Making Work Pay for Iowa's Families

2006

This brief seeks to inform policymakers about the difficulties faced by low-income working parents as they strive to make progress in the workforce. Using data from NCCP's Family Resource Simulator, it highlights ways in which the current structure of work support policies often leads to unintended consequences. As low-wage workers increase their earnings above the federal poverty level, their families begin to lose eligibility for government work supports, such as earned income tax credits, childcare and food assistance, and public health insurance. Given that some of these benefits drop off quickly as wages increase, earning more does not always improve a family's financial bottom line.

Industrial and Labor Relations Review

2004

Over 26 million American children live in low-income families. 1 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. 2

2007

2009

When President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) into law on August 22, 1996, programs to strengthen child support enforcement and improve receipt efforts were established. However, the lives of welfare recipients who were receiving child support were forever changed. These single mothers would now have to attempt to find employment, no matter what their skill level, in order to keep their welfare benefits for the five-year time limit mandated by this legislation. Some of the new welfare-to-work rules helped raise welfare recipients out of poverty by helping them gain work experience and various job skills. However, most jobs found by welfare recipients provided low wages, limited or no benefits, and no flexibility when it came to childcare situations. Before 1996, custodial parents were allowed to keep the first $50 per month in child support collected on their behalf without their welfare benefits being reduced. However, PRWORA now allowed states to increase or decrease the amount of this child support disregard. Many states, including Iowa, decided to keep the child support paid by non-custodial parents in order to offset welfare payments. This thesis includes a brief history of welfare and child support policies and the recovery by states of their welfare costs, with an analysis of “pass-through” and “disregard” policies stemming from the passage of PRWORA. PRWORA eliminated mandatory pass-through. As of June 2009, approximately 25 states keep all of the child support paid by the non-custodial parent as reimbursement for the custodial parent receiving welfare benefits (Center for Law and Social Policy, 2009). For this study, custodial and non-custodial parents, judges, and administrators from the Iowa Department of Human Services were interviewed. They were asked about their experiences with the formal child support and welfare systems, and how they navigated through the rules and regulations. Respondents also had a chance to give suggestions as to how the welfare and child support systems could be improved. This thesis reports the effects that covert non-compliance and covert support have on custodial parents who receive child support, and on non-custodial parents who pay child support. It also reports that when child support is not made readily available to families who use welfare benefits, custodial parents may choose to engage in covert non-compliance, covert support, and/or informal support. Most of the respondents had negative experiences with the formal welfare and child support systems. They understood the rules, regulations, and eligibility requirements of the programs they were involved in, but did not always agree with the stipulations. Some of the respondents also felt that welfare benefits and child support should be two separate financial supplements. My recommendations include an educational campaign for Iowa Department of Human Services administrators, workers, and clients, a switch in federal marriage promotion funding to a positive parenting curriculum, job training, and skill building programs, and a policy brief of my research that can be used by various policymakers to help understand the plight of welfare families in central Iowa and how future policies concerning child support and welfare can be beneficial to both the state and low-income families.

2003

The federal poverty level, the standard by which the United States determines economic need, was developed 40 years ago. Data collected in the 1950s indicated that, on average, families spent one-third of their income on food. The original poverty level used the costs of the U.S. Department of Agriculture's "economy food plan" and multiplied those costs by three.* Today, food comprises far less than one-third of a family's expenses, while housing, transportation, and child care costs have grown disproportionately. Yet we still measure poverty by the original standard developed in the early 1960s. The federal poverty level for a family of four is currently $18,400.* There are 12 million children who live in such families in this country. However, the numbers are far worse. Double the income that is considered "poverty" is needed for most families to provide their children with basic necessities like adequate food, stable housing, and health care. Families who live in this gray area between official poverty and minimum economic security have many of the material hardships and financial pressures that officially poor families face. As their income grows, they rapidly lose eligibility __________ * For more information about the federal poverty level, see the web site of the U.S. Department of Health and Human Services: <aspe.hhs.gov/poverty/03poverty.htm>.

Research Brief: Living at the Edge, #1, 2003

The federal poverty level, the standard by which the United States determines economic need, was developed 40 years ago. Data collected in the 1950s indicated that, on average, families spent one-third of their income on food. The original poverty level used the costs of the U.S. Department of Agriculture's "economy food plan" and multiplied those costs by three.* Today, food comprises far less than one-third of a family's expenses, while housing, transportation, and child care costs have grown disproportionately. Yet we still measure poverty by the original standard developed in the early 1960s. The federal poverty level for a family of four is currently $18,400.* There are 12 million children who live in such families in this country. However, the numbers are far worse. Double the income that is considered "poverty" is needed for most families to provide their children with basic necessities like adequate food, stable housing, and health care. Families who live in this gray area between official poverty and minimum economic security have many of the material hardships and financial pressures that officially poor families face. As their income grows, they rapidly lose eligibility __________ * For more information about the federal poverty level, see the web site of the U.S. Department of Health and Human Services: <aspe.hhs.gov/poverty/03poverty.htm>.

Journal of Policy Analysis and Management, 2015

Industrial and Labor Relations Review, 2004

Helping working families : the earned income tax credit / Saul D. Hoffman, Laurence S. Seidman. p. cm. Includes bibliographical references and index.