EPI: Work Requirement Proposals Ignore Labor-Market Realities, Wouldn’t Likely Succeed

As policymakers debate proposals to take food assistance or health coverage away from beneficiaries who don’t work a set number of hours or participate in qualifying work activities, a new Economic Policy Institute (EPI) paper shows why such proposals ignore the realities of the low-wage labor market and would do little to boost employment. These proposals, included in state Medicaid waivers and the SNAP provisions of the House-passed farm bill, would harm participants, including many workers, the paper explains.

The paper provides evidence that key assumptions underlying work requirements — including that adult participants in means-tested programs such as SNAP or Medicaid all can find stable employment — don’t match the reality:

• Low-wage work is often unstable. Lower-paid workers are much likelier than higher-paid workers to transition from employment to either unemployment or out of the labor force or vice versa. One in 10 workers earning $10 an hour transitions each month, compared to 1 in 25 workers earning $20 an hour. Workers in low-wage industries such as retail trade and leisure, where SNAP and Medicaid participants commonly work, have higher rates of involuntary part-time employment than workers in other industries.
• Much of this employment volatility reflects the characteristics of low-wage jobs, not decisions by workers. Low-wage jobs are likelier to lack benefits such as paid sick leave and health coverage, and workers in those jobs are likelier to have no flexibility over their work schedule, trouble getting time off for personal matters, and physically demanding and unpleasant or dangerous working conditions. These factors can contribute to job volatility. For example, the paper cites research showing that providing paid sick leave reduces the likelihood of a worker leaving a job, particularly for mothers.
• Similarly, labor market conditions, not workers’ motivation to work, drive employment among low-wage workers. Work hours rose more among households in the bottom fifth of the income scale than among all workers from 1979 to 2007, then fell faster for them over the next decade due to the Great Recession and slow recovery. The paper also notes that even in a healthy economy, additional barriers keep many people out of work, as evidenced by the comparatively high unemployment rates among workers who have less education, are African American, or are in fair or poor health.

Work requirement proposals won’t likely increase employment, as most participants in these programs are already working and those who aren’t often face barriers to work. And these policies could harm many workers, such as those who lose benefits when they are temporarily out of work or working fewer hours than they want due to employer decisions.