References

  1. One of the best resources about the history of the Social Security Act and related legislation is the Social Security Administration itself, which has a historian’s office.
  2. The executive group included Frances Perkins, Henry Morgenthau Jr., Homer Cummings, Henry Wallace, and Harry Hopkins, and it was “the ultimate decision-making authority on the CES.” The executive director of the staff was Edwin Witte. An advisory council of twenty-three “civic leaders from outside the Roosevelt Administration,” and a technical board of twenty-one officials from federal agencies below the cabinet level augmented and supported the executive team. The Social Security Administration details all members of the Committee and its staff.
  3. There are many sources of U.S. economic history. One of the most sweeping is Robert Gordon’s Rise and Fall of American Economic Growth.
  4. The Social Security Act of 1935 established old-age benefits and unemployment compensation, and it made a number of state grants to promote income security. The Fair Labor Standards Act of 1938 established the U.S.’ first minimum wage, standardized a forty-four-hour work week, required extra pay for overtime work, and prohibited certain child labor. The purpose of the National Labor Relations Act of 1935 was to “protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices.”
  5. Wealth is implicitly included in “the risk to current income” in that one may draw on wealth as source of income in the event of a shock to current income. In other words, wealth reduces risks to current income.
  6. Bureau of Labor Statistics. 2021. Employment Levels by Industry, Seasonally Adjusted, 2000–2020.
  7. U.S. Census Bureau. 2021. Week 1 Household Pulse Survey: April 23–May 5 and Week 21 Household Pulse Survey: December 9–December 21. Employment Tables, Table 1. Food Sufficiency and Food Security Tables, Tables 2a and 2b.
  8. U.S. Census Bureau. 2020. Week 12 Household Pulse Survey: July 16–July 21. Stimulus Table, Table 1.
  9. U.S. Department of Treasury. 2021. American Rescue Plan: Treasury’s Progress and Impact After Six Months.
  10. An example of an in-kind transfer is the Supplemental Nutrition Assistance Program (SNAP), through which beneficiaries receive benefits that may be spent on only certain food items.
    An example of a subsidy to service providers is the Legal Services Corporation Basic Field Grant. This grant funds the Legal Services Corporation, which then distributes funds to providers of civil legal aid to low-income people.
    An example of direct service provision is Head Start. Head Start offers early educational opportunities to children in low-income families, in addition to other supports to promote a healthy home environment.
    An example of a voucher program is the Housing Choice Voucher Program. The program provides vouchers to (some, not all) very low-income families, elderly individuals and couples, and people with disabilities. The vouchers allow beneficiaries to choose suitable housing in the private market. In most cases, the benefiting family pays 30 percent of monthly adjusted gross income toward rent and utilities, and the local public housing agency covers the remaining rent and utility expenses.
  11. The old age insurance portion of the legislation did not initially include farmworkers and domestic workers, which amounted to excluding at least 60 percent of Black workers from coverage at the time. By 1950, most workers in these professions were covered, and the remainder were covered in 1954 (see Dewitt 2010). Regardless of the reasoning, the effect on Black workers’ financial security was significant. The federal government created a large and generous program that did not benefit many of the lowest-income workers for over a decade of its existence.
  12. Charles H. Houston—the president of the National Association for the Advancement of Colored People at the time—testified before the Senate regarding the first draft of the bill, which would ultimately produce the Social Security Act. He stated that the legislation “looked like a sieve with the holes just big enough for the majority of Negroes to fall through.” It should be noted, Dewitt writes, that “Houston pointed out the adverse impact of the provision on African Americans, as part of an overall critique designed to persuade Congress to drop the whole Social Security program entirely. He wanted a single, universal, federal welfare benefit in lieu of a contributory social insurance system” and conceded that the administration of “‘a pay roll tax on casual, domestic and agricultural workers would practically consume the tax itself.’ So Houston was not advocating coverage for domestic and farm workers, but rather rendering the whole issue moot by rejecting the Social Security system entirely.”
    George E. Haynes—executive secretary at the Department of Race Relations for the Federal Council of Churches—also testified regarding discrimination and exclusion in the legislation. Mr. Haynes advocated for a clause prohibiting “discrimination on account of race or color in the administration of the services and benefits to any person otherwise eligible.” No such clause was included in the original legislation.
  13. The Color of Law (Rothstein 2017) documents closely how Black individuals in the U.S. have been excluded, both explicitly and (especially) implicitly, from many of the benefits offered by public policy over the past century.
  14. Returning from War, Returning to Racism (Clark, 2020) looks specifically at how the promised benefits of the G.I. Bill were in a large part denied to Black veterans. Some argue that the discriminatory implementation of the G.I. Bill initiated an era of affirmative action for White families.
  15. Today, for example, many part-time workers (especially low-wage part-time workers) do not earn enough or do not have steady enough employment to qualify for Unemployment Insurance benefits. Independent contractors are ineligible for benefits altogether (Kovalski and Sheiner 2020).
  16. Often these structural and individual interventions went hand in hand. The Banking Act of 1933, for example, created the Federal Deposit Insurance Corporation (FDIC), which both stabilized the banking industry through stricter regulation but also insured individual deposits up to an amount, which greatly reduced the risk depositors were exposed to. Similarly, the National Housing Act of 1934 created the Federal Housing Administration (FHA), which both stabilized the housing market through insuring mortgages but also created a broader mortgage market for consumers with better, regulated terms. You can find an overview of all New Deal legislation here. While these new laws reduced precarity and improved well-being for many working households, Black people were directly excluded from these gains. Rothstein writes, “The Federal Home Loan Bank Board, for example, chartered, insured, and regulated savings and loan associations from the early years of the New Deal but did not oppose the denial of mortgages to African Americans until 1961. It did not enforce the new race-blind policy, however—perhaps because it was in conflict with the board’s insistence that mortgage eligibility account for ‘economic’ factors. Like the FHA, it claimed that judging African Americans to be poor credit risks because they were Black was not a racial judgment but an economic one. As a result, its staff failed to remedy the industry’s consistent support for segregation” (The Color of Law, 2017, p. 108).
  17. Bureau of Labor Statistics. Labor Force Statistics from the Current Population Survey. Series: (Seas) Average Weeks Unemployed – LNS13008275.
  18. On aggregate, LFP rates for the sixteen and older population were down 4 percentage points between 1999 and 2019. This may not be too problematic, however, as the aged 16–24 population has seen LFP rates decline by almost 10 percentage points. These declines are nearly 17 percentage points for the aged 16–19 population. In other words, if young people are receiving more education and therefore not participating in the labor force, that is not a problem. If fewer young people are participating in the labor force during the period of their education, that is also not a problem.
    On the other end of the spectrum, the fifty-five and older population increased its LFP by 8.4 percentage points over the same time period. This includes a 9.5 percentage point increase for the 65–74 population, and a 4 percentage point increase for the seventy-five and older population. To the extent that these increases are related to more accessible and less physically burdensome work, they are not a problem. To the extent that they are related to retirement insecurity, they are more problematic (Bureau of Labor Statistics, 2020).
    Source (25–54 LFP data): U.S. Bureau of Labor Statistics, Labor Force Participation Rate: 25–54 Yrs. [LNU01300060], retrieved from FRED, Federal Reserve Bank of St. Louis.
  19. Economic status is not to be confused with socioeconomic status, which is defined by the American Psychological Association as follows: “Socioeconomic status is the social standing or class of an individual or group. It is often measured as a combination of education, income and occupation.” In short, “economic status” refers to what resources one owns and can afford to buy, while “socioeconomic status” refers to one’s well-being compared to others.
  20. For example, one definition of economic status is whether a person is “in poverty.” A poverty threshold is a dollar amount below which someone is considered poor and above which someone is not poor. What that poverty threshold should be, and what it should measure, is the subject of a long and sometimes fierce debate.
  21. Sahada, 2019. Up to Half of Exiting CEOs Don’t Quit. They Get Fired. CNN Business.
  22. CEOs are a well-studied profession. They are not only leaders in industry but also the poster children for inequality. A recent report from the Economic Policy Institute found the ratio of “CEO-to-typical-worker compensation was 320-to-1” in 2019, up from 293-to-1 in 2018, 61-to-1 in 1989, and 21-to-1 in 1965 (Mishel and Kandra, 2020). As for “golden parachutes,” the most recent data show “change in control benefits for the top 200 CEOs” to be about $27.9 million in 2019 (Executive Change in Control Report 2020).
  23. To expand on the example, janitors and cleaners made, on average, $30,010 per year as of May 2019. For families earning less than the median family income—$86,000 in 2019 (see Table H-5)—there is a 50 percent chance of owning a home (see Table 8). As such, it is very unlikely that the janitor owns a house.
  24. Potter 2011, for example, details the failure of the economics community to forecast the level of risk present in the housing market leading up to the Great Recession in 2007.
  25. Janesville, by Amy Goldstein, documents the story of workers at a General Motors plant in Janesville, Wisconsin, when it closed in 2008. The factory employed 4,800 individuals and provided high-wage jobs that the laid-off workers struggled to replace.
  26. To account for the change in prices over time, dollar amounts from prior eras are adjusted for comparison to today’s dollars, or to “real” terms, by accounting for the average change in prices over time. Throughout the report, we note by use of “real” that dollar amounts are adjusted in this manner. GDP data come from the Bureau of Economic Analysis Table 1.1.6. Real Gross Domestic Product, Chained Dollars, line 1. Dollars are in terms of chained 2012 dollars. Population data come from the Bureau of Economic Analysis Table 2.1. Personal Income and Its Disposition, line 40.
  27. The largest year-over-year decrease in consumption spending since 1942 took place in 2009 and was small in comparison to decreases observed during the Great Depression (1.3 percent). The data are available only through 2019; 2020 will likely be the fifth year of decline.
    Bureau of Economic Analysis Table 2.3.1, “Percent Change from Preceding Period in Real Personal Consumption Expenditures by Major Type of Product 1930–2019.”
  28. Residential Energy Consumption Survey 1980, 1987, 1997, 2005, 2009, and 2015.
  29. Pew Research Center. 2019. Mobile Fact Sheet.
  30. Oak Ridge National Laboratory. Table 9.04: Household Vehicle Ownership, 1960–2018.
  31. U.S. Census Bureau. 1976. Historical Statistics of the United States, Colonial Times to 1970.
    U.S. Census Bureau. 2020. Homeownership Rate for the United States [RHORUSQ156N], retrieved from FRED, Federal Reserve Bank of St. Louis.
  32. Federal Communications Commission. 2020. 2020 Broadband Deployment Report. Figure 4, p. 23.
    Busby et al. 2020 indicate that the FCC’s report significantly overestimates the portion of individuals with access to broadband internet at every level.
  33. National Equity Atlas. Car Access, United States: Percent of Households without a Vehicle by Race/Ethnicity: United States; Year 2019.
  34. U.S. Census Bureau. 2020. Quarterly Residential Vacancies and Homeownership, Third Quarter 2020. CB20-153.
  35. Semega et al. 2020. Income and Poverty in the United States: 2019. Table B-5. U.S. Census Bureau.
  36. U.S. Census Bureau. 2020. Historical Poverty Tables: People and Families—1959 to 2019. Table 2, Poverty Status of People by Family Relationship, Race, and Hispanic Origin; Table 3, Poverty Status of People by Age, Race, and Hispanic Origin.
  37. As a result of the Social Security Amendments of 1983, the age at which one receives full Social Security retirement benefits began increasing from sixty-five to sixty-seven in the year 2000. The full retirement age reached sixty-seven in 2022.
  38. The reduction in poverty among the sixty-five and older population is largely attributed to Social Security providing a significant and steady stream of income in retirement. While that population is the most impacted by Social Security, the program provides substantial poverty relief for the population under age sixty-five. The program is estimated to have lifted almost seven million children and adults out of poverty in 2018. Read more in Social Security Lifts More Americans above Poverty Than Any Other Program.
  39. U.S. Census Bureau. 2020. Historical Poverty Tables: People and Families—1959 to 2019. Table 2, Poverty Status of People by Family Relationship, Race, and Hispanic Origin.
  40. Source (poverty threshold data): U.S. Census Bureau. 2020. Historical Poverty Tables: People and Families—1959 to 2019. Table 1, Weighted Average Poverty Thresholds for Families of Specified Size: 1959 to 2019.
    Source (1959 median income): U.S. Census Bureau. 1961. Income of Families and Persons in the United States: 1959.
  41. Higher-income Social Security beneficiaries may see a portion of their benefits subject to the income tax. Read more on the Social Security Administration (SSA) website.
  42. Poverty in the United States: 50-Year Trends and Safety Net Impacts (Chaudry et al. 2016) shows tax and transfer programs as reducing poverty by 12.7 percentage points in 2012. Figures 7 through 16 document the anti-poverty impacts of an array of income security programs in the U.S.
  43. Short, Kathleen. 2011. The Research Supplemental Poverty Measure: 2010. U.S. Census Bureau, P60-241.
    Fox, Liana. 2020. The Supplemental Poverty Measure: 2019. U.S. Census Bureau, P60-272.
  44. Initially formed in 1961 by twenty-one national governments in Europe and North America, the OECD now includes thirty-seven member countries. Whenever making international comparisons along economic metrics, the U.S. should be compared to the OECD countries only or the subset of the most advanced economies within the OECD (known as the G7): Canada, France, Germany, Italy, Japan, and the United Kingdom.
  45. The OECD’s definition is justified by “the notion that avoiding poverty means an ability to access the goods and services that are regarded as customary or the norm in any given country.”
    OECD. 2019. Society at a Glance 2019: OECD Social Indicators. OECD Publishing, Paris. Chapter 6. https://doi.org/10.1787/soc_glance-2019-en.
  46. OECD. 2021. Poverty Rate (Indicator). doi: 10.1787/0fe1315d-en
  47. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Spending Tables, Table 1.
  48. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Food Sufficiency and Food Security Tables, Table 2.
  49. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Housing Tables, Table 1b.
  50. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Housing Tables, Table 3b.
  51. Whereas, before taxes and transfers in 2017, labor income made up 61 percent of total income for the lowest income quintile, 68 percent of income for the middle three quintiles, and 70 percent for those in the 81st to 99th percentiles, labor income accounted for only one-third of income for the top 1 percent of earners. See The Distribution of Household Income, 2017 (Congressional Budget Office) for more information.
  52. Occupational Employment Statistics. 2020. May 2019 National Occupational Employment and Wage Estimates United States. U.S. Bureau of Labor Statistics.
  53. As of March 2020, 88 percent of full time, nonfederal employees have access to paid sick leave. Of this population, 87 percent have access to paid vacations, but only 25 percent have access to paid family leave. Access rates are significantly lower for part-time workers (U.S. Bureau of Labor Statistics, 2020).
  54. Assistant Secretary for Planning and Evaluation. 2019 Poverty Guidelines. U.S. Department of Health and Human Services.
  55. The median annual earnings for an additional 1.4 million workers are less than $31,200—the earnings of a full-time, full-year worker at $15 per hour. The Occupational Employment and Wage Statistics does not offer median wage data for these occupations (“teaching assistants, except postsecondary”; “legislators”; and “umpires, referees, and other sports officials”).
  56. This total excludes self-employed workers, who are not employees.
  57. Gould, Elise. 2020. State of Working America Wages 2019. Figure C. Economic Policy Institute.
  58. There are one hundred points, or percentiles, in a distribution. The wage distribution is the wages of each worker in the U.S., ranked from least to most; this can be conceptualized as a line of workers arranged from lowest earning to highest earning. If there were one hundred people in a line, wages at the 10th percentile are the earnings of the tenth person in line, and not the wages of that person and the nine people below him. Therefore, the 10th percentile earner is the highest earner among the ten lowest.
  59. Economic Policy Institute. 2019. State of Working America Data Library. Wages by percentile and wage ratios. Original data from the Current Population Survey Outgoing Rotation Group microdata.
  60. Two points of debate exist around whether the link between worker pay and overall worker productivity is causal and, regardless of the link, the causes of weak wage growth. Summers and Stansbury 2017 find a strong and positive causal relationship between productivity and compensation, arguing that “other orthogonal factors are likely to be responsible for creating the wedge between productivity and pay in the US economy, suppressing typical workers’ incomes even as productivity growth acts to increase them.” Summers and Stansbury 2018 summarize in detail the existing literature around the productivity-compensation gap:
    “Computerisation and automation have been put forward as causes of rising mean-median income inequality (e.g. Autor et al. 1998, Acemoglu and Restrepo 2017); and automation, falling prices of investment goods, and rapid labour-augmenting technological change have been put forward as causes of the fall in the labour share (e.g. Karabarbounis and Neiman 2014, Acemoglu and Restrepo 2016, Brynjolffson and McAfee 2014, Lawrence 2015).
    At the same time, non-purely technological hypotheses for rising mean-median inequality include the race between education and technology (Goldin and Katz 2007), declining unionisation (Freeman et al. 2016), globalisation (Autor et al. 2013), immigration (Borjas 2003), and the ‘superstar effect’ (Rosen 1981, Gabaix et al. 2016). Non-technological hypotheses for the falling labour share include labour market institutions (Levy and Temin 2007, Mishel and Bivens 2015), market structure and monopoly power (Autor et al. 2017, Barkai 2017), capital accumulation (Piketty 2014, Piketty and Zucman 2014), and the productivity slowdown itself (Grossman et al. 2017).
    Benmelech et al. 2018 also discuss the extent to which labor market concentration may contribute to wage stagnation.
  61. We show the full series, starting with the first available year. Income at key percentiles of the distribution is estimated and published annually by the Census Bureau. Wages are not. They must be estimated from the raw Census data from the Current Population Survey. Survey methodological changes mean that most wage series start, at the earliest, in 1975.
  62. DQYDJ. 2020. Household Income by Year: Average, Median, One Percent (and a Percentile Calculator).
  63. Leonesio and Del Bene 2011 find that, using data from 1981 to 2004, the earnings trajectory of male workers at the 50th income percentile or below is declining over time. For female workers during this period, earnings trajectories increased at each income percentile, though by substantially larger magnitudes as one moves up the income scale. Kopczuk and Saez 2010 “find that long-term mobility measures among all workers . . . display significant increases since 1951 either when measured unconditionally or when measured within cohorts. However, those increases mask substantial heterogeneity across gender groups. Long-term mobility among males has been stable over most of the period with a slight decrease in recent decades. The decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women is the driving force behind the increase in long-term mobility among all workers.” Table 1 in Auten, Gee, and Turner 2013 shows that, of taxpayers in the bottom income quintile in 1987, 52 percent remained in the bottom quintile in 2007 and an additional 23 percent had incomes in the second quintile.
