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End of Regulation

The Podium

A bind for working families

For the first time in a long time, cities and states are looking seriously at increasing minimum wage. Yet as helpful and worthwhile as increasing pay for low-skill, entry-level workers is, changing only minimum wage policies misses the mark when it comes to supporting working families. Rather, the most critical policy issue is to revisit how eligibility requirements for key social services and health benefits prevent working families from moving up the social and economic ladder.

Recently I met with a single mother who lives in public housing in an affluent Boston suburb; her two children attend highly regarded public schools. After three years of juggling school and part-time work, she recently reached one of her professional goals: completing nursing school. She now has a full-time nursing job, increased salary, and a higher degree of personal and job satisfaction. But life has not become easier for her and her family.

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Rather, it has become increasingly stressful and complicated. Her higher salary — which at $55,000 is not high — means her public housing rent will go up significantly. With the high cost of housing in her town, she has no other rental options. Thus, she may have to find housing in a new city or town, uprooting her children from Brookline schools, starting over in another school system, and leaving behind both her and children’s long-time friends and peers.

And it continues. Her children no longer qualify for the lowest rate on state Child Health Insurance Plan they were on while she was in school and working part-time, yet the family insurance she can subscribe to through her new job is expensive. She also no longer qualifies for the childcare subsidy she uses to send her daughter to after school. When you do the math — what she now earns, minus what she will pay in rent, moving costs, childcare and health insurance — she is, in fact, worse off.

She is not alone in facing this dilemma. Though nearly 60 percent of low-income families nationally have at least one parent working full-time, many of these families struggle to pay the bills. Even when these parents advance professionally, they cannot get ahead. As wages and earnings increase and they move above the official poverty level (or even a certain percentage above this level for some benefits) families become ineligible for key social services and benefits. As a result, while families may earn more, they find themselves with fewer resources and less financial security, given the rise in other costs. The National Center for Children in Poverty, through its Family Resource Simulator project, effectively chronicles this bind facing many working, low-income families around the country.

While the federal government and state and local governments face fiscal constraints, policymakers should guard against cutting or reducing eligibility for key social services that support low income working families. At the same time, new policy innovation is needed to aid families who are doing everything they can to improve their professional status and quality of life. For example, local public housing entities, state child care agencies, and health insurance providers could offer a two to three year “grace period” to rising families that have become ineligible for services, allowing them to maintain benefits while continuing to work toward greater financial security. And even after this grace period, there could be a gradual reduction in benefits to support transition and planning prevent sudden financial demands and life changes. Much of the increase in funding needed for this extension of benefits would be offset by the increased tax revenue on the earnings for these families.

In the end, this is about the American Dream. All families should have the chance to reach financial security and to improve their quality of life through perseverance and hard work. We need to align public policy to make this dream a reality. And changes to minimum wage policies, while important, are not enough.

Jake Murray is the director of the Aspire Institute at Wheelock College.
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