  Earned Income Tax credit.

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Specific Research Goals

• A coordinated look at the ways low-to-moderate
  families and individuals with earnings are
  eligible for and how they get major public
  benefits in Massachusetts (from paper to
  pocket).
• Examination of the eligibility gap across a range
  of earnings by measuring the actual utilization
  of work-support benefits among eligible benefits.
  
• Assess the size of the hardships gap between
  resources (earnings plus benefits) and the costs
  low-income families face over a wide range of
  earnings and combination of public benefit
  receipt in 3 Massachusetts cities.
• Measure the high marginal tax rates for
  low-income workers who do use work-support
  benefits.

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Research strategy

• Work within Massachusetts in conjunction with
  providers, policy advocates, policy makers, and
  low-income families to ensure accuracy,
  responsible research, and policy impact.
• Work with state research partners in Texas and
  Illinois on the same set of research questions to
  compare across states to highlight similarities
  and differences in order to strengthen all our
  findings.
• Work with Center for Economic and Policy Research
  to make a national case for improvement of the
  resource base for low-to-moderate earners in
  Massachusetts and across the country.

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Whats done

• Preliminary policy mapping.
• Preliminary assessment of eligibility gaps and
  preliminary programming to estimate actual gaps.
• Preliminary findings on the hardship gaps.

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Whats to come

• Incorporation of feedback on policy mapping and
  hardship gap presentation.
• Compare the earnings range we examine to poverty
  and other reasonable measures of low-income and
  to types and numbers of jobs in Massachusetts.
• Conducting focus groups with low-to-moderate
  earners, policy advocates, public benefit
  providers, and policy makers.
• Completion of actual estimates of eligibility
  gaps.
• Written state and national reports and state and
  federal legislative briefings.

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Findings to Date

• Benefits are administered in a fairly disparate
  way. Only by applying for TAFDC does anyone get
  access to information about a wide range of
  programs.
• While this is useful for TAFDC recipients, the
  income cut-off for TAFDC is the lowest of the six
  programs (below 100 of the FPL), has the lowest
  participation rate, and requires an office visit
  to get an application.
• The cost of MassHealth swamps the other programs,
  costing three times as much as the other five
  programs combined reflecting the high cost of
  health care generally and the large percentage of
  the population covered.

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Coverage, Eligibility, and Access

• The breadth of coverage of these programs among
  the population is narrow ranging from about 14
  percent of people in Massachusetts receive
  MassHealth to about 1.7 percent receive TAFDC.
• Income eligibility thresholds differ
  considerably from close to the official poverty
  line to over 2.5 times that amount. For a family
  of three that translates into an annual income of
  about 13,000 (TAFDC) to close to 36,000 (EITC
  and public housing in Boston).
• There is considerable variability on
  documentation required in order to access
  benefits. On paper at least, EITC is the simplest
  to access, while TAFDC is the hardest.

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Getting Benefits?

• TAFDCs eligibility requirements and the apparent
  stigma attached to it limit the use of it among
  low-income families with children and with
  earnings making it among the least likely program
  workers would access.
• Housing and child care assistance needs far
  exceed their availability, despite relatively
  high income eligibility thresholds. Both have
  long waiting lists and serve priority clients,
  making these programs unlikely to be assessed by
  eligible families with earners (those leaving
  TAFDC for employment are the most likely to
  receive child care assistance).

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Getting Benefits?

• While the Food Stamps program is not capped and
  is paid for by the feds, usage is low in
  Massachusetts (ranking last among the states in
  2002 with only 42 of the eligible population
  receiving them).
• Massachusetts has been a leader among the states
  in extending health coverage to low-income
  families and MassHealth usage rates reflect that.
  
• Everyone must file taxes, making the EITC the
  most accessible of these six benefits. Private
  firms and non-profit entities have done
  considerable outreach to help people claim their
  refund.
• Federal and state budget deliberations point to
  changes in these program that are likely to
  reduce current usage.

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Defining Low-income Families

• In 2003, the federal poverty line (FPL) for a
  family of three was 14,680. For such a family
  200 percent of poverty is 29,360.
• Defining low-income as 200 of the FPL, whos
  low-income in Massachusetts?
• 20 percent of families
• 25.2 percent of all the people
• 30.7 percent of all children
• Over half (58 percent) of all female-headed
  households.

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Earnings and Income

• It would take a worker in a 3-person family
  working year round and full-time 14.68 to be at
  200 percent of the FPL.
• It would take a year-round part-time (25 hours a
  week) worker 22.76 to get to 200 percent of the
  FPL.
• The median wage in Massachusetts in 2003 was
  16.67 while the wage of the worker at the 25th
  percentile was 11.04

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Measuring Resources and Expenses

• The prototypical family we examine is a single
  parent with two children ages 3 and 8 moving
  toward full employment.
• Expenses include food, housing (with utilities),
  child care, health insurance (if not received),
  transportation, and miscellaneous expenses for
  low-income families in Boston and Springfield as
  calculated by the National Center for Children in
  Poverty.
• Resources include net earnings (taxes deduced and
  credits added), cash assistance, cash value of
  food stamps, and the cash value of child care.
• Resources Expenses Net Resources.

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A Policy Conundrum?

• A smaller number of benefits provides a little
  more incentive for higher earnings, but leaves
  families in financial difficulties even as they
  earn more.
• A high number of benefits helps families move to
  financial economic security, but at the same time
  provides no incentive for more earnings over a
  very large range of earnings.

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Ways out

• Individual solutions Families can reduce
  expenses on their own find cheaper child care at
  the risk of losing quality care, find cheaper
  housing by crowding in with others or living in
  less safe neighborhoods, or go without medical
  insurance or as much food.

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Policy changes?

• Increase earnings boosting the state minimum
  wage will help lift wages and move families
  further along the earnings line.
• Increase benefit levels generally and/or phase
  them out over a wider range of earnings.
• Other countries have found a solution by
  providing universal coverage of certain benefits
  such as health insurance and child care.

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Feedback

• Are policy rules properly summarized?
• What is the most effective way to convey the
  hardship gap and the eligibility gap?
• Strengths and weaknesses of this approach in
  illustrating the relationship between
  low/moderate earnings and public benefits?

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Next Steps

• Identifying focus group participants to talk
  about eligibility rules in practice and about
  coping strategies.
• Other organizations/individuals to involve.
• Who should see the report at release time? How do
  we best involve them?
• How can we best work with you throughout the
  project?