  64. In other words, lack of growth at the bottom of the distribution would not be as noteworthy if there was not growth (especially high levels of growth) at upper portions of the distribution.
  65. Saez, Emmanuel. 2020. Striking It Richer: The Evolution of Top Incomes in the United States (Updated with 2018 Estimates). Figure 1.
  66. Capital gains are income from the profit on a sale of an asset. Typically these include stocks, bonds, real estate, or a business. As noted earlier in this section, the wealthiest households in the U.S. tend to have disproportionate income shares as capital gains relative to the rest of the population (see footnote 51).
  67. Income shares, shown in Figure 4, are not the only measure of income equality. There are also income ratios, the Gini coefficient, and others. They each show an increase in income inequality since the mid-1970s.                                                                                                                            Researchers have compiled an incredible library of resources to graphically depict the extent of inequality. The Economic Policy Institute and Inequality.org offer interactive charts that help show changes in the distribution of wealth and income over the past decades in the U.S. The World Inequality Database offers similar charts from nearly every country in the world. Some of the more prominent economists who have written on inequality recently include Joseph Stiglitz, Heather Boushey, Thomas Piketty, Alan Krueger, and James Heckman. This Center on Budget and Policy Priorities report discusses how inequality is measured and the various sources of data.
  68. Source (median price of a new home): U.S. Census Bureau. 2020. New Residential Sales. Median and Average Sale Price of Houses Sold.
    Source (median income in nominal dollars): U.S. Census Bureau. 2020. Historical Income Tables: Households. Table H-6.
  69. In general, in well-functioning economies, incomes should rise faster than prices: This increase in income levels is the source in the improvement of economic status over time among households. Otherwise, people may have more money but be able to afford less of a good, as is the case with homes and college tuitions.
  70. 2019 was the first year since 1991 outside of the Great Recession in which median new-home sale prices fell, while median household income saw its largest annual increase since 1979. In short, the ratio of median new home sale prices to median household income fell from 5.2 in 2018 to 4.7 in 2019.
  71. Source (college pricing): Ma, Jennifer, Matea Pender, and CJ Libassi. 2020. Trends in College Pricing and Student Aid 2020. Table CP-2, Excel Data. New York, College Board.
    Source (median income): U.S. Census Bureau. 2020. Historical Income Tables: Households. Table H-6.
  72. These calculations assume that the savings are not invested in growing assets.
  73. Board of Governors of the Federal Reserve System (U.S.), Household Financial Obligations as a Percent of Disposable Personal Income [FODSP], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/FODSP, November 19, 2020.
  74. Federal Reserve Bank of New York. 2020. Quarterly Report on Household Debt and Credit, 2020: Q3. Total Debt Balance and Its Composition. p. 3. “Home equity revolving” accounts are also known as “home equity lines of credit.” They can be thought of as “home equity loans with a revolving line of credit where the borrower can choose when and how often to borrow up to an updated credit limit” (p. 42).
  75. Median income increased by about 13.8 percent nominally between 2003 and 2019.
  76. See Fichtner 2019 for an analysis of increasing levels of debt among retirees and the extent to which debt is reducing economic security in retirement.
  77. Monica Prasad 2019 provides evidence that higher levels of spending on social insurance across OECD nations is associated with lower levels of household indebtedness. Allen et al. 2017 provides causal evidence that the 2011–2012 Medicaid expansion in California resulted in lower demand for high-interest loans. To this extent, debt—especially high-interest debt—might be viewed as both a symptom and reinforcer of economic insecurity.
  78. Bureau of Economic Analysis. 2021. National Income and Product Accounts. Table 2.6. Personal Income and Its Disposition, Monthly.
  79. The year 2020 is excluded from Figure 8 because—due to the unprecedented nature of the pandemic—the savings rate data are extraordinarily high and make the prior sixty years more difficult to understand.
  80. In August 2020, 34 percent of U.S. adults reported having less than $1,000, and 55 percent reported having $5,000 or less. This survey took place following the four highest monthly savings rates since 1959 from April through July 2021.
  81. This finding comes from the Survey of Household Economics and Dynamics (SHED) and the Survey of Consumer Finances (SCF), both from the Federal Reserve. Both of these surveys inform the Fed’s annual Report on the Economic Well-being of U.S. Households. The first year the question was asked (2013), 50 percent of respondents answered in the negative. The portion declined to 37 percent in 2019.
  82. This explanation is according to the author’s analysis in Why Are So Many Households Unable to Cover a $400 Expense? (Chen 2019).
  83. Source (wage data): Economic Policy Institute. 2019. State of Working America Data Library. Wages by education. Original data from the Current Population Survey Outgoing Rotation Group microdata.
    Source (income data): U.S. Census Bureau. 2020. PINC-03. Educational Attainment: People 25 Years Old and Over, by Total Money Earnings, Work Experience, Age, Race, Hispanic Origin, and Sex. 25 Years and Over, Total Work Experience “White alone, not Hispanic,” “Black alone,” and “Hispanic (any race).” Current Population Survey Annual Social and Economic Supplement.
  84. Income data are presented by the Census Bureau in smaller subgroups than in this table. For example, “>High school” is broken down into “less than 9th grade” and “9th to 12th nongrad.” To account for this, the data presented here are the weighted sums of the median income data presented by the Census Bureau (when necessary).
  85. Kaiser Family Foundation. 2020. Population Distribution by Race/Ethnicity.
  86. Are Emily and Greg More Employable than Lakisha and Jamal? is known as the landmark study that quantified some aspects of racial discrimination in the hiring process. Quillian et al. 2017 reviewed more than two dozen similar studies and found that the same result has persisted over the last three decades for Black individuals.
  87. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Banking and Credit. Figure 18 and Tables 10 and 11.
  88. U.S. Department of Education, National Center for Education Statistics. 2016/17 Baccalaureate and Beyond Longitudinal Study (B&B:16/17). Table 5.1. Cumulative Amount Borrowed and Percent Owed.
  89. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Student Loans and Other Education Debt. Figures 33 and 34.
  90. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Overall Well-Being in 2019. Box 2, Table A. Exposure to Crime and the Court System.
  91. U.S. Commission on Civil Rights. 2017. Targeted Fines and Fees Against Communities of Color: Civil Rights & Constitutional Implications.
  92. Tilcsik 2011 documents variation in response to job applications in which resumes show experience in a gay campus organization. He finds “in some but not all states, significant discrimination against the fictitious applicants who appeared to be gay.” This finding is reinforced by Badgett et al. 2009. While we might expect discrimination to have lessened since these papers were written, there is little question as to whether discrimination against the LGBTQ community still exists in the labor market. The 2015 U.S. Transgender Survey (see page 5) found that 15 percent of respondents were unemployed (compared to 5 percent of the total population at the time), and 29 percent of respondents were living in poverty (12 percent in total U.S. population).
  93. Human Rights Campaign. 2020. U.S. Supreme Court Is on the Right Side of History for LGBTQ.
  94. Chai and Maroto 2019 inspect the various sources of economic insecurity for gay and bisexual men in recent decades.
  95. The Financial Diaries Project and The Fragile Families and Child Wellbeing Study delve into income instability, and Jonathan Morduch, Kathryn Edin, and Katherine Newman have all contributed extensively to this literature.
  96. In income volatility literature, “permanent” and “transitory” shocks to income are frequently discussed. The former describes a shock with a “long-lasting effect which does not go away, even partially,” and the latter, a shock that affects earnings over a short period of time but does not permanently impact one’s future earning trajectory. While permanent negative shocks are more harmful, transitory negative shocks can be extremely difficult for households to manage as well. “Gross volatility” encompasses both permanent and transitory shocks.
    Moffit and Zhang 2018 “find that both gross volatility [of male income] and the component consisting of only the variance of transitory shocks have experienced a large increase during the Great Recession after following similar trends to those previously established showing upward trends from the 1970s to the 1980s followed by a stable period until the Recession.” Last, Western et al. 2016 find that large income losses have become more common than large income gains for low-income children between the mid-1990s and 2010. Moffit and Zhang provide an extensive overview of existing literature on income volatility in Tables 1–3 on pages 43–48.
  97. Hardy, Bradley, and James P. Ziliak. 2014. Decomposing Trends in Income Inequality: The “Wild Ride” at the Top and the Bottom. Economic Inquiry. Vol. 52, No. 1. p. 459–476.
  98. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Income. Table 6.
  99. Gennetian, Lisa A., Sharon Wolf, Heather D. Hill, and Pamela A. Morris. 2015. Intrayear Household Income Dynamics and Adolescent School Behavior. Demography. Apr;52(2):455-83. doi: 10.1007/s13524-015-0370-9. PMID: 25735265.
  100. See U.S. Financial Diaries.
  101. 83 Charts to Describe the Hidden Financial Lives of Working Americans. Chart 2.4. These data do not include income shocks from tax refunds or credits.
  102. 83 Charts to Describe the Hidden Financial Lives of Working Americans. Charts 4.1–4.2.
  103. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Banking and Credit. Table 12.
  104. U.S. Bureau of Labor Statistics. Table A-3. Employment Status of the Civilian Noninstitutional Population by Sex and Age, Seasonally Adjusted. Labor Force Statistics from the Current Population Survey.
  105. Mead, David, Karen Ransom, Stephen B. Reed, and Scott Sager. 2020. The Impact of the COVID-19 Pandemic on Food Price Indexes and Data Collection. U.S. Bureau of Labor Statistics. Table 4.
  106. In December 2020, Congress passed another relief bill after many of the provisions of the CARES Act were set to expire (H.R.133 – Consolidated Appropriations Act, 2021). At the time of our writing, additional relief bills are being proposed. None of the relief mentioned below was available to noncitizens.
  107. Cole, Bethany. 2020. Paid Leave Provisions in Recent Federal COVID-19 Response Legislation. National Academy of Social Insurance.
  108. Due to the exemption of private employers with over 500 employees and the limitations on “qualified reasons for leave,” the provision was not very effective in increasing paid leave in 2020.
  109. Federal Student Aid. Coronavirus and Forbearance Info for Students, Borrowers, and Parents. U.S. Department of Education.
  110.  Learn about Mortgage Relief Options and Protections. Consumer Financial Protection Bureau.
  111. O’Leary, Christopher J. 2020. Food Stamps and Unemployment Compensation in the COVID-19 Crisis. Upjohn Institute for Employment Research.
  112. Ibid.
  113. Ibid.
  114. Arnone, William. 2020. CARES Act Rebates: Who, How Much, When, and How? National Academy of Social Insurance.
  115. U.S. Census Bureau. 2020. Week 12 Household Pulse Survey: July 16–July 21. Stimulus Table, Table 1.
  116. U.S. Department of Labor, Wage and Hour Division. History of Changes to the Minimum Wage Law.
  117. At full-time work (forty hours per week, fifty-two weeks per year), a minimum wage worker earning the federal minimum wage earns $15,080 annually. Had the minimum wage increased with inflation using the Consumer Price Index for All Urban Consumers since January 2009, it would have been $8.86 as of January 2021 ($18,429 annually). Had it increased with median weekly earnings since the first quarter of 2009, it would have been $9.74 as of the fourth quarter of 2019 ($20,259 annually). Had it increased with average hourly earnings in the private sector since January 2009, it would have been $9.88 as of January 2021 ($20,550 annually) (January 2021 data preliminary at time of extraction).
  118. U.S. Department of Labor, Wage and Hour Division. 2021. Consolidated Minimum Wage Table.
  119. UC Berkeley Labor Center. 2020. Inventory of US City and County Minimum Wage Ordinances.
  120. In 2014, SeaTac became the first city in the U.S. to institute a $15 minimum wage as a result of employers at SeaTac playing “hardball” during union negotiations. As leverage, union organizer David Rolf put a $15 minimum wage on the city ballot. Much to his surprise, it passed, and since then many other cities, counties, and states have followed suit (Bergman 2015).
  121. The National Law Review. 2020. Florida Minimum Wage To Increase. Vol. X, No. 366.
  122. Bureau of Labor Statistics. 2020. Characteristics of Minimum Wage Workers, 2019.
  123. The 2021 federal poverty guidelines indicate that a household of four earning less than $26,500 is in poverty. At $12.75 for forty hours a week, fifty-two weeks a year, an individual would take home $26,520. This calculation does not take into consideration payroll taxes, income taxes, sales taxes, or tax credits.
  124. Oregon Minimum Wage. 2021. Oregon Bureau of Labor and Industries.
  125. Average wages are used to update the threshold for wages subject to FICA. The wage threshold changes every year based on average wage growth (Social Security Administration, Contribution and Benefit Base).
  126. U.S. Department of Labor, Wage and Hour Division. Wages and the Fair Labor Standards Act.
  127. U.S. Department of Labor, Wage and Hour Division. Subminimum Wage.
  128. According to the Department of Labor, “a worker who has disabilities for the job being performed is one whose earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury. Disabilities which may affect productive capacity include blindness, mental illness, developmental disabilities, cerebral palsy, alcoholism and drug addiction” (U.S. Department of Labor, Fact Sheet #39: The Employment of Workers with Disabilities at Subminimum Wages).
    An investigation into the use of subminimum wage practices for workers with disabilities by the U.S. Commission on Civil Rights found that its use violated the civil rights of workers with disabilities, did not lead to higher employment, and recommended repealing the section of the Fair Labor Standards Act (14(c)) that allows for subminimum wages (U.S. Commission on Civil Rights, Subminimum Wages: Impacts on the Civil Rights of People with Disabilities).
  129. Defined as “a student who is at least 16 years of age (or at least 18 years of age if employed in an occupation which the Secretary of Labor has declared to be particularly hazardous), who is receiving instruction in any accredited school, college or university and who is employed by an establishment on a part-time basis, pursuant to a bona fide vocational training program” (U.S. Department of Labor, Instructions for Form WH-205: Application to Employ Student-Learners at Subminimum Wages).
  130. The industries in which employers may apply for certificates granting exception include “those that manufacture: women’s apparel; knitted outerwear; gloves and mittens; buttons and buckles; handkerchiefs; embroideries; and jewelry. There are two different types of certificates.” One is for individuals facing circumstances that limit their ability to work outside the home, and the other is for employers to employ homeworkers more broadly; this certificate does not apply to the women’s apparel industry (U.S. Department of Labor, Industrial Homeworker).
  131. U.S. Department of Labor, Wage and Hour Division. Fact Sheet #32: Youth Minimum Wage—Fair Labor Standards Act.
    Minimum wage laws in each state are available at minimum-wage.org.
  132. The minimum wage for tipped employees exceeds $2.13 in all but fifteen states (U.S. Department of Labor, Minimum Wages for Tipped Employees).
  133. All agricultural workers are covered by the federal minimum wage except in cases of “work performed on a farm which is not incidental to or in conjunction with such farmer’s farming operation” and “operations performed off a farm if performed by employees employed by someone other than the farmer whose agricultural products are being worked on.” Other exemptions include:
    1) Agricultural employees who are immediate family members of their employer; 2) Those principally engaged on the range in the production of livestock; 3) Local hand harvest laborers who commute daily from their permanent residence, are paid on a piece rate basis in traditionally piece-rated occupations, and were engaged in agriculture less than thirteen weeks during the preceding calendar year; and 4) Non-local minors, 16 years of age or under, who are hand harvesters, paid on a piece rate basis in traditionally piece-rated occupations, employed on the same farm as their parent, and paid the same piece rate as those over 16 (U.S. Department of Labor, Fact Sheet #12: Agricultural Employers Under the Fair Labor Standards Act (FLSA)).
    Only seven states cover agricultural workers in their state’s minimum wage laws. In two of those, such workers have a specified lower wage than other workers. In twenty-three states, some agricultural workers are covered, but there are limitations/exceptions. In the remaining twenty states, agricultural workers are either altogether excluded from the state’s minimum wage laws or the state has no minimum wage laws (Farmworker Justice, Wages Map).
  134. Hale v. Arizona in 1993 ruled that prisoners are not entitled to the minimum wage under the FLSA (Hale v. Arizona, 993 F.2d 1387 (9th Cir. 1993)). Lynn Gibson of the Government Accountability Office testified on the matter before the Senate Committee on Labor and Human Resources.
  135. Sources: Prison Policy Initiative. 2017. How Much Do Incarcerated People Earn in Each State? and State and Federal Prison Wage Policies and Sourcing Information.
  136. The issue of whether ride-share drivers in particular should be treated as employees or independent contractors, and what sorts of benefits the drivers should be entitled to, has come to a head in California.
  137. U.S. Commission on Civil Rights. 2020. Subminimum Wages: Impacts on the Civil Rights of People with Disabilities. p. 179.
  138. This proposal was included under Section 2(b) of the H.R. 1010 (113th): Fair Minimum Wage Act of 2013.
  139. U.S. Department of Labor, Wage and Hour Division. Overtime Pay.
  140. U.S. Department of Labor, Wage and Hour Division. Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA).
  141. Specifically, “Using pooled 2018/2019 [Current Population Survey–Merged Outgoing Rotation Group Earnings] data to represent the July 2018 through June 2019 period, a salary level of $684 corresponds to the 20th percentile of earnings for full-time salaried workers in the South Census Region and/or in the retail industry.”
    The same rules are related to the overtime threshold for highly compensated employees, which is currently $107,432 per year using data for the 80th percentile of weekly, full-time salary workers nationally. This exempts employees who are highly compensated annually but do not receive a consistent salary (U.S. Department of Labor, Highlights of the Final Rule on Overtime Eligibility for White Collar Employees).
  142. Lambert et al. 2019 explore the extent to which U.S. workers deal with precarious work schedules and how such work schedules contribute to economic insecurity. In a 2020 essay, Lambert lays out the “dimensions of problematic work schedules,” evidence from states that have taken action, and how better scheduling benefits both employers and employees in the long run. Harknett et al. 2021 inspect the impacts of Seattle’s Secure Scheduling Ordinance in the second year after its implementation and found “increased work schedule stability and predictability, 2) increased job satisfaction and satisfaction with work schedules, 3) increased overall happiness and sleep quality, and 4) reduced material hardship” for Seattle workers. From the employer perspective, Kamalahmadi et al. 2019 find that day-of scheduling reduces both worker productivity and profit levels in the restaurant industry. The Center for Popular Democracy outlines the goals of “The Fair Workweek Initiative.”
  143. Oregon, for example, requires that employers notify employees at least fourteen days in advance of their shift (or their “on-call” shift) (Oregon Bureau of Labor & Industries. Predictive Scheduling).
  144. In New York City, for example, fast-food workers must “consent in writing before being scheduled to work or working two shifts over two calendar days when the first shift ends a day and there are less than 11 hours between shifts.” For such shifts, employers must pay the employees a $100 premium (NYC Department of Consumer and Worker Protection, Fair Workweek Law: Frequently Asked Questions).
