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Social Scientists Recommend New Safety Net for Low-Income Familes

Document date: July 16, 2008
Released online: July 16, 2008

Contact: Stu Kantor, (202) 261-5283, skantor@urban.org

WASHINGTON, D.C, July 16, 2008—One-third of families with children, 13.7 million households, struggle to cover the everyday costs of living but don’t always succeed. Yet, four in five of these low-income families, whose incomes are less than twice the federal poverty level, include working adults.

Some families receive food stamps, child care subsidies, tax credits, and other government work supports, but these programs either offer too little or go to too few of those in need. At the same time, wages for low-income workers have generally stagnated over the past two decades, rainy-day saving is difficult at best, employer-sponsored health insurance is growing scarcer, and unemployment insurance is limited or unavailable.

Reinforcing the Safety Net
With so many families straining to make ends meet, a team of Urban Institute researchers, including labor economists, health researchers, housing experts, and children’s policy analysts, has created a set of interconnected proposals designed “to make work pay in today’s economy.”

The proposals, collected in “A New Safety Net for Low-Income Families” (available at http://www.urban.org/projects/newsafetynet), are grounded in rigorous research and extensive knowledge about the lives of low-income working families, and they come at a time when the economic slowdown, housing meltdown, and rising fuel and food prices could overwhelm these families. Analyzing low-income adults as both workers and parents, the collection makes clear-eyed connections between private-sector supports (such as job benefits and working conditions) and public-sector supports.  

“A New Safety Net for Low-Income Families” was supported by the Charles Stewart Mott and Annie E. Casey foundations. To spark further debate, the collection of eight essays includes commentaries from more than a dozen experts outside the Urban Institute.

How Could Policies Change to Help Low-Income Families Succeed?

Gregory Acs and Margery Austin Turner, in their essay “Making Work Pay Enough: A Decent Standard of Living,” recommend policies to enhance low-income families’ purchasing power. To make housing costs more affordable, for instance, Acs and Turner propose a new refundable tax credit for renters and homeowners targeted at areas where housing is expensive, along with federal incentives to create more affordable housing.

Cynthia Perry and Linda Blumberg’s “Making Work Pay II: Comprehensive Health Insurance for Low-Income Working Families” recommends universal health coverage with an individual mandate requiring everyone to get at least a minimum level of coverage. This system would include new state-designed purchasing pools and sliding-scale subsidies.

Shelley Waters Boots, Jennifer Macomber, and Anna Danziger, in “Family Security: Supporting Parents’ Employment and Children’s Development,” complement these proposals by calling for greater investments in child care assistance, comprehensive child development programs, and employee-financed paid leave.

New proposals are also needed, researchers say, to help parents advance to better-paying jobs and to support parents finding it difficult to move into the labor market. Harry Holzer and Karin Martinson, in “Helping Poor Working Parents Get Ahead: Federal Funds for New State Strategies and Systems,” suggest competitive federal matching block grants that reward states for developing new advancement systems linked to state workforce development structures.

Pamela Loprest and Karin Martinson’s “Supporting Work for Low-Income People with Significant Challenges” suggests a parallel initiative: offering states competitive matching grants to integrate programs that alleviate work barriers (such as mental health and substance abuse problems) with help locating and keeping a job.

To shore up a big hole in the safety net for working families, Margaret Simms, in “Weathering Job Loss: Unemployment Insurance,” recommends increasing the share of wages unemployment insurance replaces and expanding eligibility to more low-income workers.

Signe-Mary McKernan and Caroline Ratcliffe, in “Enabling Families to Weather Emergencies and Develop: The Role of Assets,” propose policies that would improve financial markets and savings opportunities. For example, they recommend increasing regulation in the small-loan and mortgage markets. They also suggest initiating savings accounts for all children at birth with a government deposit of $500 and an additional savings match for low-income families.

From Proposal to Policy

In an overview essay synthesizing their Urban Institute colleagues’ work, Sheila Zedlewski, Ajay Chaudry, and Margaret Simms acknowledge that ballooning deficits, a weak economy, and a tough business environment make this “a difficult moment to suggest new initiatives” for federal and state governments and employers.

The research team puts forth ways—mainly, phase-in provisions and co-pays by some beneficiaries—to make the proposals affordable. They also point out opportunities to redirect current spending to partially or fully fund the initiatives.

“Increasing the number of families on a solid economic footing will strengthen the nation’s competitive advantage in the global economy,” Zedlewski, Chaudry, and Simms observe. “Surely, parents with health care, with jobs that provide benefits, and with just enough government support to make them confident that they can meet their families’ basic needs will be more productive workers and more successful. Their children—nurtured in supportive families and positive learning environments—will contribute more to our future economy.”

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation.

Topics/Tags: | Children and Youth | Families and Parenting | Poverty, Assets and Safety Net

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