Giving Compass' Take:
- Elaine Waxman and Heather Hahn discuss research that shows that work requirements fail to help - and can actually hurt - the intended beneficiaries.
- What role can donors play in supporting evidence-based policy?
- Learn how the child Tax Credit help families.
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Ideally, negotiations around policy choices draw on the best evidence about what works and doesn’t work in public programs. In the case of work requirements, the evidence is clear: they may sound appealing, but they don’t actually promote increased work and earnings. In fact, they impose other harms.
The American Rescue Plan Act, passed in March 2021, provides families a monthly CTC payment between July and December 2021 of up to $300 for each child younger than 6 and up to $250 for children ages 6–17, with the remainder refunded following the 2021 year-end tax filing. The American Rescue Plan Act made additional significant—albeit temporary—changes to the CTC that aim to support the lowest-income families who were previously not eligible for the credit.
Analyses of the impact of the new CTC indicate significant reductions in poverty and low income for children across the US. If the credit is made permanent, Urban researchers estimate that child poverty across the US would be cut by more than 40 percent in a typical year, assuming that 80 percent of eligible households are reached. In Manchin’s home state of West Virginia, child poverty could be reduced by nearly 50 percent.
Work requirements don’t increase work and earnings
The problem with work requirements as a proposed solution to an already low risk of work disincentives is that they don’t actually achieve their objectives. Over the past several years, researchers have delved into the impact of work requirements on employment in US public benefit programs and found that requirements don’t facilitate their stated primary goal of increasing work and earnings.
What work requirements can do: Produce negative outcomes
Work requirements can lead to negative outcomes that further undermine program efficiency and erode programs’ benefits for household well-being. It’s unclear what level of documentation would be required to comply with CTC work requirements, but the evidence shows the red tape associated with work requirements can cause people to lose access to vital supports, even when they are working or should be exempt.
Read the full article about work requirements by Elaine Waxman and Heather Hahn at Urban Institute.