  145. Wykstra 2019 offers an overview of the breadth and goals of Fair Workweek laws.
  146. Average wages are used to update the threshold for wages subject to FICA. The wage threshold changes every year based on average wage growth (Social Security Administration, Contribution and Benefit Base).
  147. National Women’s Law Center. 2019. State and Local Laws Advancing Fair Work Schedules.
  148. See Remove Barriers to Opportunity for People with Criminal Records under Equity policy for more details.
  149. Avery, Beth, and Han Lu. 2020. Ban the Box: U.S. Cities, Counties, and States Adopt Fair Hiring Policies.
  150. Washington, DC, enacted ban the box legislation with the Fair Criminal Record Screening Amendment Act of 2014. The law prohibits employers with eleven or more employees “from asking job applicants about: arrests; criminal accusations made against the applicant that are not pending or did not result in a conviction; or criminal convictions. However, an employer may ask about criminal conviction(s) after extending a conditional offer of employment (the employer can never ask about arrests or criminal accusations that aren’t pending). An employer who properly asks about a criminal conviction can only withdraw the offer or take adverse action against the applicant for a legitimate business reason that is reasonable under the six factors listed in the Act” (DC.gov Office of Human Rights, Returning Citizens and Employment). Stacy and Cohen 2017 review the impacts of DC’s legislation and discuss improvements, including stronger equal employment legislation and enforcement, provision of training for employers, better outreach to those with criminal records, and others.
  151. National Association of Professional Background Screeners. 2019. How Human Resources Professionals View and Use Background Screening in Employment.
  152. H. R. Dive. 2020. Salary History Bans.
  153. Bessen, James E., Chen Meng, and Erich Denk. 2020. Perpetuating Inequality: What Salary History Bans Reveal About Wages. SSRN.
    The authors discuss their findings here.
  154. Washington Center for Equitable Growth. 2021. Executive Action to Combat Wage Theft Against U.S. Workers.
    This piece also outlines how the WHD might “prioritize strategic enforcement” to increase the perceived cost of labor law violations and “pursue co-enforcement with community-based organizations” to help uncover violations in industries where workers fear retribution for speaking up.
  155. The full report of the Office of the Inspector General can be found here.
  156. Workplace Fairness. Right to Work Laws.
  157. Laufer and Loustaunau 2020 document how U.S. employers engage in anti-unionization activities, from mandatory anti-union meetings to threats of job loss. They find that U.S. employers “collectively spend $340 million per year on ‘union avoidance’ consultants who teach them how to exploit the weaknesses of federal labor law to effectively scare workers out of exercising their legal right to collective bargaining.”
  158. “Sectoral bargaining—also known as multiemployer, industrywide, or broad-based bargaining—is a form of collective bargaining that provides contract coverage and sets compensation floors for most workers in a particular occupation, industry, or region” (Center for American Progress, What Is Sectoral Bargaining?).
  159. Woodbury 2014 provides an overview of U.S. unemployment insurance programs, as do Whittaker and Isaacs 2019.
  160. Bloom 2010 discusses existing evidence around transitional jobs programs, goals for transitional jobs programs, and the testing of new strategies in transitional jobs programs.Yahner and Zweig 2012 inspect which components of transitional jobs programs have the most impact in terms of positive employment and nonrecidivism for participants. The duration of one’s transitional job is the component that has the greatest impact on one’s likelihood of receiving unsubsidized employment following the transitional job. Those “who spent 30 workdays or more in a transitional job during the first six months of the follow‐up period (at a rate of four workdays per week, which equates to two months of time) were 14 [percentage points] more likely than other TJ program participants to obtain an unsubsidized job in the subsequent six months (45% vs. 31%; see Figure 1, Model A).”Barden et al. 2018 discuss the findings of the Enhanced Transitional Jobs Demonstration, which “tested seven transitional jobs programs that targeted people recently released from prison or low-income parents who had fallen behind in child support payments,” and tracked participants’ outcomes over thirty months following their enrollment in the programs. On average, those in the programs earned $700 more than the control group in the final year of the study and saw an employment rate of 64 percent compared to 60 percent in the control group in the final year.
  161. Section 134 (a)(2)(A)(i)(II) of the Workforce Innovation and Opportunity Act, Public Law113–128—July 22, 2014, 128 STAT. 1520, 29 USC 3174.
  162. This sort of program is modeled after the United Kingdom’s Jobseeker’s Allowance. Strengthening Unemployment Protections in America outlines the creation of jobseeker’s allowance in the U.S., who such a program would target, and how it might be implemented (West et al. 2016).
  163. Federal legislation to carry this option out was introduced in 2021 as the “Jobs for Economic Recovery Act” by Danny Davis (D-IL) in the House and by Ron Wyden (D-OR) in the Senate.
  164. “Job Corps is the largest nationwide residential career training program in the country and has been operating for more than 50 years. The program helps eligible young people ages 16 through 24 complete their high school education, trains them for meaningful careers, and assists them with obtaining employment. Job Corps has trained and educated over two million individuals since 1964” (What Is Job Corps, U.S. Department of Labor).
  165. The Workforce Innovation and Opportunity Act and the One-Stop Delivery System outlines the many avenues through which WIOA funds workforce development activities (Bradley 2015, Congressional Research Service).
  166. CTE, also known as vocational education, focuses on equipping students with skills that translate more directly to the labor market. Catherine Gewertz discusses CTE in Education Week. Brunner et al. 2019 state that there is “increasing evidence that high-quality CTE programs in high school are actually complements—they can improve high school completion, employment, and earnings, all while not sacrificing general learning outcomes.” Their research found a 10 percentage point increase in graduation rates and a 30 percent increase in quarterly earnings for participants in CTE high schools in Connecticut, though all positive impacts accrued to males.
  167. The Academy’s Report to the New Leadership and the American People on Social Insurance and Inequality draws on Robert M. Ball’s nine guiding principles to define social insurance (see pages xxi–xxii). In broad strokes, the benefits of social insurance programs tend to be more strongly based on and linked to one’s work history and one’s earnings history than those of social assistance programs. A vast majority of a nation’s population is covered by social insurance programs, whereas a much smaller portion tends to be eligible for social assistance programs.
  168. The Tax Foundation defines these terms as follows:
    “A tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly.”
    “A tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state/local taxes paid, mortgage interest, and charitable contributions.”
    “A tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the IRS, preventing them from having to pay income tax.”
    Page 3 of Sammartino and Toder 2020 goes into more detail about the various forms of tax expenditures.
    The IRS lists the various tax credits and tax deductions available to both individuals and businesses on its website.
  169. See An Overview of Tax Expenditures for more information about the significance of tax expenditures in the U.S. (Bipartisan Policy Center, 2018).
  170. The UIB is classified as a social assistance program because, although its universality is unique in comparison to other social assistance programs, its core goal is to provide income stability to low- and middle-income households. At higher incomes, a large portion of the benefit will be taxed back.
  171. Increases in spending warrant increases in tax revenue, which we discuss in the finance section of the report.
  172. See Low Income Home Energy Assistance Program (LIHEAP) (Department of Health and Human Services (DHHS)) and LIHEAP: Program and Funding (Congressional Research Service (CRS) 2018).
  173. See Medicaid.gov, Policy Basics: Introduction to Medicaid (Center for Budget and Policy Priorities (CBPP) 2020), and Medicaid Primer (CRS 2020).
  174. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) ended cash entitlement for welfare for very low-income families and replaced it with TANF. Rather than individuals qualifying for a benefit based on income and family situation, states are sent a block grant of funds to spend on cash assistance to low-income families or on any program that meets the overall goal of the legislation of encouraging work, encouraging marriage, and reducing out-of-wedlock births.
    This report does not include TANF as a benefit policy because the program design is not conducive to assuring income on a federal basis, and it does a poor job of assuring income on a state basis; only 23 percent of families in poverty in 2019 received TANF cash assistance (CBPP 2021). For more, see What Is TANF? (DHHS), Policy Basics: Temporary Assistance for Needy Families (CBPP 2021), and The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions (CRS 2021). Falk 2017 details the low portion of TANF beneficiaries who receive cash assistance.
  175. These individuals are termed “able-bodied adults without dependents,” or ABAWDs. That phrasing, however, can be considered pejorative for individuals with disabilities, and it incorrectly implies that disabilities are only physical. See SNAP Work Requirements (U.S. Department of Agriculture (USDA)).
  176. In fiscal year 2018, 67.1 percent of SNAP beneficiaries were in households with children, 15.7 percent of beneficiaries were in households with “elderly individuals,” 18.6 percent of beneficiaries were in households with non-elderly individuals with disabilities, and 8.1 percent of beneficiaries were adults ages 18–49 without recognized disabilities and in childless households. Overlap between households with children and with elderly individuals is not clear, and overlap in households with non-elderly individuals with disabilities and other households is not clear (Cronquist 2019. Table A.1, p. 41).
  177. SSI is the largest program that continues to have and apply asset tests in every state. Many means-tested programs that once had asset tests either no longer have them or do not apply them. Medicaid for families with children, the CTC, CHIP, WIC, and rental assistance, for example, do not have asset tests. Most states have eliminated asset testing in SNAP.
    A straightforward example of an asset test would be “you must have less than $2,000 in your checking account/cash in order to qualify for….” Programs differ in what they consider assets and what resources are exempt from counting as assets. Typically, at least one car is exempt and the value of one’s home (up to a limit) is exempt.
  178. McDonald et al. 2005 review the literature on the impact of asset tests on savings, and they state that “both theory and the available evidence suggest that this disincentive can reduce and distort saving among moderate- and lower-income families.” Chen and Lerman 2005 acknowledge the role that asset tests play in targeting benefits to those with the least resources and lowest incomes, while drawing a similar conclusion from existing literature: “In general, the studies find that asset limits lower the net worth of potentially eligible low-income individuals and families.”
  179. Grehr 2018 finds that “states that have eliminated asset limits have found that the resulting administrative cost savings significantly outweigh any increase in the number of families receiving benefits.”
    A 2017 issue brief by The Pew Charitable Trusts found that, although lifting asset tests does not significantly increase savings among benefit-eligible populations, a number of positive effects were associated with lifting asset tests. Benefit-eligible households in states without asset tests were more likely to have a checking or savings account, and those in states with eliminated or relaxed vehicle limits were more likely to own a vehicle and to have liquid/semi-liquid assets exceeding $500. The Pew brief also reports that lifting asset tests does not yield increased administrative costs or caseload growth. The most recent information on asset tests for program eligibility is produced by the Prosperity Now Scorecard.
  180. Mauer and McCalmont 2013 discuss the 1996 legislation and its impact on individuals with drug felony convictions, as do Mohan et al. 2017. Polkey 2019 provides the most recent data on the degree to which each state continues to ban this group from receiving SNAP benefits. The Network for Public Health Law released a two-part issue brief in 2020, exploring both the public health consequences of the eligibility ban for individuals with felony drug convictions and how states have reacted to the federal ban.
  181. Broder et al. 2015 explain how the 1996 legislation altered the eligibility status of many immigrants who were potential future beneficiaries of SNAP, TANF, and other federal and state programs. Immigrants who were already benefiting at the time the legislation was enacted did not have their eligibility rescinded. The National Immigration Law Center provides a general overview of immigrant eligibility for federal programs and a more specific body of resources on changes to immigrant eligibility. The National Immigration Forum created a frequently asked questions document in 2018 with regard to immigrants and access to public benefits.
  182. Thompson 2019 explores the recent uptick in the number of states subjecting potential beneficiaries of TANF and other public programs to various forms of drug screening. A 2016 USDA report lays out various potential “modified bans” for those with drug felonies. These restrictions include “1) limiting the circumstances in which the permanent disqualification applies (such as only when convictions involve the sale of drugs); 2) requiring the person convicted to submit to drug testing; 3) requiring participation in a drug treatment program; and/or 4) imposing a temporary disqualification period.”
  183. Thirty-five states and Washington, DC, have already removed the asset limit for eligibility for SNAP. Three states—Idaho, Indiana, and Texas—have raised their asset limit to $5,000, and Michigan and Nebraska have limits of $15,000 and $25,000, respectively. Of the forty states with increased or removed asset limits, sixteen impose asset limits of $3,500 on households with seniors or people with disabilities and gross income exceeding 200 percent of the poverty threshold.
  184. While Medicaid removed asset tests for low-income families including pregnant women in 2014, asset tests still exist for the income-poor sixty-five and older population and people with disabilities. This asset test is especially relevant to the extent that many in these groups qualify for Medicaid via SSI, which continues to have the most prohibitive asset test. Individuals with especially high health care costs might also qualify for Medicaid, though these individuals are also subject to the asset limit. To qualify, they must “spend down” their countable assets.
  185. The Social Security Administration outlines the existing asset test for SSI, including what resources do and do not count as assets and how beneficiaries may save some resources via a “Plan to Achieve Self Support (PASS)” and an “Achieving a Better Life Experience (ABLE)” account.
  186. In fiscal year 2021, eleven states continued to use asset tests to limit eligibility for LIHEAP (see DHHS 2021).
  187. Had the asset tests for individuals and couples in SSI kept pace with CPI-U inflation since 1989, they would have been $4,320 and $6,480 respectively in January 2021. Had they kept pace with inflation since they were implemented at $1,500 for individuals and $2,250 for couples in 1974, they would have been $8,420 and $12,630 in January 2021.
  188. The ASSET Act, sponsored by TJ Cox (D-CA) in the House and by Christopher Coons (D-DE) in the Senate in 2020, would prohibit asset tests in TANF, SNAP, and LIHEAP, while increasing limits in SSI to $10,000 and $20,000 for individuals and couples, respectively, and indexing them to inflation.
  189. One type of phase-out might decrease benefits by 8.33 percentage points per month when one exceeds the asset threshold, thus completely phasing out when one has exceeded the threshold for twelve months. Another might decrease benefits as one’s asset levels further exceed the threshold, completely phasing out when one has doubled the asset limit.
  190. The federal government also excludes most immigrants from eligibility for SSI. Immigrant restrictions were intensified with the passing of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (Title V, Subtitle A, Sec. 501).
  191. The Center for American Progress, using data from 2010 to 2014, found that almost 10.75 million individuals in the U.S. share a household with an undocumented immigrant. Twersky 2019 does not find evidence of a chilling effect in SNAP in the early 2000s but does observe a lower likelihood of SNAP enrollment among immigrant families relative to “native-born” families. The implementation of the “public charge” rule—which allows for immigrant applications for admission and residency in the U.S. to be denied on the basis of having received public benefits in the past and on the basis of whether one is deemed likely to receive public benefits in the future—in February 2020 has immediately renewed the conversation around chilling effects. Early data analyses from The Urban Institute show that, between 2018 and 2019, the portion of adults in benefit-eligible immigrant families with at least one nonpermanent resident that experienced a chilling effect (i.e., did not enroll in public benefit programs out of fear of immigration consequences) increased from 21.8 percent to 31.0 percent. Capps 2020 discusses the findings of the report and interviews its lead author.
  192. See Supplemental Nutrition Assistance Program (SNAP) (USDA) and Policy Basics: The Supplemental Nutrition Assistance Program (SNAP) (CBPP 2019).
  193. USDA, Center for Nutrition Policy and Promotion. Thrifty Food Plan, 2006.
  194. See Carlson 2019 for a discussion of the Thrifty Food Plan and why it fails to meet the needs of low-income households.
  195. Center on Budget and Policy Priorities. 2020. A Quick Guide to SNAP Eligibility and Benefits.
  196. Center on Budget and Policy Priorities. 2021. States Are Using Much-Needed Temporary Flexibility in SNAP to Respond to COVID-19 Challenges.
  197. Food and Nutrition Service. 2021. SNAP COVID-19 Emergency Allotments Guidance. U.S. Department of Agriculture.
  198. Gassman-Pines and Bellow 2018 find a statistically significant relationship between students’ test scores and the recency of a SNAP benefit transfer. Gennetian et al. 2016 find that students in Chicago public schools that receive SNAP benefits are more likely to commit “disciplinary infractions” at the end of the month than nonrecipients.
  199. USDA, Food and Nutrition Service. 2021. SNAP Benefit Changes: October 1, 2021.
  200. The Urban Institute finds that the average per meal SNAP benefit fell $0.50 short of the average cost per meal in 2015. Over a month, this shortfall comes to $46.50, or just over $10 per week per person. For those eligible for SNAP in the “ten percent of counties with the highest average meal cost, the monthly shortfall is $82.04 per person,” or roughly $20 per week per person.
  201. See footnote 183.
  202. Center on Budget and Policy Priorities. 2020. A Quick Guide to SNAP Eligibility and Benefits.
  203. In the summer of 2018, only 13.1 percent of children who received free and reduced-price school lunches participated in a summer food service program (Children’s Defense Fund, Table 12). Nord and Romig 2007 found higher levels of food insecurity, especially among households with children, during the summer months.
  204. U.S. Department of Agriculture. 2021. Help to Put Food on the Table: Facts on Nutrition Assistance in the American Rescue Plan.
  205. U.S. Department of Agriculture, Food and Nutrition Service. 2020. What Can SNAP Buy?
  206. The Bipartisan Policy Center’s 2018 report titled Leading with Nutrition: Leveraging Federal Programs for Better Health lays out options to change SNAP to emphasize better nutritional outcomes. Two specific recommendations include eliminating the purchase of sugar-sweetened beverages and strengthening incentives to purchase fruits and vegetables.
  207. See Supplemental Security Income Home Page—2020 Edition (SSA 2020), Policy Basics: Supplemental Security Income (SSI) (CBPP 2021), and Supplemental Security Income (SSI) (CRS 2020).
  208. Social Security Administration. 2021. SSI Federal Payment Amounts For 2021.
  209. Congressional Budget Office. 2012. Supplemental Security Income: An Overview. Figure 2.
  210. Social Security Administration. 2020. SSI Annual Statistical Report, 2019. Table 9.
  211. SSA 2020 states that “the first $65 of earnings and one-half of earnings over $65 received in a month” are not counted as income for SSI, and that they “subtract your ‘countable income’ from the SSI Federal benefit rate.” SSI also allows a $20 exemption for unearned income, which may be counted against earned income if one does not have $20 in unearned income. In other words, after $85 in earnings (if one has no unearned income), for every dollar a beneficiary earns, 50 cents are subtracted from their benefit. While earned income above the threshold is deducted at 50 cents per dollar earned, unearned income exceeding the threshold is offset dollar for dollar.
  212. In 2021, the annual federal poverty level for a household of one was $12,880, or $1,073 per month. The maximum individual federal SSI benefit in 2021 of $794 per month was only 74 percent of monthly poverty level income.
