The Hamilton Project at Brookings

Section 4: Improving Safety Net and Work Support

  Proposal Title, Author(s) Proposal Description
10. Supporting Low-Income Workers through Refundable Child-Care Credits, James P. Ziliak Proposes converting the federal Child and Dependent Care Credit from a nonrefundable tax credit to a refundable one, capping eligibility at $70,000 and making the credit a progressive function of income, the age of the child, and utilization of licensed care facilities.
11. Building on the Success of the Earned Income Tax Credit, Hilary Hoynes Proposes expanding the Earned Income Tax Credit (EITC) by raising the benefits for families with one child to be on par with the benefits for families with two children.
12. Encouraging Work Sharing to Reduce Unemployment, Katharine G. Abraham and Susan N. Houseman Proposes that the federal government subsidize state work-sharing payments during economic downturns, make work sharing a requirement for state unemployment insurance systems, change federal requirements to modify provisions of state work sharing plans that may discourage employer participation, and provide states with adequate funding to administer work-sharing programs.
13. Designing Thoughtful Minimum Wage Policy at the State and Local Levels, Arindrajit Dube Proposes that states and localities consider median wages and local costs when setting minimum wages, index the minimum wage for inflation, and engage in regional wage setting.
14. Smarter, Better, Faster: The Potential for Predictive Analytics and Rapid-Cycle Evaluation to Improve Program Development and Outcomes, Scott Cody and Andrew Asher Proposes that federal, state, and local agencies conduct thorough needs assessments to identify where predictive analytics and rapid-cycle evaluation can improve service delivery.
Download All The Proposals or the Highlights Below:

Economic self-sufficiency through labor market work for low-income families, especially those headed by a single mother, formed a fundamental tenet of both the 1993 expansion in the Earned Income Tax Credit (EITC) and the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (aka welfare reform). While both reforms have been credited with expanding employment of single mothers in the years immediately following implementation, employment rates of mothers with dependent children have been on a steady decline over the past decade, leaving many families unable to make ends meet.

A key financial challenge facing these families is finding affordable child care.

This policy memo introduces a way to restructure an existing federal child-care tax credit to better incentivize work and improve the financial and child well-being for low-income families. Specifically, I propose converting the Child and Dependent Care Credit (CDCC) from a nonrefundable credit — a credit that cannot exceed the income taxes owed by a family — to a refundable credit—one that can result in a net gain after taxes—that is targeted to low- and middle-income families.


Building on the Success of the Earned Income Tax Credit
Hilary Hoynes (University of California, Berkeley)

After expansions to the Earned Income Tax Credit (EITC) in the late 1980s through the late 1990s — under Democrat and Republican administrations — the EITC now occupies a central place in the U.S. safety net. Based on the Census Bureau's 2012 Supplemental Poverty Measure (SPM), the EITC keeps 6.5 million people, including 3.3 million children, out of poverty. No other tax or transfer program prevents more children from living a life of poverty, and only Social Security keeps more people above poverty

Since the EITC is only eligible to tax filers who work, the credit's impact on poverty takes place through encouraging employment by ensuring greater pay after taxes.Yet a program of this size and impact could be more equitable in its reach. Under the current design of the EITC, childless earners and families with only one child, for instance, receive disproportionately lower refunds.

Considering this broad set of EITC reforms, and recognizing the demonstrated effectiveness of the program as an antipoverty program with numerous benefits, this policy memo proposes an expansion for the largest group of EITC recipients: families with one child. In particular, I propose to expand the one-child schedule to be on par with the two-child schedule, in equivalence scale-adjusted terms.


Encouraging Work Sharing to Reduce Unemployment
Katharine G. Abraham (University of Maryland) and Susan N. Houseman (W.E. Upjohn Institute for Employment Research)

During the Great Recession, millions of Americans lost their jobs as employers downsized in response to falling demand. A substantial body of research implies that these job losses can lead to significant and persistent problems for affected workers, including lengthy periods of unemployment, sustained earnings losses, serious health problems, and other adverse outcomes.

Recent public debate about the problem of unemployment — and especially long-term unemployment — has focused to a great extent on providing extended unemployment insurance (UI) benefits to support family incomes following a job loss. Strategies for preventing layoffs have not received comparable attention in the United States. By comparison, many other developed countries have incorporated work sharing into their UI systems, permitting the payment of prorated benefits to workers who are kept on the job with reduced hours because of slack demand.

Work sharing has been credited with substantially reducing the number of layoffs and mitigating unemployment during the recent recession in several other countries.

We propose that the federal government take additional actions to encourage the use of work sharing as an alternative to layoffs during future U.S. recessions.


Designing Thoughtful Minimum Wage Policy at the State and Local Levels
Arindrajit Dube (University of Massachusetts Amherst)

Rising wage inequality and stagnant real wages have contributed to inequality in family incomes during the past three decades. The federal minimum wage has failed to keep pace with both the cost of living and the median wage in the labor market. As a consequence, working full-time at the minimum wage does not allow many families to escape poverty, or to attain economic self-sufficiency.

State and local governments can set minimum wages in excess of the statutory federal minimum wage. Indeed, state and local governments have played an important role in establishing minimum wages across the country; as a result, thirty-seven states had state minimum wages exceeding the federal level in 2007 prior to the most recent federal increase. Cities, too, have begun setting higher minimum wages, as evidenced by city-level wage minimums in Albuquerque, San Francisco, San Juan, Santa Fe, Seattle, and Washington, DC; other cities are actively exploring possibilities of raising minimum wages.

In this policy memo, I propose a framework for effective state and local minimum wage policy. The implementation of the state and local framework does not override the need for reform at the federal level. Thoughtful reforms to the federal minimum wage can help reduce poverty and mitigate inequality.


Public administrators have always been interested in identifying cost-effective strategies for managing their programs. As government agencies invest in data warehouses and business intelligence capabilities, it becomes feasible to employ analytic techniques used more-commonly in the private sector. Predictive analytics and rapid-cycle evaluation are analytical approaches that are used to do more than describe the current status of programs: in both the public and private sectors, these approaches provide decision makers with guidance on what to do next.

We believe that these techniques can be used to help government programs — including social service programs serving low-income individuals — to improve program services while efficiently allocating limited resources. We believe that the use of predictive modeling and rapid-cycle evaluation — both individually and together — holds significant promise to improve programs in an increasingly fast-paced policy and political environment.