off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Bernstein on the Safety Net, Work, and Poverty
| By CBPP
CBPP Senior Fellow Jared Bernstein testified today at a House Ways and Means subcommittee hearing on how safety net and tax benefit programs affect recipients’ work incentives. Here’s an excerpt:
For policy makers to gain a full understanding of the impacts of the policies under review, we must investigate not solely any work disincentives they may engender, but also work incentives. . . . [A]nother necessary dimension along which these programs must be evaluated [is], to what extent do they achieve their poverty reduction goals? . . .Click here for the full testimony.
- While benefits of means-tested programs are, by definition, reduced as incomes rise beyond a certain point, their work disincentives differ, and a number of significant programs, including the EITC and SNAP, are found to have either positive or neutral impacts on labor supply.
- A recent, exhaustive review of the poverty reduction effectiveness of our safety net and social insurance programs found that “…the combination of the means-tested and social insurance transfers in the system have a major impact on poverty, reducing deep poverty, poverty, and near-poverty rates by about 14 percentage points in the U.S. population as a whole in 2004.”
- Importantly, the study concluded that “…this impact is only negligibly affected by work incentives which, in the aggregate, have almost no effect on the pre-transfer rates of poverty in the population as a whole.”
- Recent research also finds positive generational effects of safety net programs on later education and earnings outcomes of children from families that received such benefits. In the full accounting that I’m advocating, these benefits too must be assessed against any costs of work disincentives.
- lower marginal tax rates by extending phase out ranges (even though this increases costs);
- provide work supports, such as child care and transportation assistance;
- increase the number of jobs available to low-income workers through demand-side policies.
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