  213. For purposes of illustration, in 2021, with a federal minimum wage of $7.25, this change would allow for roughly $1,257 of individual earnings per month prior to benefit reductions ($7.25 per hour × 40 hours of work per week × 4.33 weeks per month).
  214. Social Security Administration. 2021. Understanding Supplemental Security Income Living Arrangements.
  215. Social Security Administration. 2021. SSI Federal Payment Amounts for 2021.
  216. In 2011, Puerto Rico’s Aid to the Aged, Blind, or Disabled program provided benefits to 34,401 individuals per month. The Government Accountability Office finds that “average monthly participation in SSI would have ranged from 305,000 to 354,000” if residents were eligible.
    Government Accountability Office. 2014. Information on How Statehood Would Potentially Affect Selected Federal Programs and Revenue Sources. GAO-14-31, p. 78.
  217. Congressional Research Service. 2021. Proposed Extension of Supplemental Security Income (SSI) to American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands. IN11793.
  218. Balmaceda, Javier. 2021. Build Back Better Permanently Extends Economic Security to Puerto Rico and Other Territories. Center on Budget and Policy Priorities.
  219. See Assured Income (NASI 2019).
  220. The UIB should not be confused with the universal basic income (UBI). The former aims to provide a small cash base of income, but not one that could reasonably be expected to fill all basic needs. The latter is a larger benefit that would require significant increases in government spending or the elimination of large parts of the existing safety net so that the monthly benefit would provide enough income to meet a “basic” standard of living.
  221. Alaska 529 allows for Alaskans to contribute their permanent fund dividend directly to a tax-advantaged savings account for educational expenses. Pick. Click. Give. allows for Alaskans to donate their dividend to charities and causes within their state. More information about the dividend and the Permanent Fund can be found on Alaska.gov.
  222. See Old-Age & Survivors Insurance Trust Fund (SSA), Social Security Benefits, Finances, and Policy Options: A Primer (NASI 2020), and Social Security Primer (CRS 2020).
  223. See Unemployment Insurance (U.S. Department of Labor), Policy Basics: Unemployment Insurance (CBPP 2021), and Unemployment Insurance: Programs and Benefits (CRS 2019).
  224. Although workers’ compensation remains a state-run program, the National Commission on State Workmen’s Compensation Laws—which was established by the Occupational Safety and Health Act and whose members were appointed by President Nixon—submitted its report in 1972 indicating that “State workmen’s compensation laws in general are inadequate and inequitable.” The report made eighty-four recommendations to improve state workers’ compensation programs and designated nineteen of these as “essential and particularly suitable for Federal support to guarantee their adoption.” The Commission called on Congress to guarantee compliance with the nineteen essential recommendations by July 1, 1975, after an evaluation of state compliance. As of 2021, no federal oversight or federal legislation to regulate state workers’ compensation programs exists. The CRS report Workers’ Compensation: Overview and Issues summarizes the work of the National Commission and ensuing changes to state policy. It notes progress with regard to the Commission’s recommendations in the initial years after its work, followed by a rolling back of benefits and eligibility beginning in the 1990s. As of 2015, a ProPublica analysis done in consultation with the National Commission’s chairman, John F. Burton Jr., noted that only seven states follow more than fifteen of the Commission’s nineteen essential recommendations. A 2018 analysis by Elliot Schreur for the Workers’ Injury Law and Advocacy Group found that every state follows at least eight of the nineteen essentials; twenty-nine states follow twelve or fewer, and twenty-one states follow thirteen or more.
    The Academy publishes an annual report on the benefits, costs, and coverage of workers’ compensation programs in the U.S. For a summary of workers’ compensation laws by state, see Appendix D (p. 94) of the 2020 report.
  225. The Academy’s 2020 report Examining Approaches to Expand Medicare Eligibility: Key Design Options and Implications explores in detail how policy makers might adapt Medicare to cover more individuals in the U.S. to make health care less of a cost burden for more households.
  226. See Old-Age & Survivors Insurance Trust Fund (SSA), Social Security Benefits, Finances, and Policy Options: A Primer (NASI 2020), and Social Security Primer (CRS 2020).
  227. See Disability Insurance Trust Fund (SSA) and Policy Basics: Social Security Disability Insurance (SSDI) (CBPP 2020).
  228. Social Security Administration. 2021. Contribution and Benefit Base.
  229. Congress raised the full retirement age to sixty-seven for all individuals born in 1960 and later. A full retirement age of sixty-five applies to individuals born before 1938, and a full retirement age of sixty-six for individuals born between 1943 and 1954. All other birth years reach full retirement at two-month increments in between the whole-number ages (SSA 1983).
  230. To qualify for Social Security benefits, an individual must have at least forty “quarters of coverage,” or “credits.” In 2021, one credit is received per $1,470 of covered earnings up to a maximum of four credits per year. So in 2021, for example, one needed to earn 4 × $1,470 = $5,880 in covered earnings in order to receive four credits (SSA 2021). Certain groups of workers are not covered by Social Security.
    Berry 2020 offers more information regarding how Social Security benefits are calculated.
  231. An example of a progressive benefit structure is as follows: Person A averaged inflation-adjusted earnings of $40,000/year over their thirty-five highest earning years and receives $20,000/year in retirement benefits. Person B averaged inflation-adjusted earnings of $100,000/year over their thirty-five highest earning years and receives $30,000/year in retirement benefits. Although Person A receives $10,000 less per year in retirement benefits, their replacement rate is 50 percent ($20,000 / $40,000) compared to Person B’s replacement rate of 30 percent ($30,000 / $100,000). The Office of the Chief Actuary provides more detailed examples of how Social Security benefits are calculated.
    Claiming one’s Social Security retirement benefit before one’s full retirement age (i.e., before turning sixty-seven for individuals born after 1959) reduces the monthly benefit, while claiming benefits after one’s full retirement age increases the monthly benefit. In this regard, the benefit structure may not appear progressive if two people claim at very different times due to the penalty for claiming early and the credit for claiming late. See Early or Late Retirement on the SSA’s website for information on the extent to which benefits are decreased and increased depending on when one claims.
  232. The special minimum benefit is calculated based on one’s special minimum primary insurance amount, which is a function of the number of years one has earnings at or above a certain threshold (Li 2020).
  233. Feinstein 2013 shows that, although the last minimum benefit was awarded to a worker who became eligible for benefits in 1998, a small number of workers and family members of workers continue to receive benefits based on the special minimum primary insurance amount.
  234. See Types of Beneficiaries on the SSA’s website for more information.
  235. About 6.1 million children—8 percent of all children in the U.S.—are estimated to have either received benefits directly in their own right or indirectly as the result of living in households that received income from Social Security in 2018. In that year, Social Security benefits reduced child poverty by 1.6 percentage points, from 17.8 percent to 16.2 percent. Put differently, Social Security lifted almost 1.2 million children out of poverty (Romig, 2020).
  236. The primary insurance amount is the average, inflation-adjusted earnings of the relevant worker’s thirty-five highest earning years during which they contributed to Social Security.
  237. See footnote 230 for information on a sufficient work history to qualify for Social Security benefits.
  238. Although both SSDI and SSI provide income to individuals with disabilities, they are very distinct programs. A 2018 CRS report outlines the many differences between the two programs. The report outlines the five-step process used to determine whether one’s condition meets the disability standard for SSDI and SSI adult eligibility. This process considers one’s current ability to earn income and the extent of the disability.
  239. A DAC beneficiary receives benefits from the trust fund from which their parent is receiving benefits. If, for example, the parent of a DAC beneficiary is receiving retirement benefits, the DAC beneficiary will receive benefits from the Old-Age and Survivors Insurance Trust Fund as well, not the Disability Insurance (DI) Trust Fund. As a result, most DAC beneficiaries do not receive benefits out of the DI Trust Fund.
  240. Social Security Administration. 2021. Beneficiary Data: Number of Social Security Recipients
    at the End of Dec 2020.
  241. “The Social Security full retirement age (FRA) is the age at which workers can first claim full (i.e., unreduced) Social Security retired-worker benefits.” As of 2021, the FRA was sixty-six and ten months and is sixty-seven in 2022 (The Social Security Retirement Age, Congressional Research Service).
  242. In 2021 the monthly SGA amount was $1,310 ($15,720/year) for nonblind individuals and $2,190 ($26,280/year) for blind individuals. The monthly threshold must be exceeded “net of impairment-related work expenses,” and “[t]he amount of monthly earnings considered as SGA depends on the nature of a person’s disability” (Substantial Gainful Activity, Social Security Administration).
  243. If an individual exceeds the SGA threshold for nine months in a rolling sixty-month period, they will no longer receive disability benefits (Trial Work Period, Social Security Administration).
  244. This estimate of poverty uses the Supplemental Poverty Measure. Secondary Social Security beneficiaries faced the following poverty rates in 2012 (ordered from largest quantity to smallest): aged widow(er)s 19.7 percent, aged spouses 13.4 percent, disabled adult children 37.6 percent, disabled widow(er)s 31.0 percent, child-in-care widow(er)s 23.5 percent, and child-in-care spouses 33.8 percent (Poverty Status of Social Security Beneficiaries, by Type of Benefit, Bridges and Gesumaria 2016).
  245. Social Security Administration. Primary Insurance Amount. The summary of potential changes to the PIA formula can be found at Provisions Affecting Monthly Benefit Levels.
  246. Countable earnings are gross earnings minus applicable exclusions. An example of an exclusion is impairment-related work expenses.
  247. A 2015 Bipartisan Policy Center report lays out options for policy makers to improve work incentives, to increase experimentation around returning to work, and to improve interagency coordination to better help people with disabilities remain in the workforce in some capacity.
    Fichtner and Seligman 2018 explore changes to SSDI that would allow for benefits to be received for temporary and partial disabilities.
  248. The Social Security Administration provides a brief overview of spousal benefits.
  249. In 2010, about 4 percent of the elderly population was not eligible for current or future Social Security benefits due to insufficient earning histories. The poverty rate of this group was estimated to be about 44 percent (Whitman et al. 2011).
  250. Social Security Finances: Findings of the 2020 Trustees Report discusses how Social Security is financed and how the Office of the Chief Actuary at the SSA projects revenue and outlays each year over the next seventy-five years, summarized, as well over the ensuing nineteen, twenty-five, and fifty years. Whereas federal budgetary actions are measured over a ten-year window by the Congressional Budget Office, Social Security is projected much farther into the future.
  251. The exact year in which the OASDI trust funds are projected to become depleted while projected outlays exceed projected revenue tends to vary with the economy. The more people who are working, generally, the more revenue goes to the trust funds. To take into account economic uncertainty, the Trustees Report projects low-cost, intermediate-cost, and high-cost scenarios for the OASDI trust funds over the time horizons previously mentioned. Over time, the projected year in which reserves will be fully drawn and outlays will exceed revenue has moved somewhat closer in time than when first projected, though some time around 2035 remained the consensus as of early 2020. The impact of the pandemic recession does not appear to change the trust fund depletion date by more than six months to a year, according to the SSA as of late 2020.
  252. The Social Security program operates two separate trust funds: the OASI Trust Fund and the DI Trust Fund. They are generally discussed as a group (OASDI), however, because if one of these trust funds were depleted before the other and still had unmet obligations, it is anticipated that the excess reserves in either fund would be used to pay out any unmet OASDI obligations. The use of the excess reserves would, however, require legislation passed by Congress and signed by the president. Read more about the trust funds in this CRS report from 2020.
  253. Arnone, William, and Jay Patel. 2020. Social Security Finances: Findings of the 2020 Trustees Report. National Academy of Social Insurance.
    Board of Trustees. 2020. Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Social Security Administration.
  254. An Academy report from 2009 titled Fixing Social Security: Adequate Benefits, Adequate Financing lays out options that shore up the finances of the trust funds while also ensuring that benefits paid to those who most rely on them in retirement and in life are not reduced and in some cases are increased. The Office of the Chief Actuary projects the impact on the trust funds’ finances of many changes to Social Security, including certain benefit cuts.
  255. See “Category E: Payroll Taxes” proposals E1.1 through E1.10 in Summary of Provisions That Would Change the Social Security Program.
  256. Whiteman, Kevin. 2009. Distributional Effects of Raising the Social Security Taxable Maximum. Social Security Administration. Policy Brief No. 2009-01.
  257. In 2021, the taxable wage cap was $142,800.
  258. Congressional Budget Office. 2018. Increase the Maximum Taxable Earnings for the Social Security Payroll Tax.
  259. See “Category E: Payroll Taxes” proposals E2.1 through E2.15 and E3.1 through E3.19 in Summary of Provisions That Would Change the Social Security Program.
  260. Internal Revenue Service. 2020. Self-Employment Tax (Social Security and Medicare Taxes).
  261. There are several 1099 forms, based on the type of income and who issued it and how it was paid. In most cases, independent contractors will receive a Form 1099-K, a Form 1099-MISC, or a Form 1099-NEC from the person or entity that pays them compensation. You can read an overview here: What Is an IRS 1099 Form? Who Gets One and How It Works (Orem, 2021).
  262. Board of Trustees. 2020. Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Table II.B1. Social Security Administration.
  263. See Unemployment Insurance (U.S. DOL), Policy Basics: Unemployment Insurance (CBPP 2021), and Unemployment Insurance: Programs and Benefits (CRS 2019).
  264. The SUTA tax base and tax rate are determined by state legislatures. The base must be a minimum of $7,000 but may be higher. There is no constant minimum rate. State tax bases vary from the minimum of $7,000 to $52,700, and rates vary from 0 percent to 14.37 percent. Within each state, however, there is a minimum and maximum tax rate depending on an employer’s “experience rating,” or the likelihood that former employees successfully claim unemployment benefits. The higher the likelihood, the higher the tax rate. In Massachusetts, for example, the maximum rate is 14.37 percent, but the minimum rate is 0.94 percent. In addition, if a state’s trust fund is low (or if states are paying back a loan because their trust fund was depleted), some states automatically increase the SUTA tax rate until the funds are restored or the loan is paid back. SUTA taxes collect in a state’s trust fund and are used to finance benefits.
    For more information about state unemployment tax bases and rates, see Table 2 of Unemployment Insurance: Programs and Benefits (Congressional Research Service 2019).
  265. The FUTA tax base is $7,000 and has not been increased since 1983. The FUTA tax rate is notionally 6.0 percent, but states with programs in good standing have their FUTA tax rebated to 0.6 percent. No program has ever not been in good standing; hence the FUTA tax is 0.6 percent on the first $7,000 of earnings, or $42 per employee per year. FUTA taxes are collected into a federal trust fund and are used to reimburse states for the program’s administrative costs (Whittaker, Julie M. 2016. Unemployment Compensation: The Fundamentals of the Federal Unemployment Tax (FUTA). Congressional Research Service).
  266. During the Great Recession, thirty-six states had federal trust fund loans (Unemployment Insurance: States’ Reductions in Maximum Benefit Durations Have Implications for Federal Costs, Government Accountability Office, p. 13).
  267. See Time to End the Race-to-the-Bottom on Unemployment Insurance for further comments on this phenomenon (Atkinson 2020, American Compass).
  268. Whittaker, Julie M., and Katelin P. Isaacs. 2019. Unemployment Insurance: Programs and Benefits. Table 1. Congressional Research Service.
  269. Will States Take the Wrong Lesson About Unemployment Insurance’s Failings? comments on this phenomenon (Edwards 2021, The RAND Blog).
  270. As far back as 1993, the Government Accountability Office issued a report titled Unemployment Insurance: Program’s Ability to Meet Objectives Jeopardized, which found that “the deteriorating financial solvency of state trust funds has led to changes in state laws affecting eligibility and compensation levels and adversely affected the percentage of unemployed persons receiving unemployment benefits,” among other key findings, suggesting critical problems in unemployment insurance programs. A New York Times piece published in January 2021 depicts the problematic trends in the unemployment insurance system in a number of telling graphics.
  271. Isaacs, Katelin P., and Julie M. Whittaker. 2020. Unemployment Insurance Provisions in the CARES Act. Congressional Research Service.
  272. In a report issued on November 30, 2020, the Government Accountability Office recommended that the “DOL (1) revise its weekly news releases to clarify that in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits, and (2) pursue options to report the actual number of distinct individuals claiming benefits, such as by collecting these already available data from states.”
  273. The National Employment Law Project explains PUA and other boosts to unemployment insurance benefits that were enacted early on in the pandemic. Since that piece was written, benefits were extended beyond December 2020.
  274. See Putting Short-Time Compensation to Work: How Employers Can Avert Layoffs and Reduce Training Costs for more information on short-time compensation in practice in the U.S. and the impact it has on companies and states where it is practiced.
  275. Houghton, Charlotte, and Mariette Aborn. 2021. As the Economy Continues to Struggle, Can Short-Time Compensation Offer Relief?. Bipartisan Policy Center.
  276. Pirtle, Jennifer. 2020. STC State Websites. WorkforceGPS.
  277. See Designing Universal Family Care (NASI 2020) and Paid Family and Medical Leave in the United States (CRS 2020).
  278. As of March 2020, 21 percent of private, state, and local workers had access to paid family leave (U.S. Bureau of Labor Statistics. National Compensation Survey: Employee Benefits in the United States, March 2020. Table 31).
  279. U.S. Department of Labor, Wage and Hour Division. Family and Medical Leave Act.
  280. National Academy of Social Insurance. 2020. Designing Universal Family Care. pp.145–146.
  281. Life Insurance and Market Research Association (LIMRA). 2017. Combination Products Giving Life Back to Long-term Care Market.
  282. Sammon, Alexander. 2020. The Collapse of Long-Term Care Insurance. The American Prospect.
  283. Designing Universal Family Care notes that
    The majority of LTSS today is provided by family and friends, often to the detriment of their health and financial security. In the coming decades, most professional care will be paid for by families out of pocket. Most of the remainder of paid care will be covered by Medicaid, the primary public payer of LTSS. To qualify for Medicaid, however, a person must have low income and may not have assets above a certain level. Many middle-income people “spend down”—they use their assets to pay for care until they have very little left and qualify for Medicaid. Those individuals who qualify for Medicaid (whether low- or middle-income) must contribute most of their income to their care costs, losing financial independence, and may be forced to enter a nursing home because they cannot access sufficient home- and community-based services or afford to remain at home. (p. 143)
  284. In practice, because it is nonrefundable and because of how it interacts with other tax policies, the CDCTC offers minimal benefits to workers earning less than $25,000; in 2018, those with adjusted gross incomes of less than $25,000 received 3.2 percent of benefits in spite of accounting for 5.6 percent of returns claiming the credit. Households earning at least $75,000 in adjusted gross income in 2018 accounted for 58.0 percent of aggregate CDCTC dollars spent. The income brackets that determine one’s tax credit rate are not adjusted for inflation annually and have not been updated by legislation since 2001 (Congressional Research Service, Child and Dependent Care Tax Benefits: How They Work and Who Receives Them, Table 1).
