Poverty Despite Work
Many Working Families with Children in Kentucky Remain Poor

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Some 80,000 Kentucky families with children live in poverty despite the presence of a working parent, according to a report released Wednesday by the Center on Budget and Policy Priorities and Kentucky Youth Advocates.

The report, Poverty Despite Work in Kentucky, finds that two-thirds of poor families with children in Kentucky work. Their work effort is substantial, averaging 10 months per year. Nearly one-quarter of poor families with children in Kentucky included a full-time, year-round worker.

Poverty among working families is getting worse. During the past decade, the poverty rate among working families with children in Kentucky has risen from 12 percent to 16 percent.

Work, not welfare, is the main source of income for most poor families with children in Kentucky. Less than 20 percent of poor families with children relied on welfare for the majority of their income.

"It's common to assume that families are poor because the parents don't work, but these statistics show that this belief is false. Many parents are working and playing by the rules, but still can't make ends meet," said Christina Smith FitzPatrick, an analyst at the Center on Budget and Policy Priorities and author of the report.

These findings are particularly relevant given the effects of welfare reform. Kentucky's welfare caseload has declined by almost 40 percent since it reached its peak in 1993. But leaving welfare does not automatically mean leaving poverty. In Kentucky, 59 percent of those leaving welfare for work in 1998 earned less than seven dollars an hour, a wage below the poverty line for a family of four. In 1998, the poverty line for a family of four was $16,655.

The study also suggests that Kentucky's high child poverty rate could be addressed by helping working poor families with children. Almost one in four children in Kentucky is poor.

"Most poor children live in a family which includes a worker. Kentucky's high child poverty rate is unlikely to decline significantly without efforts to assist low-wage working families," said Debra Miller, executive director of Kentucky Youth Advocates.

Both economic trends and government policies have made it more difficult for working parents to make ends meet.

First, job growth in Kentucky has been concentrated in the low-paying services and retail trade industries. Second, the value of the federal minimum wage has declined significantly during the past 20 years. Third, because of the make-up of Kentucky's tax system, low-income families pay a higher share of their income in taxes than do more wealthy families.

"These trends make it difficult for parents to support their families through work. With more families leaving welfare and trying to find jobs, Kentucky needs to adopt policies that encourage the work effort of parents and relieve some of the costs that families face as they move from welfare to work," said FitzPatrick.

The report identifies several ways that Kentucky can address the needs of working poor families with children.

Implementing a refundable state earned income tax credit would lift more families out of poverty. It would also relieve the burden of state and local taxes on poor families. Ten states have already established a state EITC.

Kentucky could also increase the state minimum wage to boost the wage floor for low-income workers in Kentucky, the report says.

In addition to these policies that would boost the incomes of the working poor, the report identifies three other strategies Kentucky could adopt. These policies would ease the burden on low-wage workers caused by the high cost of health insurance and child care.

Kentucky can expand health insurance coverage for working parents using federal matching funds. To inform parents about the availability of public health insurance programs for children, Kentucky can establish effective outreach programs. Finally, Kentucky can expand its child care assistance program.

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The Center on Budget and Policy Priorities is a nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs, with an emphasis on those affecting low- and middle-income people. It is supported primarily by foundation grants.

Kentucky Youth Advocates is a public interest organization that serves to promote the best interest of children, especially those of low-income, minority, and other vulnerable populations.

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