  285. Income eligibility thresholds and work/training requirements vary by state, as the CCDF typically functions in coordination with each state’s TANF program. For more information, see Child Care Entitlement to States, Congressional Research Service.
  286. National Academy of Social Insurance. 2020. Designing Universal Family Care. pp. 15–16.
  287. Chapter 3: Long-Term Services and Supports of Designing Universal Family Care makes the case for state action on long-term care insurance via a social insurance design. The chapter lays out finance, coverage, and benefit options. The coverage options mentioned here are outlined in Table 1 on page 176.
  288. Spoerry, Scott. 2011. Obama Drops Long-Term Health Care Program. CNN.
  289. Chernof, Bruce, et al. 2013. Commission on Long-Term Care Report to the Congress. U.S. Senate.
  290. Chapter 1: Early Child Care and Education of Designing Universal Family Care outlines the childcare landscape in the U.S. and proposes three potential social insurance models for states to improve early childcare and education including “1. a comprehensive universal early child care and education program, 2. an employment-based early child care and education contributory program, and 3. a universal early child care and education subsidy program.”
    In Ending Child Poverty Now, the Children’s Defense Fund proposes both: 1) Expanding federal childcare subsidies to all families with incomes less than 150 percent of the poverty line and exempting these families from copays; and 2) Making the CDCTC fully refundable with cost reimbursements up to 50 percent (from 35 percent) for lower-income families (see Chapter 2, policies 5 and 6). Other proposals for improving the CCDF and CDCTC come from the National Academies of Sciences, Engineering, and Medicine (see Appendix D, 5-3, p. 415, of A Roadmap to Reducing Child Poverty), the Center for American Progress in A New Vision for Child Care in the United States, and Title III of H.R. 3300: Economic Mobility Act of 2019.
  291. See Earned Income Tax Credit (EITC) (IRS 2021), Policy Basics: The Earned Income Tax Credit (CBPP 2019), What Is the Earned Income Tax Credit? (Tax Policy Center 2020), and The Earned Income Tax Credit (EITC): How It Works and Who Receives It (CRS 2021).
  292. Credit levels are updated each year by the IRS in the Earned Income and Earned Income Tax Credit Tables.
  293. With the passing of the American Rescue Plan Act of 2021, the maximum credit for workers without children at home increased to $1,502 for 2021, and fully phased out for joint filers at earned income of $27,367 (Tax Policy Center 2021, EITC Parameters).
  294. This analysis/calculation is based on an individual working forty hours per week, fifty-two weeks per year.
  295. Marr, Chuck, Chye-Ching Huang, Cecile Murray, and Arloc Sherman. 2016. Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty. Center on Budget and Policy Priorities.
  296. Internal Revenue Service. 2021. State and Local Governments with Earned Income Tax Credit.
  297. The American Rescue Plan Act of 2021 implemented a temporary (for tax year 2021) increase in both benefit size and eligibility for workers without dependents at home. This option would make this expansion a permanent part of the EITC (Congressional Research Service 2021, The American Rescue Plan Act of 2021 (ARPA;P.L. 117-2): Title IX, Subtitle G—Tax Provisions Related to Promoting Economic Security).
  298. Prior to passage of the ARP, the maximum credit for workers without dependents was $543 and phased out completely at $21,920 for married filers.
  299. A 2019 Urban Institute blog post further discusses the degree to which an age-eligibility expansion of the EITC would help older workers both in the short term and in retirement.
  300. Maag, Elaine. 2021. Increasing the Childless EITC Is a Good Start; It Should Include Students Too. Tax Policy Center.
  301. Thompson, Darrel, Whitney Bunts, and Ashley Burnside. 2020. EITC for Childless Workers: What’s at Stake for Young Workers. Center for Law and Social Policy.
  302. Maag et al. 2020 explore the impacts of extending EITC eligibility to “low-income students who are in school at least half time and independent for tax purposes [such that they] would receive the maximum credit even if their earnings are too low to qualify for the maximum. Essentially, being in school would be treated as meeting the earnings requirements in place for most credit recipients.”
  303. See About Publication 972, Child Tax Credit and Credit for Other Dependents (IRS 2021), Policy Basics: The Child Tax Credit (CBPP 2019), What Is the Child Tax Credit? (Tax Policy Center 2020), and The Child Tax Credit: How It Works and Who Receives It (CRS 2020).
  304. The ARP granted households with seventeen-year-old children eligibility for the $3,000 credit in 2021.
  305. In 2019, the National Academies of Sciences, Engineering, and Medicine issued a report titled A Roadmap to Reducing Child Poverty, which outlined options to cut child poverty in half in ten years. The report draws on existing literature to conclude that “poverty in early childhood . . . [is] associated with worse child and adult outcomes,” and that “income poverty itself causes negative child outcomes, especially when it begins in early childhood” (pp. 73, 89).
  306. Haider, Areeba. 2021. The Basic Facts about Children in Poverty. Figure 4. Center for American Progress.
  307. Prime Minister of Canada. 2020. Prime Minister announces annual increase to the Canada Child Benefit.
  308. Greenstein, Robert, Elaine Maag, Chye-Ching Huang, and Chloe Cho. 2018. Improving the Child Tax Credit for Very Low-Income Families. U.S. Partnership on Mobility from Poverty.
  309. The NAS report outlines two options for this proposal on page 148:[1)] Pay a monthly benefit of $166 per month ($2,000 per year) per child to the families of all children under age 17 who were born in the United States or are naturalized citizens. In implementing this new child allowance, we would eliminate the Child Tax Credit and Additional Child Tax Credit as well as the dependent exemption for children. The child allowance benefit would be phased out under the same schedule as the Child Tax Credit. . . . [2)] Pay a monthly benefit of $250 per month ($3,000 per year) per child to the families of all children under age 18 who were born in the United States or are naturalized citizens. (As with Child Allowance Policy #1, we would eliminate the Child Tax Credit and Additional Child Tax Credit as well as the dependent exemption for children.) The child allowance benefit would be phased out between 300 and 400 percent of the poverty line.
    The report projects the former proposal to reduce child poverty rates by 3.4 percentage points (13.0 to 9.6) and the latter proposal by 5.3 percentage points (13.0 to 7.7) (see Figure 5-1).
    National Academies of Sciences, Engineering, and Medicine. (2019). A Roadmap to Reducing Child Poverty. Washington, DC: The National Academies Press. doi: https://doi.org/10.17226/25246.
  310. High-income households may see their credits vary if the credit phases out at high incomes (as it does under current law). A higher credit for younger children might introduce some unpredictability, too; impending declines in monthly benefits should be communicated to households well ahead of time.
  311. See The Negative Income Tax and the Evolution of U.S. Welfare Policy (Moffitt 2003).
  312. This $4,500 benefit is calculated by taking the NIT threshold ($39,000) minus income ($30,000) and multiplying the difference by the NIT rate (50 percent).
  313. Passell, Peter, and Leonard Ross. 1973. Daniel Moynihan and President-Elect Nixon: How Charity Didn’t Begin at Home. The New York Times.
  314. Retirement accounts vary by who establishes them and when the tax preference occurs (among other things). The full list of those types with tax preferences can be found on the IRS page Types of Retirement Accounts, which is part of the large section on Tax Information for Retirement Plans. The Balance—a personal finance website—provides explanatory articles for the three most common types: individual retirement accounts, 401(k)s, and 403(b)s.
  315. The tax code contains numerous exceptions to this general principle. Individuals may withdraw early with a penalty or withdraw early without a penalty if they meet certain circumstances. Individuals may also borrow from their 401(k) accounts in certain circumstances. Contributions were capped at $19,500 in 2021 but, if permitted by one’s 401(k) plan, may be as high as $26,000 for the fifty and older population (see “catch-up contributions”). The IRS has a Retirement Plans FAQ that details many of these scenarios. The Balance has guides to Early Distribution of Funds and 401k Loans.
  316. National Compensation Survey, Bureau of Labor Statistics, Employee Benefits, Table 1.
  317. Report on the Economic Well-being of U.S. Households, 2020, Figure 36.
  318. See Tax Incentives for Retirement Savings, Tax Policy Center. In related findings, lower retirement savings are reported for individuals who are younger, Black, or Hispanic (Report on the Economic Well-being of U.S. Households 2020, Table 30.)
  319. The income and contribution eligibility for the Saver’s Credit can be found on the IRS page Retirement Savings Contributions Credit (Saver’s Credit). The Balance also has an explanatory article, Retirement Saver’s Credit for 2021.
  320. A straightforward example of an asset test would be “you must have less than $2,000 in your checking account/cash in order to qualify for….” Programs differ in what they consider assets and what resources are exempt from counting as assets. Typically, at least one car is exempt, and the value of one’s home (up to a limit) is exempt.
  321. McDonald et al. 2005 review the literature on the impact of asset tests on savings and state that “both theory and the available evidence suggest that this disincentive can reduce and distort saving among moderate- and lower-income families.” Chen and Lerman 2005 acknowledge the role that asset tests play in targeting benefits to those with the least resources and lowest incomes, while drawing a similar conclusion from existing literature: “In general, the studies find that asset limits lower the net worth of potentially eligible low-income individuals and families.”
  322. Grehr 2018 finds that “states that have eliminated asset limits have found that the resulting administrative cost savings significantly outweigh any increase in the number of families receiving benefits.” A 2017 issue brief by The Pew Charitable Trusts finds that, although lifting asset tests does not significantly increase savings among benefit-eligible populations, a number of positive effects were associated with lifting the tests. Benefit-eligible households in states without asset tests were more likely to have a checking or savings account, and households in states with eliminated or relaxed vehicle limits were more likely to own a vehicle and to have liquid/semi-liquid assets exceeding $500. The Pew brief also reports that lifting asset tests does not yield increased administrative costs or caseload growth. The most recent information on asset tests for program eligibility is produced by the Prosperity Now Scorecard.
  323. The federal government might, for example, incentivize retirement account managers to notify participants and potential participants of Saver’s Credit eligibility dependent on one’s income and clarify for participants what information is needed in order to claim the credit.
  324. The Impact of Leakages on 401(k)/IRA Assets, Center for Retirement Research. The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout Leakage, The Employee Benefits Research Institute.
  325. See Topic No. 558 Additional Tax on Early Distributions from Retirement Plans Other Than IRAs for more information about rules around separations from service. The IRS states the following as exempt from the 10 percent penalty, which we refer to as separation from service: “Distributions made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary. If these distributions are from a qualified plan other than an IRA, you must separate from service with this employer before the payments begin for this exception to apply.”
  326. Cashing Out: The Systemic Impact of Withdrawing Savings before Retirement provides a literature review of the impact of withdrawals following separation from service. This study finds that, each year, between 6.5 percent and 9.5 percent of 401(k) participants “cash out” following a job change, resulting in $60 billion to $105 billion in lost savings annually.
  327. Internal Revenue Service. 2020. Retirement Topics: Hardship Distributions.
  328. Access to savings during an emergency such as a medical event or extended unemployment is generally less controversial. An Aon Hewitt testimony before the Senate in 2013 stated that “more than a third (34 percent) of African-Americans and 29 percent of Hispanics say the ability to take loans from their plans if they need the money is a ‘strong’ influence on their decision to invest in a DC plan, compared to 17 percent of Asian-Americans and 13 percent of Whites.” Proposals may also consider access to retirement savings for certain wealth-building opportunities, such as financing an education, starting a business, or purchasing a home. A related proposal is detailed in A Birthright to Capital: Equitably Designing Baby Bonds to Promote Economic and Racial Justice. Specifically, “4. Allowable Uses of Funds” on page 19 discusses how access to savings—in this case, to those accrued by a system of baby bonds—might be implemented to create the best wealth-building outcomes.
  329. Mitchell et al. 2005 find that offering the option of a loan on one’s 401(k) does not raise overall participation rates, but contribution rates rise “by about 10 percent among non-highly-paid participants.” Moore et al. 2021 state that “the 401(k) system is de facto income and expenses insurance of the last resort. . . . Because other countries have better unemployment insurance and health insurance, they do not need as much pre-retirement liquidity in their pension system.” To this extent, improvements to income security outside of the retirement system are likely to increase retirement contributions. See the Labor and Benefit sections for more information on such improvements.
  330. The Impact of Leakages on 401(k)/IRA Assets, Center for Retirement Research. The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout Leakage, The Employee Benefits Research Institute.
  331. This figure is from the Economic Well-being of U.S. Households annual report (Figure 14) produced by the Federal Reserve. When the question was first asked in 2013, 50 percent of households said they could meet the unexpected $400 expense. By 2019 this portion had risen to 63 percent. See page 21 for further discussion of the implications of the survey’s findings.
  332. This figure is from the Economic Well-being of U.S. Households annual report (Table 9 in 2020). Bills include rent, mortgage, water, gas, electric, credit card, phone, cable, student loan, car payment, and other unspecified expenses.
  333. This statistic is from the Economic Well-being of U.S. Households annual report (Figure 18 in 2020).
  334. Whether or not self-employers are to be mandated to create an account and provide a minimum contribution from their own income is an important question. At the very least, self-employers may have the option to contribute to a saving account under this arrangement.
  335. The tradeoffs of varying structures to implement an ESA are discussed in this exploratory paper. Mitchell and Lynne 2017 “explore the possibility of linking a short-term savings, or ‘sidecar,’ account to a traditional retirement account to better meet consumers’ short- and long-term financial needs.” Nest Insight is undertaking a multi-year trial with a “sidecar savings model” in which contributions are automatically deducted from payroll and allocated first to one’s liquid emergency savings account and, once the savings account cap is hit, then to one’s retirement account.
  336. Child Development Accounts, The Federal Reserve Bank of St. Louis.
  337. S. 2231 American Opportunity Accounts Act.
  338. The policies described here refer to federal government policies and actions, though states might be permitted to contribute to these accounts assuming administrative feasibility.
  339. This short piece from the Urban Institute discusses the potential effects of baby bonds on wealth and wealth disparity.
  340. The Eastern Band of Cherokee Indians, for example, administers a universal asset endowment within their tribe known as the Minors Trust Fund (Littledave, Sheyashe 2019, The Big Money). Upon turning eighteen, tribe members receive no-strings-attached disbursements which have grown to over $100,000 in recent years. To assist recipients in managing their wealth disbursement, the tribe has made an intentional effort to improve money management skills among the youth population. (See The Cherokee Preservation Foundation, Financial Literacy.)
  341. Two short histories of the Postal Savings System: from USPS and from Mehsra Baradaran, a postal banking proponent.
  342. Providing Non-Bank Financial Services for the Underserved, Office of the Inspector General, USPS.
    It’s Time for Postal Banking, Harvard Law Review.
  343. What Is a Predatory Loan? from The Balance and What Is Predatory Lending from Nerdwallet provide introductions to the concept of predatory lending. The National Consumer Law Center has a resource guide for the two loan types often accused of being predatory, Payday and Installment Loans. Both the New York Times and the Washington Post have recently examined the effect of these types of loans on borrowers.
  344. The Center for Responsible Lending investigated the geographic concentration of payday lenders in California in its report Predatory Profiling. Six years later, the state of California released a report that came to a similar conclusion, The Demographics of California Payday Lending. The Morning Consult also found that Black households reported having more payday lenders and pawn shops in their neighborhoods in “It’s What We Call Reverse Redlining.”
  345. Building the CFPB, CFPB.
  346. One prominent example is the reversal of payday lending regulations. See CNBC for coverage.
  347. The Pew Research Center Consumer Finance Project has been leading in research and policy design in the area of small dollar loans. Their head explains the advantages of the Ohio law in Ohio’s Payday Lending Law Could Be National Model.
  348. Bourke, Nick. 2018. Ohio’s Payday-Lending Law Could Be National Model. The Columbus Dispatch.
  349. Many summaries and descriptions of student loan debt are available. Educationdata, a website that compiles education data from publicly available sources, summarizes student loan statistics. In researching the well-being of U.S. households, the Federal Reserve includes annual estimates of student loans and other educational debt. When student debt forgiveness became a possible policy, the Brookings Institute released this Q&A guide, Who Owes All That Student Debt?
  350. Roll, Jabari, and Michal Grinstein-Weiss 2018 discuss the findings of the survey, stating that:
    student debt is strongly influencing decisions that can have large implications for household economic stability, e.g., emergency savings, and mobility, e.g., saving for a down payment on a home, starting a business, etc. In addition, student debt may be altering the structure of families themselves. Roughly 7 percent of respondents reported that they would be more likely to get married or have children if their student debt were forgiven, indicating that this debt burden is affecting even fundamental decisions about debt holders’ life trajectories.
  351. School fraud and servicer fraud are not the same thing. School fraud involves educational institutions that were found to have made fraudulent representations to their students, many of whom took out loans to attend. The large number of recent cases of educational institute fraud were Corinthian Colleges and ITT Technical Institute. The Department of Education has a time line of the decline for Corinthian and ITT, as well as student loan questions for former Corinthian and ITT students. The New York Times has coverage of the case against ITT and the case against Corinthian made by government prosecutors. Servicer fraud is when a financial institution that manages student loan repayments is accused of defrauding customers. In 2017 the CFPB sued Navient for deception, accusing it of having “illegally cheated borrowers of repayment rights.” The lawsuit was the result of years of research into issues related to student loan services, summarized in this report. Navient is the largest student loan service entity in the U.S. and was previously Sallie Mae. The CFPB lawsuit for mistreatment of borrowers is separate from the investigation of a whistleblower claim that Navient cheated the federal government; it was ordered to pay back $22 million to the federal government in early 2021.
  352. For example, the city of Ferguson, Missouri, was revealed to have relied on raising municipal court fees and fines to make up fully one-fifth of its $12.75 million budget in 2013. The Department of Justice’s Investigation of the Ferguson Police Department found that its focus on revenue from police-issued fines led to unconstitutional practices and exacerbated racial disparities.
  353. Past Due, The Vera Institute of Justice.
  354. Who Pays? The True Cost of Incarceration on Families. Ella Baker Center for Human Rights, Forward Together, and Research Action Design.
  355. Levine, Sam. 2020. Federal Court Rules Florida Felons Must Pay Off Debts to State before Voting. The Guardian.
  356. The American Bar Association working group on building public trust in the American justice system found that, as of 2020, “about 10 million low-income residents owe more than $50 billion in often unaffordable additional costs” (American Bar Association, New ABA Study Captures Impact of Fines, Fees on the Poor).
  357. The Fines and Fees Justice Center documents the economic insecurity and injustice brought by fines and fees across the U.S.
  358. How Bail Works, How Stuff Works.
  359. Bail Reform, . . . , Explained, Vox, and What You Need to Know About Ending Cash Bail from the Center for American Progress discuss bail and potential reform. Illinois recently passed the Pretrial Fairness Act, which ends all money bail.
    The Prison Policy Initiative finds that 74 percent of the 470,000 individuals in city and county jail on a given day are being held there pretrial due to an inability to pay bail. This population is extremely low income; average annual income for men and women who cannot afford bail is $16,000 and $11,000, respectively. Inability to pay bail is also a racial issue, as 43 percent of the pretrial population in jail is Black. The PPI provides more data in its report Mass Incarceration: The Whole Pie 2020.
  360. The National Conference of State Legislatures has a Child Support Tutorial to introduce the legal and regulatory issues around child support.
  361. Child Support Reforms in PRWORA: Initial Impacts, The Urban Institute.
  362. See Interest on Child Support Arrears, National Conference of State Legislatures, and Reforming Child Support to Improve Outcomes for Children and Families, the Abell Foundation.
  363. Child Support Pass-Through and Disregard Policies for Public Assistance Recipients, National Conference of State Legislatures.
  364. An overview of the issues and goals of child support reform can be found in the New York Times editorial Child Support vs. Deadbeat States, this overview Child Support Reform from Child Trends, and Transforming the Child Support System into a Family-Building System from the U.S. Partnership on Mobility from Poverty.
  365. See Appendix D, 5-10, p. 432, of A Roadmap to Reducing Child Poverty for analyses of child support guaranteed minimums of $100 and $150 per month.
  366. How We Work, Legal Services Corporation.
  367. Legal Services Corporation, American Bar Association.
  368. Code of Federal Regulations, Title 45, Subtitle B, Chapter XVI, Part 1611: Financial Eligibility provides the regulations, but more explanation of who is covered by LSC can be found at What Is Legal Aid? by the National Legal Aid and Defender Association, and Can LSC Grantees Represent Undocumented Immigrants? by Legal Services Corporation.
  369. Civil Legal Aid 101, Department of Justice.
  370. See the Legal Services Corporation’s report The Justice Gap: Measuring the Legal Needs of Low-Income Americans.
  371. Restricted activities for LSC funds are listed here LSC Restrictions and Other Funding Sources. The Center for American Progress proposed idea for Legal Services Reform is here: Making Justice Equal.
  372. For an introduction to the right to counsel, see Right to Counsel from the Cornell Legal Information Institute. For an introduction to the Supreme Court case that extended the right to counsel to state felony charges, see Gideon v Wainright from the Georgetown Law Library.
  373. The National Coalition for a Civil Right to Counsel keeps track of where states and localities have expanded the right to counsel, Major Developments. Evidence that counsel reduces eviction is based on a pilot expansion of right to counsel in New York City, summarized at Expand the Right to Counsel. Background on the right to counsel and proposals to increase are discussed in A Right to Counsel Is a Right to a Fighting Chance by the Center for American Progress.
  374. For an introduction to differences in wealth between Black and White Americans (often called the Black-White wealth gap or racial wealth gap), you can read The Racial Wealth Gap in the United States. Three reports provide an overview of how Black Americans benefit from Social Security: Social Security Helps African Americans Save for Retirement (AARP), African American Economic Security and the Role of Social Security (Urban Institute), or Social Security: A Vital Protection for African American People of All Ages (CBPP). In addition, the NAACP released this statement on Social Security: Viewing Social Security through the Civil Rights Lens.
  375. This review in the Proceedings of the National Academy of Sciences summarizes twenty years of field experiments to show that discrimination in hiring toward Black job applicants is large and consistent: Meta-analysis of Field Experiments Shows No Change in Racial Discrimination in Hiring over Time.
  376. Changes to OASDI fall primarily under the category of benefit policy for the purpose of this report and are thus not included in this section. With that said, establishing a new minimum benefit under OASDI has obvious equity implications.
  377. Table 11 of the Annual Labor Force Statistics tables from the Current Population Survey shows occupational distribution of workers by gender, race, and ethnicity.
  378. Even, William E., and David A. Macpherson. 2014. The Effect of the Tipped Minimum Wage on Employees in the U.S. Restaurant Industry. Southern Economic Journal, 80(3), 633–655.
  379. For a discussion of criminal records and the number of Americans who have them, see Just Facts: As Many Americans Have Criminal Records as College Diplomas from the Brennan Center for Justice.
  380. For more on the impact of criminal records on children, see Removing Barriers to Opportunity for Parents with Criminal Records and Their Children: A Two-Generation Approach from the Center for American Progress.
  381. Barrier to Work: People with Criminal Records, National Conference of State Legislatures.
  382. More on the difference between sealed and expunged records can be found on FindLaw.
  383. A University of Michigan study found that just 6.5 percent of eligible individuals were able to obtain a “set-aside” in Michigan within five years of becoming eligible.
  384. A guide to the process for restoration of rights in every U.S. jurisdiction is maintained by the Collateral Consequences Resource Center, Restoration of Rights Project.
  385. Follow these links to learn more about Clean Slate laws in Pennsylvania, Utah, Michigan, Virginia, Connecticut, Delaware, and California.
  386. Find out more about automatic record clearance at the Clean Slate Initiative.
  387. The bipartisan Clean Slate Act, introduced in the House in 2019 and 2020 and in the Senate in 2020, would create the first-ever federal record-clearing remedy and make the process automatic for certain drug records.
  388. More on the absence of federal record-clearing can be found in this overview by the Collateral Consequences Resource Center.
  389. Furman, Jason, and Laura Giuliano. 2016. New Data Show That Roughly One-Quarter of U.S. Workers Hold an Occupational License.
  390. The Institute for Justice provides more information on the “37 states and Washington, D.C. [that] have reformed their occupational licensing laws to make it easier for ex-offenders to find work in state-licensed fields” since 2015.
  391. Kent, Ana Hernández, and Lowell Ricketts. 2021. Wealth Gaps between White, Black and Hispanic Families in 2019. Federal Reserve Bank of St. Louis.
  392. U.S. Census Bureau. Housing Vacancies and Homeownership (CPS/HVS)—Historic Tables. Table 16, Q4 2020.
  393. Zonta documents evidence of the variety of “new forms of racial bias in housing” that have emerged in recent decades, including real estate agents steering “African Americans away from desirable neighborhoods and toward areas featuring larger concentrations of people of color, higher poverty levels, and lower housing quality compared with neighborhoods to where whites relocate.”
    Zonta, Michela. 2019. Racial Disparities in Home Appreciation. Center for American Progress.
  394. Neal, Michael, and Alanna McCargo. 2020. How Economic Crises and Sudden Disasters Increase Racial Disparities in Homeownership. Table 1. Urban Institute.
  395. Green, Dan. 2022. $25,000 Downpayment Toward Equity Act of 2021: Simplified. Homebuyer.com.
  396. Choi, Jung Hyun, and Janneke Ratcliffe. 2021. Down Payment Assistance Focused on First-Generation Buyers Could Help Millions Access the Benefits of Homeownership. Urban Institute.
  397. Gray-Lobe et al. 2021 find that “attendance at a public preschool in Boston boosts on-time college enrollment by 8 percentage points, an 18% increase relative to the baseline college-going rate of 46%. Children who randomly win a seat at a Boston preschool are 5.5 percentage points more likely to attend a four-year college by the fall after projected high school graduation and 8.5 percentage points more likely to attend a Massachusetts college.”
    Regarding the Head Start program, Schanzenback and Bauer 2016 find that it “improves educational outcomes— increasing the probability that participants graduate from high school, attend college, and receive a post-secondary degree, license, or certification” and that it “causes social, emotional, and behavioral development that becomes evident in adulthood measures of self-control, self-esteem, and positive parenting practices.”
    Gray-Lobe, Guthrie, Parag A. Pathak, and Christopher R. Walters. 2021. The Long-Term Effects of Universal Preschool in Boston. NBER Working Paper No. 28756.
    Schanzenbach, Diane Whitmore, and Laruen Bauer. 2016. The Long-Term Impact of the Head Start Program. Brookings Institution.
  398. “In the years since Washington, D.C., began offering two years of universal preschool, the city’s maternal labor force participation rate has increased by about 12 percentage points, with 10 percentage points attributable to preschool expansion.”
    Malik, Rasheed. 2018. The Effects of Universal Preschool in Washington, D.C. Center for American Progress.
  399. Martin et al. 2018 discuss two neighboring school districts in Texas. As of 2013/2014, the Edgewood school district received “about $5,000 less per pupil in education funding than Alamo Heights, a wealthier, neighboring school district.” As such, “core services that have a significant influence on instructional quality and student performance are systematically unavailable to students in low-income schools relative to students in higher-income schools. These critical services include early childhood education, quality teachers, and exposure to rigorous curriculum.”
    Indeed, Baker et al. 2018 find that seventeen states are regressive in their public school funding, meaning that higher-poverty school districts receive less funding per pupil than their lower-poverty counterparts. They also show the range of per pupil funding across states in 2015 at a high of $18,719 in New York to a low of $6,277 in Idaho.
    Martin, Carmel, Meg Benner, Ulrich Boser, and Perpetual Baffour. 2018. A Quality Approach to School Funding. Center for American Progress.
    Baker, Bruce, Danielle Farrie, and David G. Sciarra. 2018. Is School Funding Fair? A National Report Card. Education Law Center.
  400. Jackson et al. 2021, for example, find that during the Great Recession, when school budgets were being cut, “cohorts exposed to these spending cuts had lower test scores and lower college-going rates. The test score impacts were larger for children in poor neighborhoods. Evidence suggests that both test scores and college-going were more adversely affected for Black and White students than Latinx students.”
    Jackson, C. Kirabo, Cora Wigger, and Heyu Xiong. 2021. “Do School Spending Cuts Matter? Evidence from the Great Recession.” American Economic Journal: Economic Policy, 13(2): 304–335.
  401. According to the National College Attainment Network, only 23 percent of four-year public colleges were affordable for a student who received the average-sized Pell Grant in 2018–19, with an average affordability gap of $2,524. Ten states had no affordable four-year public institutions, and 38 states had five or fewer.
    National College Attainment Network. 2021. College Affordability.
  402. Carnevale et al. 2021 show that, at the median, compared to a high school diploma, lifetime earnings for a Black worker increase by 21 percent with an associate’s degree and 64 percent with a bachelor’s degree. For a Hispanic worker, those figures are 36 percent and 64 percent, respectively.
    Carnevale, Anthony P., Ban Cheah, and Emma Wenzinger. 2021. The College Payoff: More Education Doesn’t Always Mean More Earnings. Washington, DC: Georgetown University Center on Education and the Workforce.
  403. Feldman, David H., and Christopher R. Marsicano. 2021. Moving Beyond Free: A College Affordability Compact for the Next Generation. Third Way.
    Huelsman, Mark. 2014. The Affordable College Compact. Demos.
    Startz, Dick. 2020. Biden’s Plan for Higher Ed Is Good—But It Could Be Better. Brookings Institution.
  404. See Sherman’s Field Order No. 15 from the Georgia Encyclopedia, The Truth Behind 40 Acres and a Mule from PBS, and Black Reparations and the Racial Wealth Gap from authors William “Sandy” Darity and Kirsten Mullen.
  405. Text of HR 40, introduced by Shelia Jackson Lee. Veteran Congressman Still Pushing for Reparations in a Divided America provides an overview of the many years’ effort of John Conyers to introduce the bill in the House. More recent press coverage provides context for the discussion today, in the Washington Post, the Atlantic, and Vox.
  406. The language in Public Law 100-383 “Civil Liberties Act of 1987” begins by stating: “The purposes of this Act are to—(1) acknowledge the fundamental injustice of the evacuation, relocation, and internment of United States citizens and permanent resident aliens of Japanese ancestry during World War II; (2) apologize on behalf of the people of the United States for the evacuation, relocation, and internment of such citizens and permanent resident aliens.”
  407. See the New York Times’ coverage of the vote and the Densho Encyclopedia’s summary for more information about the act. In 2018 in Trump v. Hawaii, in which the U.S. Supreme Court upheld the travel ban aimed at certain nations, the Court took the occasion to overrule its decision in Korematsu v. United States, which had upheld the Roosevelt internment order.
  408. The Migration Policy Institute maintains a Frequently Asked Questions page with links to further reports and discussions of data, immigration in the U.S., and the number of immigrants in the U.S. The Department of Homeland Security has its own data page. The Pew Research Center produces an annual statistical portrait of immigrants in the U.S.
  409. This statement was fact checked by Politifact; see Overstayed Visas (fact checking Rep. Kevin McCarthy). All fact checks by Politifact on statements about immigration can be found on its webpage.
  410. Both Gallup and The Pew Research Center perennially poll Americans about their views on immigration and components of immigration policy. In a Gallup poll placed January 21–27, 2019, 34 percent of Americans said they strongly favor and 47 percent favor “allowing immigrants living in the U.S. illegally the chance to become U.S. citizens if they meet certain requirements over a period of time.” In a Pew poll placed June 4–20, 74 percent of Americans said they favor “Congress passing a law granting permanent legal status to immigrants who came to the U.S. illegally when they were children.” The Bipartisan Policy Center published similar findings in The New Middle on Immigration.
  411. 4 Myths about How Immigrants Affect the U.S. Economy from PBS gives an overview of the economic contribution of immigrants. The positive impact immigrants provide to the economy, even if they at one point need some form of social assistance, is explained in Immigrants Contribute Greatly to U.S. Economy, Despite Administration’s “Public Charge” Rule Rationale (CBPP). More information about why immigration is good for the U.S. can be found at the George W. Bush Presidential Institute and outlined in this essay, Benefits of Immigration Outweigh the Cost. In addition, the Bipartisan Policy Center has a large research portfolio on immigration policy in the U.S., including Immigrants and Public Benefits.
  412. Goss et al. 2013 estimate the net impact of “unauthorized immigrants” on the Social Security Trust Funds in 2010 to be an increase in reserves of $12 billion, with $13 billion paid in taxes and $1 billion paid out in benefits.
  413. The Migration Policy Institute has a history of IRCA and two summaries of potential lessons from IRCA, IRCA in Retrospect and Will Immigration Reform Ever Succeed Again? A separate report from the Urban Institute reviews the lessons from IRCA but considers how the population of undocumented immigrants has changed since 1986.
  414. Social Security wage and payroll contributions, which include 6.2 percent paid by the employer, are commonly thought to be “passed on” to workers through lower wages. That is, workers may bear the incidence, even though employers pay the cost. Melguizo and González-Páramo 2012 review decades of literature on the matter and find that “in the long run, workers bear between two thirds of the tax burden in Continental and Anglo-Saxon economies, and nearly 90% in the Nordic economies.”
    Minimum wage increases on the other hand may fall primarily on employers through an increase in labor costs. In some industries, however, the cost of labor might be passed on to consumers in the form of higher prices or even borne by the workers themselves through automation and lost jobs.
  415. This all-encompassing analysis is referred to as “dynamic scoring.” The Congressional Budget Office is the agency in charge of estimating the cost of federal legislation. They only provide dynamic scoring when it is requested by Congress, or when “the gross budgetary effects of a bill would equal or exceed 0.25 percent of gross domestic product (the economy’s total output) in any year” (CBO 2018). The Tax Policy Center provides an overview of dynamic scoring and dynamic analysis.
  416. James Chen of Investopedia explains the U.S. dollar as a reserve currency and its implications.
  417. This idea is more commonly known as modern monetary theory (MMT). These explainers by Vox, Business Insider, and The Conversation are a few of many. A Bipartisan Policy Center blog post lays out some of the more common arguments against undertaking an MMT framework in the U.S. moving forward.
  418. The federal budget is a key tool in shaping economic and social policy. For a background on the budget, the Peterson Foundation provides a webpage titled Understanding the Budget (PGPF 2020).
  419. Revenue-raising options are only one part of CBO’s report, which also includes spending reductions. The most recent CBO report, titled Options for Reducing the Deficit: 2021 to 2030, was released in December 2020.
  420. Although Medicare Part A receives almost all of its funding from payroll taxes, Parts B and D of Medicare receive a majority of funding from general revenues (Cubanski et al. 2019, Figure 7). Unemployment Insurance is also supported by general revenues (particularly during times of financial crisis); Walczak 2021 states that the federal government had spent almost $430 billion as of January 2021 to provide additional unemployment relief during the coronavirus pandemic. The need for general revenue spending might be mediated by better efforts to build and retain trust fund reserves.
  421. The Center on Budget and Policy Priorities provides a brief overview of payroll taxes (CBPP 2020).
  422. The Center on Budget and Policy Priorities provides an overview of the various sources of federal tax revenue (CBPP 2020).
  423. This example does not take into consideration adjustments to income or deductions to income. It is only after adjustments and deductions that federal income taxes take effect. Because adjustments vary significantly from person to person, we do not take them into account in this example. Most low- and middle-income filers take the standard deduction to income (as opposed to itemized deductions), which was $12,400 for individuals and $24,800 for joint filers for tax year 2020.
  424. El-Sibaie, Amir. 2019. 2020 Tax Brackets. The Tax Foundation.
  425. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 1—Increase Individual Income Tax Rates. p. 59.
  426. This idea is illustrated by the Laffer Curve, which shows that after a certain point, an increase in tax rates will decrease tax revenue because the behavior being taxed is disincentivized by the tax. In the case of income taxes, all else equal, work is disincentivized by higher tax rates.
  427. Nerdwallet. 2020. Standard Tax Deduction: How Much It Is in 2020–2021 and When to Take It.
  428. The Tax Foundation provides a concise definition of the state and local tax deduction.
  429.  Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 4—Eliminate Itemized Deductions. p. 62.
  430. The Tax Policy Center provides a four-part overview of taxes on capital gains and dividends and how they might be improved.
  431. The Balance explains how the IRS calculates and utilizes modified adjusted gross income (MAGI) (Fisher 2020).
  432. Orem, Tina. 2020. 2020–2021 Capital Gains Tax Rates—and How to Calculate Your Bill. Nerdwallet.
  433. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 2—Raise the Tax Rates on Long-Term Capital Gains and Qualified Dividends by 2 Percentage Points. p. 60.
  434. This idea is illustrated by the Laffer Curve, which shows that after a certain point, an increase in tax rates will decrease tax revenue because the behavior being taxed is disincentivized by the tax. In the case of capital gains taxes, all else equal, investments are disincentivized by higher tax rates.
  435. The Tax Policy Center explains the difference between these two terms and the implications of their use for the tax system.
  436. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 6—Change the Tax Treatment of Capital Gains from Sales of Inherited Assets. p. 64.
  437. Batchelder and Kamin 2019 estimate that this change (denoted “Tax Accrued Gains at Death and Increase CG/Dividends Rate to 28%” in Table 2) accompanied with an increase of the top tax rate for long-term capital gains and qualified dividends to 28 percent would raise $290 billion over ten years.
  438. The Tax Policy Center provides a brief, seven-part overview of the estate tax: what it is, who pays it, and options for reforming the estate tax in addition to options to tax other forms of wealth transfers (Tax Policy Center 2020). The Tax Foundation provides a concise definition.
  439. Tax Policy Center. 2020. How Many People Pay the Estate Tax?
  440. See What Is an Inheritance Tax? from the Tax Policy Center for more information about the differences between an estate tax and an inheritance tax.
  441. CBO does not offer revenue impact estimates of changes to the estate tax in Options for Reducing the Deficit: 2021–2030. The Urban-Brookings Microsimulation Model projects revenue impacts for nine variations of an inheritance tax (in lieu of current law) that varies along lifetime exemption levels and tax rates and institutes a change from the step-up in basis to the carryover basis in T19-0046 – Revenue Impact of an Inheritance Tax Proposal with Different Lifetime Exemptions and Tax Rates with the Current-Law Estate Tax Repealed, 2022–30. On the low end it estimates a net-revenue increase of $141 billion between 2022 and 2030 for a $2 million lifetime exemption and a tax rate of the larger of one’s marginal income tax rate plus 10 percent or 30 percent. On the high end it estimates a net-revenue increase of $646 billion between 2022 and 2030 for a $1 million lifetime exemption with a tax rate of the larger of one’s marginal income tax rate plus 20 percent or 40 percent. Other proposals and revenue estimates are presented by Batchelder and Kamin 2019, Sarin and Summers 2020, Philips and Wamhoff 2018, Sammartino et al. 2016, Auxier et al. 2016, and The Penn Wharton Budget Model (Bennet Plan and Sanders Plan).
  442. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 19— Increase the Corporate Income Tax Rate by 1 Percentage Point. p. 77.
  443. This idea is illustrated by the Laffer Curve, which shows that after a certain point, an increase in tax rates will decrease tax revenue because the behavior being taxed is disincentivized by the tax. In the case of corporate income taxes, all else equal, creating corporate income is disincentivized by higher tax rates.
  444. The Tax Foundation projects a ten-year revenue increase of $522 billion using conventional scoring and $392 billion using dynamic scoring for an increase in the corporate tax rate from 21 percent to 25 percent between 2022 and 2031. They project increases of $886 billion and $644 billion for an increase to 28 percent using conventional and dynamic scoring, respectively. Batchelder and Kamin 2019 project a ten-year revenue increase of $730 billion for a rate increase to 28 percent. Mermin et al. 2020 similarly project a ten-year revenue increase of $727 billion for a rate increase to 28 percent. The Penn Wharton Budget model projects the following revenue increases over ten years for the following tax rate hikes from 21 percent: 1) a rate of 25 percent yields an additional $592 billion; 2) a rate of 28 percent yields an additional $1,029 billion; 3) a rate of 30 percent yields an additional $1,315.3 billion.
  445. Greenberg 2018 provides an extensive overview of the pass-through deduction for the Tax Foundation.
  446. Internal Revenue Service. 2021. Tax Cuts and Jobs Act, Provision 11011 Section 199A: Qualified Business Income Deduction FAQs.
  447. York, Erika. 2019. Pass-Through Businesses Q&A. Tax Foundation.
  448. The IRS outlines the 2.9 percent self-employment tax for Medicare hospital insurance and the additional Medicare tax rate of 0.9 percent on “wages, compensation, and self-employment income above a threshold amount” (Internal Revenue Service, Self-Employment Tax (Social Security and Medicare Taxes)).
  449. Batchelder, Lily, and David Kamin. 2019. Taxing the Rich: Issues and Options. p. 5.
  450. The IRS lists relevant tax laws prior to the Tax Cuts and Jobs Act and what changed under the new law (Internal Revenue Service, Tax Cuts and Jobs Act: A Comparison for Businesses).
  451. Batchelder, Lily, and David Kamin. 2019. Taxing the Rich: Issues and Options. pp. 10, 37.
  452. Penn Wharton Budget Model. 2020. Senator Michael Bennet’s “The Real Deal” Tax Plan: Budgetary Effects.
  453. Leigh Thomas and David Lawder explain global minimum taxes for Reuters.
  454. The Tax Policy Center explains GILTI and provides an example of how it (and similar taxes) might work in practice.
  455. Clausing, Kimberly A. 2018. Profit Shifting before and after the Tax Cuts and Jobs Act. 73(4), National Tax Journal 1233–1266 (2020), UCLA School of Law, Law-Econ Research Paper No. 20-10.
    Mermin, Gordon B., Janet Holtzblatt, Surachai Khitatrakun, Chenxi Lu, Thorton Matheson, and Jeffrey Rohaly. 2020. An Updated Analysis of Former Vice President Biden’s Tax Proposals. Tax Policy Center.
  456. Committee for a Responsible Federal Budget provides an overview of accelerated depreciation in its blog post on Senator Max Baucus’s 2013 proposal.
  457. Batchelder, Lily L. 2017. Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing.
  458. U.S. Senate Committee on Finance. 2013. Baucus Works to Overhaul Outdated Tax Code.
  459. Congressional Budget Office. 2020. Options for Reducing the Deficit:2021-2030. Revenues Option 28— Impose a Tax on Emissions of Greenhouse Gases. p. 85.
  460. Rosenberg et al. 2018 find that rates of $73 per metric ton (+1.5 percent per year), $50 per metric ton (+2 percent per year), and $14 per metric ton (+3 percent per year) would raise $3.0 trillion, $2.1 trillion, and $742 billion respectively over ten years. Other proposals and revenue projections (in highest to lowest net revenue order) come from
    Horowitz et al. 2017, Pomerleau and Asen 2019, Huntley and Rico 2019, and Sobhani et al. 2019.Resources for the Future provides a Carbon Pricing Calculator which allows one to explore the impacts of a carbon tax on a variety of outcomes using their model.
    Fichtner 2019 makes the case for using carbon tax revenue to offset other taxes in order to promote economic growth.
  461. The Tax Policy Center explains the VAT and makes the case that it is “administratively superior to a retail sales tax.”
  462. In this regard, the VAT is considered regressive insofar as households with lower incomes spend a higher proportion of their income. Gale 2020 proposes a VAT which offsets regressivity by funding a universal basic income.
  463. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 27—Impose a 5 Percent Value-Added Tax. p. 84.
  464. Gale 2020 proposes a 10 percent VAT with certain exemptions and projects it would net $10.0 trillion over ten years. This projection includes the cost of increasing benefit payments in federal cash transfer programs to account for increased prices. If the revenue were used to fund a UIB at 20 percent of the federal poverty level ($2,576 per year, $215 per month in 2021), $2.9 trillion in new revenue would remain over ten years.
    Huntley et al. 2019 project a 1 percent VAT with certain exemptions and a progressive universal rebate would net $700 billion over ten years.
  465. The tax is levied on stocks when they are issued, only when they are exchanged between traders. Klein 2020 explains the financial transactions tax in further detail.
  466. As of February 2021, the financial transactions fee rate was “$22.10 per million of covered sales,” or 0.0021 percent.
  467. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 29—Impose a Tax on Financial Transactions. p. 86.
  468. Pollin et al. 2017 project that an FTT with rates of 0.5 percent of value for stock purchases, 0.1 percent of value for bond purchases, and 0.005 percent for derivative purchases along with a tax credit for moderate- to low-income filers would net $3.0 trillion in revenue over ten years. This figure is the product of 1.2 percent of GDP (from the paper) multiplied by CBO’s projected GDP as of July 2020.
    Batchelder and Kamin 2019 project $810 billion over ten years for a 0.1 percent FTT on all financial assets. Other projections come from Burman et al. 2016, Sammartino et al. 2016, Weiss and Kawano 2020, and Schulmeister 2008.
  469. This is the definition of net wealth put forth by Emmanuel Saez and Gabriel Zucman in How Would a Progressive Wealth Tax Work? Evidence from the Economics Literature. Saez and Zucman are considered two of the foremost experts on the wealth tax and assisted Senator Elizabeth Warren in developing one of her proposals for the 2020 presidential campaign.
  470. Breuninger, Kevin, and Tucker Higgins. 2019. Elizabeth Warren Proposes “Wealth Tax” on Americans with More Than $50 Million in Assets. CNBC.
  471. Asen, Elke. 2020. Wealth Taxes in Europe. The Tax Foundation.
  472. Batchelder and Kamin 2019 project that a 2 percent tax on the top 0.1 percent of net-wealth holders and a 3 percent tax on net wealth exceeding $1 billion over ten years would raise $6.7 trillion with no avoidance, $5.1 with 15 percent avoidance, and $3.5 trillion with 30 percent avoidance. They also project that a 2 percent tax on the top 1 percent of net-wealth holders would raise $3.3 trillion with no avoidance, $2.6 trillion with 15 percent avoidance, and $1.9 trillion with 30 percent avoidance.
    Other revenue projections include Li and Smith 2020 (analysis of two proposals), Leiserson 2020 (analysis of two proposals), Penn Wharton Budget Model 2020 (Sanders proposal), Saez and Zucman 2019, Penn Wharton Budget Model 2020 (Warren proposal), Gleckman 2019, and Sarin and Summers 2019 (which states that Warren’s proposal will bring in only 12–40 percent of projections).
  473. Gleckman 2019 discusses best practices for effectively taxing the rich, and Bunn 2021 discusses the difficulties other countries have faced in implementing their wealth taxes. The Tax Policy Center hosted a recorded event in 2019 that discussed the many questions around taxing wealth in detail.
  474. An accrual tax effectively repeals the stepped-up basis and is typically thought of as an alternative to a wealth tax due to its ability to tax asset growth every year.
  475. Under current law, net capital losses of up to $1,500 per individual per year can be deducted from taxable income. Net capital losses exceeding the limit can be carried over and deducted from taxable income in future years (Internal Revenue Service, Helpful Facts to Know about Capital Gains and Losses).
  476. Leiserson and McGrew 2019 provide an overview of mark-to-market taxation for the Washington Center for Equitable Growth. Eastman et al. 2019 evaluate a mark-to-market approach for the Tax Foundation.
  477. In 2019, Senator Ron Wyden (D-OR) made this proposal with certain exemptions to ensure that the tax affected the wealthiest taxpayers. His proposal also called for capital gains income to be taxed at the same rate as ordinary income.
  478. The Batchelder and Kamin 2019 analysis taxes capital gains as ordinary income and uses 39.6 percent as the top tax rate on ordinary income (plus 3.8 percent for the Medicare tax or the Net Investment Income Tax) and assumes a 15 percent avoidance rate for the revenue estimates listed here. The paper also shows revenue estimates for 0 percent avoidance and 30 percent avoidance.
  479. Penn Wharton Budget Model. 2020. Senator Michael Bennet’s “The Real Deal” Tax Plan: Budgetary Effects.
  480. Congressional Budget Office. 2018. Options for Reducing the Deficit: 2019–2028. p. 306.
  481. Erb, Kelly Phillips. 2015. Former IRS Commissioners Differ on Politics, United against Agency Cuts. Forbes.
  482. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 31—Increase Appropriations for the Internal Revenue Service’s Enforcement Initiatives. p. 88.
  483. Faler, Brian. 2021. Biden Proposes Doubling IRS Workforce as Part of Plan to Snag Tax Cheats. Politico.
  484. Gibbs, Lawrence B., Fred T. Goldberg, Margaret M. Richardson, Charles O. Rossotti, and John Koskinen. 2021. Opinion: Five Former IRS Commissioners: Biden’s Proposal Would Create a Fairer Tax System. The Washington Post.
  485. Sarin, Natasha, Lawrence H. Summers, and Joe Kupferberg. 2020. Tax Reform for Progressivity: A Pragmatic Approach. The Hamilton Project.
  486. Fichtner et al. 2019 review the literature and conclude that “the aggregate cost of federal tax compliance for [U.S.] taxpayers probably exceeds $200 billion annually” and draw on IRS data in their discussion of the $458 billion in tax revenue per year that went uncollected between 2008 and 2010.

References

  1. One of the best resources about the history of the Social Security Act and related legislation is the Social Security Administration itself, which has a historian’s office.
  2. The executive group included Frances Perkins, Henry Morgenthau Jr., Homer Cummings, Henry Wallace, and Harry Hopkins, and it was “the ultimate decision-making authority on the CES.” The executive director of the staff was Edwin Witte. An advisory council of twenty-three “civic leaders from outside the Roosevelt Administration,” and a technical board of twenty-one officials from federal agencies below the cabinet level augmented and supported the executive team. The Social Security Administration details all members of the Committee and its staff.
  3. There are many sources of U.S. economic history. One of the most sweeping is Robert Gordon’s Rise and Fall of American Economic Growth.
  4. The Social Security Act of 1935 established old-age benefits and unemployment compensation, and it made a number of state grants to promote income security. The Fair Labor Standards Act of 1938 established the U.S.’ first minimum wage, standardized a forty-four-hour work week, required extra pay for overtime work, and prohibited certain child labor. The purpose of the National Labor Relations Act of 1935 was to “protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices.”
  5. Wealth is implicitly included in “the risk to current income” in that one may draw on wealth as source of income in the event of a shock to current income. In other words, wealth reduces risks to current income.
  6. Bureau of Labor Statistics. 2021. Employment Levels by Industry, Seasonally Adjusted, 2000–2020.
  7. U.S. Census Bureau. 2021. Week 1 Household Pulse Survey: April 23–May 5 and Week 21 Household Pulse Survey: December 9–December 21. Employment Tables, Table 1. Food Sufficiency and Food Security Tables, Tables 2a and 2b.
  8. U.S. Census Bureau. 2020. Week 12 Household Pulse Survey: July 16–July 21. Stimulus Table, Table 1.
  9. U.S. Department of Treasury. 2021. American Rescue Plan: Treasury’s Progress and Impact After Six Months.
  10. An example of an in-kind transfer is the Supplemental Nutrition Assistance Program (SNAP), through which beneficiaries receive benefits that may be spent on only certain food items.
    An example of a subsidy to service providers is the Legal Services Corporation Basic Field Grant. This grant funds the Legal Services Corporation, which then distributes funds to providers of civil legal aid to low-income people.
    An example of direct service provision is Head Start. Head Start offers early educational opportunities to children in low-income families, in addition to other supports to promote a healthy home environment.
    An example of a voucher program is the Housing Choice Voucher Program. The program provides vouchers to (some, not all) very low-income families, elderly individuals and couples, and people with disabilities. The vouchers allow beneficiaries to choose suitable housing in the private market. In most cases, the benefiting family pays 30 percent of monthly adjusted gross income toward rent and utilities, and the local public housing agency covers the remaining rent and utility expenses.
  11. The old age insurance portion of the legislation did not initially include farmworkers and domestic workers, which amounted to excluding at least 60 percent of Black workers from coverage at the time. By 1950, most workers in these professions were covered, and the remainder were covered in 1954 (see Dewitt 2010). Regardless of the reasoning, the effect on Black workers’ financial security was significant. The federal government created a large and generous program that did not benefit many of the lowest-income workers for over a decade of its existence.
  12. Charles H. Houston—the president of the National Association for the Advancement of Colored People at the time—testified before the Senate regarding the first draft of the bill, which would ultimately produce the Social Security Act. He stated that the legislation “looked like a sieve with the holes just big enough for the majority of Negroes to fall through.” It should be noted, Dewitt writes, that “Houston pointed out the adverse impact of the provision on African Americans, as part of an overall critique designed to persuade Congress to drop the whole Social Security program entirely. He wanted a single, universal, federal welfare benefit in lieu of a contributory social insurance system” and conceded that the administration of “‘a pay roll tax on casual, domestic and agricultural workers would practically consume the tax itself.’ So Houston was not advocating coverage for domestic and farm workers, but rather rendering the whole issue moot by rejecting the Social Security system entirely.”
    George E. Haynes—executive secretary at the Department of Race Relations for the Federal Council of Churches—also testified regarding discrimination and exclusion in the legislation. Mr. Haynes advocated for a clause prohibiting “discrimination on account of race or color in the administration of the services and benefits to any person otherwise eligible.” No such clause was included in the original legislation.
  13. The Color of Law (Rothstein 2017) documents closely how Black individuals in the U.S. have been excluded, both explicitly and (especially) implicitly, from many of the benefits offered by public policy over the past century.
  14. Returning from War, Returning to Racism (Clark, 2020) looks specifically at how the promised benefits of the G.I. Bill were in a large part denied to Black veterans. Some argue that the discriminatory implementation of the G.I. Bill initiated an era of affirmative action for White families.
  15. Today, for example, many part-time workers (especially low-wage part-time workers) do not earn enough or do not have steady enough employment to qualify for Unemployment Insurance benefits. Independent contractors are ineligible for benefits altogether (Kovalski and Sheiner 2020).
  16. Often these structural and individual interventions went hand in hand. The Banking Act of 1933, for example, created the Federal Deposit Insurance Corporation (FDIC), which both stabilized the banking industry through stricter regulation but also insured individual deposits up to an amount, which greatly reduced the risk depositors were exposed to. Similarly, the National Housing Act of 1934 created the Federal Housing Administration (FHA), which both stabilized the housing market through insuring mortgages but also created a broader mortgage market for consumers with better, regulated terms. You can find an overview of all New Deal legislation here. While these new laws reduced precarity and improved well-being for many working households, Black people were directly excluded from these gains. Rothstein writes, “The Federal Home Loan Bank Board, for example, chartered, insured, and regulated savings and loan associations from the early years of the New Deal but did not oppose the denial of mortgages to African Americans until 1961. It did not enforce the new race-blind policy, however—perhaps because it was in conflict with the board’s insistence that mortgage eligibility account for ‘economic’ factors. Like the FHA, it claimed that judging African Americans to be poor credit risks because they were Black was not a racial judgment but an economic one. As a result, its staff failed to remedy the industry’s consistent support for segregation” (The Color of Law, 2017, p. 108).
  17. Bureau of Labor Statistics. Labor Force Statistics from the Current Population Survey. Series: (Seas) Average Weeks Unemployed – LNS13008275.
  18. On aggregate, LFP rates for the sixteen and older population were down 4 percentage points between 1999 and 2019. This may not be too problematic, however, as the aged 16–24 population has seen LFP rates decline by almost 10 percentage points. These declines are nearly 17 percentage points for the aged 16–19 population. In other words, if young people are receiving more education and therefore not participating in the labor force, that is not a problem. If fewer young people are participating in the labor force during the period of their education, that is also not a problem.
    On the other end of the spectrum, the fifty-five and older population increased its LFP by 8.4 percentage points over the same time period. This includes a 9.5 percentage point increase for the 65–74 population, and a 4 percentage point increase for the seventy-five and older population. To the extent that these increases are related to more accessible and less physically burdensome work, they are not a problem. To the extent that they are related to retirement insecurity, they are more problematic (Bureau of Labor Statistics, 2020).
    Source (25–54 LFP data): U.S. Bureau of Labor Statistics, Labor Force Participation Rate: 25–54 Yrs. [LNU01300060], retrieved from FRED, Federal Reserve Bank of St. Louis.
  19. Economic status is not to be confused with socioeconomic status, which is defined by the American Psychological Association as follows: “Socioeconomic status is the social standing or class of an individual or group. It is often measured as a combination of education, income and occupation.” In short, “economic status” refers to what resources one owns and can afford to buy, while “socioeconomic status” refers to one’s well-being compared to others.
  20. For example, one definition of economic status is whether a person is “in poverty.” A poverty threshold is a dollar amount below which someone is considered poor and above which someone is not poor. What that poverty threshold should be, and what it should measure, is the subject of a long and sometimes fierce debate.
  21. Sahada, 2019. Up to Half of Exiting CEOs Don’t Quit. They Get Fired. CNN Business.
  22. CEOs are a well-studied profession. They are not only leaders in industry but also the poster children for inequality. A recent report from the Economic Policy Institute found the ratio of “CEO-to-typical-worker compensation was 320-to-1” in 2019, up from 293-to-1 in 2018, 61-to-1 in 1989, and 21-to-1 in 1965 (Mishel and Kandra, 2020). As for “golden parachutes,” the most recent data show “change in control benefits for the top 200 CEOs” to be about $27.9 million in 2019 (Executive Change in Control Report 2020).
  23. To expand on the example, janitors and cleaners made, on average, $30,010 per year as of May 2019. For families earning less than the median family income—$86,000 in 2019 (see Table H-5)—there is a 50 percent chance of owning a home (see Table 8). As such, it is very unlikely that the janitor owns a house.
  24. Potter 2011, for example, details the failure of the economics community to forecast the level of risk present in the housing market leading up to the Great Recession in 2007.
  25. Janesville, by Amy Goldstein, documents the story of workers at a General Motors plant in Janesville, Wisconsin, when it closed in 2008. The factory employed 4,800 individuals and provided high-wage jobs that the laid-off workers struggled to replace.
  26. To account for the change in prices over time, dollar amounts from prior eras are adjusted for comparison to today’s dollars, or to “real” terms, by accounting for the average change in prices over time. Throughout the report, we note by use of “real” that dollar amounts are adjusted in this manner. GDP data come from the Bureau of Economic Analysis Table 1.1.6. Real Gross Domestic Product, Chained Dollars, line 1. Dollars are in terms of chained 2012 dollars. Population data come from the Bureau of Economic Analysis Table 2.1. Personal Income and Its Disposition, line 40.
  27. The largest year-over-year decrease in consumption spending since 1942 took place in 2009 and was small in comparison to decreases observed during the Great Depression (1.3 percent). The data are available only through 2019; 2020 will likely be the fifth year of decline.
    Bureau of Economic Analysis Table 2.3.1, “Percent Change from Preceding Period in Real Personal Consumption Expenditures by Major Type of Product 1930–2019.”
  28. Residential Energy Consumption Survey 1980, 1987, 1997, 2005, 2009, and 2015.
  29. Pew Research Center. 2019. Mobile Fact Sheet.
  30. Oak Ridge National Laboratory. Table 9.04: Household Vehicle Ownership, 1960–2018.
  31. U.S. Census Bureau. 1976. Historical Statistics of the United States, Colonial Times to 1970.
    U.S. Census Bureau. 2020. Homeownership Rate for the United States [RHORUSQ156N], retrieved from FRED, Federal Reserve Bank of St. Louis.
  32. Federal Communications Commission. 2020. 2020 Broadband Deployment Report. Figure 4, p. 23.
    Busby et al. 2020 indicate that the FCC’s report significantly overestimates the portion of individuals with access to broadband internet at every level.
  33. National Equity Atlas. Car Access, United States: Percent of Households without a Vehicle by Race/Ethnicity: United States; Year 2019.
  34. U.S. Census Bureau. 2020. Quarterly Residential Vacancies and Homeownership, Third Quarter 2020. CB20-153.
  35. Semega et al. 2020. Income and Poverty in the United States: 2019. Table B-5. U.S. Census Bureau.
  36. U.S. Census Bureau. 2020. Historical Poverty Tables: People and Families—1959 to 2019. Table 2, Poverty Status of People by Family Relationship, Race, and Hispanic Origin; Table 3, Poverty Status of People by Age, Race, and Hispanic Origin.
  37. As a result of the Social Security Amendments of 1983, the age at which one receives full Social Security retirement benefits began increasing from sixty-five to sixty-seven in the year 2000. The full retirement age reached sixty-seven in 2022.
  38. The reduction in poverty among the sixty-five and older population is largely attributed to Social Security providing a significant and steady stream of income in retirement. While that population is the most impacted by Social Security, the program provides substantial poverty relief for the population under age sixty-five. The program is estimated to have lifted almost seven million children and adults out of poverty in 2018. Read more in Social Security Lifts More Americans above Poverty Than Any Other Program.
  39. U.S. Census Bureau. 2020. Historical Poverty Tables: People and Families—1959 to 2019. Table 2, Poverty Status of People by Family Relationship, Race, and Hispanic Origin.
  40. Source (poverty threshold data): U.S. Census Bureau. 2020. Historical Poverty Tables: People and Families—1959 to 2019. Table 1, Weighted Average Poverty Thresholds for Families of Specified Size: 1959 to 2019.
    Source (1959 median income): U.S. Census Bureau. 1961. Income of Families and Persons in the United States: 1959.
  41. Higher-income Social Security beneficiaries may see a portion of their benefits subject to the income tax. Read more on the Social Security Administration (SSA) website.
  42. Poverty in the United States: 50-Year Trends and Safety Net Impacts (Chaudry et al. 2016) shows tax and transfer programs as reducing poverty by 12.7 percentage points in 2012. Figures 7 through 16 document the anti-poverty impacts of an array of income security programs in the U.S.
  43. Short, Kathleen. 2011. The Research Supplemental Poverty Measure: 2010. U.S. Census Bureau, P60-241.
    Fox, Liana. 2020. The Supplemental Poverty Measure: 2019. U.S. Census Bureau, P60-272.
  44. Initially formed in 1961 by twenty-one national governments in Europe and North America, the OECD now includes thirty-seven member countries. Whenever making international comparisons along economic metrics, the U.S. should be compared to the OECD countries only or the subset of the most advanced economies within the OECD (known as the G7): Canada, France, Germany, Italy, Japan, and the United Kingdom.
  45. The OECD’s definition is justified by “the notion that avoiding poverty means an ability to access the goods and services that are regarded as customary or the norm in any given country.”
    OECD. 2019. Society at a Glance 2019: OECD Social Indicators. OECD Publishing, Paris. Chapter 6. https://doi.org/10.1787/soc_glance-2019-en.
  46. OECD. 2021. Poverty Rate (Indicator). doi: 10.1787/0fe1315d-en
  47. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Spending Tables, Table 1.
  48. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Food Sufficiency and Food Security Tables, Table 2.
  49. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Housing Tables, Table 1b.
  50. U.S. Census Bureau. 2021. Week 21 Household Pulse Survey: December 9–December 21. Housing Tables, Table 3b.
  51. Whereas, before taxes and transfers in 2017, labor income made up 61 percent of total income for the lowest income quintile, 68 percent of income for the middle three quintiles, and 70 percent for those in the 81st to 99th percentiles, labor income accounted for only one-third of income for the top 1 percent of earners. See The Distribution of Household Income, 2017 (Congressional Budget Office) for more information.
  52. Occupational Employment Statistics. 2020. May 2019 National Occupational Employment and Wage Estimates United States. U.S. Bureau of Labor Statistics.
  53. As of March 2020, 88 percent of full time, nonfederal employees have access to paid sick leave. Of this population, 87 percent have access to paid vacations, but only 25 percent have access to paid family leave. Access rates are significantly lower for part-time workers (U.S. Bureau of Labor Statistics, 2020).
  54. Assistant Secretary for Planning and Evaluation. 2019 Poverty Guidelines. U.S. Department of Health and Human Services.
  55. The median annual earnings for an additional 1.4 million workers are less than $31,200—the earnings of a full-time, full-year worker at $15 per hour. The Occupational Employment and Wage Statistics does not offer median wage data for these occupations (“teaching assistants, except postsecondary”; “legislators”; and “umpires, referees, and other sports officials”).
  56. This total excludes self-employed workers, who are not employees.
  57. Gould, Elise. 2020. State of Working America Wages 2019. Figure C. Economic Policy Institute.
  58. There are one hundred points, or percentiles, in a distribution. The wage distribution is the wages of each worker in the U.S., ranked from least to most; this can be conceptualized as a line of workers arranged from lowest earning to highest earning. If there were one hundred people in a line, wages at the 10th percentile are the earnings of the tenth person in line, and not the wages of that person and the nine people below him. Therefore, the 10th percentile earner is the highest earner among the ten lowest.
  59. Economic Policy Institute. 2019. State of Working America Data Library. Wages by percentile and wage ratios. Original data from the Current Population Survey Outgoing Rotation Group microdata.
  60. Two points of debate exist around whether the link between worker pay and overall worker productivity is causal and, regardless of the link, the causes of weak wage growth. Summers and Stansbury 2017 find a strong and positive causal relationship between productivity and compensation, arguing that “other orthogonal factors are likely to be responsible for creating the wedge between productivity and pay in the US economy, suppressing typical workers’ incomes even as productivity growth acts to increase them.” Summers and Stansbury 2018 summarize in detail the existing literature around the productivity-compensation gap:
    “Computerisation and automation have been put forward as causes of rising mean-median income inequality (e.g. Autor et al. 1998, Acemoglu and Restrepo 2017); and automation, falling prices of investment goods, and rapid labour-augmenting technological change have been put forward as causes of the fall in the labour share (e.g. Karabarbounis and Neiman 2014, Acemoglu and Restrepo 2016, Brynjolffson and McAfee 2014, Lawrence 2015).
    At the same time, non-purely technological hypotheses for rising mean-median inequality include the race between education and technology (Goldin and Katz 2007), declining unionisation (Freeman et al. 2016), globalisation (Autor et al. 2013), immigration (Borjas 2003), and the ‘superstar effect’ (Rosen 1981, Gabaix et al. 2016). Non-technological hypotheses for the falling labour share include labour market institutions (Levy and Temin 2007, Mishel and Bivens 2015), market structure and monopoly power (Autor et al. 2017, Barkai 2017), capital accumulation (Piketty 2014, Piketty and Zucman 2014), and the productivity slowdown itself (Grossman et al. 2017).
    Benmelech et al. 2018 also discuss the extent to which labor market concentration may contribute to wage stagnation.
  61. We show the full series, starting with the first available year. Income at key percentiles of the distribution is estimated and published annually by the Census Bureau. Wages are not. They must be estimated from the raw Census data from the Current Population Survey. Survey methodological changes mean that most wage series start, at the earliest, in 1975.
  62. DQYDJ. 2020. Household Income by Year: Average, Median, One Percent (and a Percentile Calculator).
  63. Leonesio and Del Bene 2011 find that, using data from 1981 to 2004, the earnings trajectory of male workers at the 50th income percentile or below is declining over time. For female workers during this period, earnings trajectories increased at each income percentile, though by substantially larger magnitudes as one moves up the income scale. Kopczuk and Saez 2010 “find that long-term mobility measures among all workers . . . display significant increases since 1951 either when measured unconditionally or when measured within cohorts. However, those increases mask substantial heterogeneity across gender groups. Long-term mobility among males has been stable over most of the period with a slight decrease in recent decades. The decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women is the driving force behind the increase in long-term mobility among all workers.” Table 1 in Auten, Gee, and Turner 2013 shows that, of taxpayers in the bottom income quintile in 1987, 52 percent remained in the bottom quintile in 2007 and an additional 23 percent had incomes in the second quintile.
  64. In other words, lack of growth at the bottom of the distribution would not be as noteworthy if there was not growth (especially high levels of growth) at upper portions of the distribution.
  65. Saez, Emmanuel. 2020. Striking It Richer: The Evolution of Top Incomes in the United States (Updated with 2018 Estimates). Figure 1.
  66. Capital gains are income from the profit on a sale of an asset. Typically these include stocks, bonds, real estate, or a business. As noted earlier in this section, the wealthiest households in the U.S. tend to have disproportionate income shares as capital gains relative to the rest of the population (see footnote 51).
  67. Income shares, shown in Figure 4, are not the only measure of income equality. There are also income ratios, the Gini coefficient, and others. They each show an increase in income inequality since the mid-1970s.                                                                                                                            Researchers have compiled an incredible library of resources to graphically depict the extent of inequality. The Economic Policy Institute and Inequality.org offer interactive charts that help show changes in the distribution of wealth and income over the past decades in the U.S. The World Inequality Database offers similar charts from nearly every country in the world. Some of the more prominent economists who have written on inequality recently include Joseph Stiglitz, Heather Boushey, Thomas Piketty, Alan Krueger, and James Heckman. This Center on Budget and Policy Priorities report discusses how inequality is measured and the various sources of data.
  68. Source (median price of a new home): U.S. Census Bureau. 2020. New Residential Sales. Median and Average Sale Price of Houses Sold.
    Source (median income in nominal dollars): U.S. Census Bureau. 2020. Historical Income Tables: Households. Table H-6.
  69. In general, in well-functioning economies, incomes should rise faster than prices: This increase in income levels is the source in the improvement of economic status over time among households. Otherwise, people may have more money but be able to afford less of a good, as is the case with homes and college tuitions.
  70. 2019 was the first year since 1991 outside of the Great Recession in which median new-home sale prices fell, while median household income saw its largest annual increase since 1979. In short, the ratio of median new home sale prices to median household income fell from 5.2 in 2018 to 4.7 in 2019.
  71. Source (college pricing): Ma, Jennifer, Matea Pender, and CJ Libassi. 2020. Trends in College Pricing and Student Aid 2020. Table CP-2, Excel Data. New York, College Board.
    Source (median income): U.S. Census Bureau. 2020. Historical Income Tables: Households. Table H-6.
  72. These calculations assume that the savings are not invested in growing assets.
  73. Board of Governors of the Federal Reserve System (U.S.), Household Financial Obligations as a Percent of Disposable Personal Income [FODSP], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/FODSP, November 19, 2020.
  74. Federal Reserve Bank of New York. 2020. Quarterly Report on Household Debt and Credit, 2020: Q3. Total Debt Balance and Its Composition. p. 3. “Home equity revolving” accounts are also known as “home equity lines of credit.” They can be thought of as “home equity loans with a revolving line of credit where the borrower can choose when and how often to borrow up to an updated credit limit” (p. 42).
  75. Median income increased by about 13.8 percent nominally between 2003 and 2019.
  76. See Fichtner 2019 for an analysis of increasing levels of debt among retirees and the extent to which debt is reducing economic security in retirement.
  77. Monica Prasad 2019 provides evidence that higher levels of spending on social insurance across OECD nations is associated with lower levels of household indebtedness. Allen et al. 2017 provides causal evidence that the 2011–2012 Medicaid expansion in California resulted in lower demand for high-interest loans. To this extent, debt—especially high-interest debt—might be viewed as both a symptom and reinforcer of economic insecurity.
  78. Bureau of Economic Analysis. 2021. National Income and Product Accounts. Table 2.6. Personal Income and Its Disposition, Monthly.
  79. The year 2020 is excluded from Figure 8 because—due to the unprecedented nature of the pandemic—the savings rate data are extraordinarily high and make the prior sixty years more difficult to understand.
  80. In August 2020, 34 percent of U.S. adults reported having less than $1,000, and 55 percent reported having $5,000 or less. This survey took place following the four highest monthly savings rates since 1959 from April through July 2021.
  81. This finding comes from the Survey of Household Economics and Dynamics (SHED) and the Survey of Consumer Finances (SCF), both from the Federal Reserve. Both of these surveys inform the Fed’s annual Report on the Economic Well-being of U.S. Households. The first year the question was asked (2013), 50 percent of respondents answered in the negative. The portion declined to 37 percent in 2019.
  82. This explanation is according to the author’s analysis in Why Are So Many Households Unable to Cover a $400 Expense? (Chen 2019).
  83. Source (wage data): Economic Policy Institute. 2019. State of Working America Data Library. Wages by education. Original data from the Current Population Survey Outgoing Rotation Group microdata.
    Source (income data): U.S. Census Bureau. 2020. PINC-03. Educational Attainment: People 25 Years Old and Over, by Total Money Earnings, Work Experience, Age, Race, Hispanic Origin, and Sex. 25 Years and Over, Total Work Experience “White alone, not Hispanic,” “Black alone,” and “Hispanic (any race).” Current Population Survey Annual Social and Economic Supplement.
  84. Income data are presented by the Census Bureau in smaller subgroups than in this table. For example, “>High school” is broken down into “less than 9th grade” and “9th to 12th nongrad.” To account for this, the data presented here are the weighted sums of the median income data presented by the Census Bureau (when necessary).
  85. Kaiser Family Foundation. 2020. Population Distribution by Race/Ethnicity.
  86. Are Emily and Greg More Employable than Lakisha and Jamal? is known as the landmark study that quantified some aspects of racial discrimination in the hiring process. Quillian et al. 2017 reviewed more than two dozen similar studies and found that the same result has persisted over the last three decades for Black individuals.
  87. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Banking and Credit. Figure 18 and Tables 10 and 11.
  88. U.S. Department of Education, National Center for Education Statistics. 2016/17 Baccalaureate and Beyond Longitudinal Study (B&B:16/17). Table 5.1. Cumulative Amount Borrowed and Percent Owed.
  89. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Student Loans and Other Education Debt. Figures 33 and 34.
  90. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Overall Well-Being in 2019. Box 2, Table A. Exposure to Crime and the Court System.
  91. U.S. Commission on Civil Rights. 2017. Targeted Fines and Fees Against Communities of Color: Civil Rights & Constitutional Implications.
  92. Tilcsik 2011 documents variation in response to job applications in which resumes show experience in a gay campus organization. He finds “in some but not all states, significant discrimination against the fictitious applicants who appeared to be gay.” This finding is reinforced by Badgett et al. 2009. While we might expect discrimination to have lessened since these papers were written, there is little question as to whether discrimination against the LGBTQ community still exists in the labor market. The 2015 U.S. Transgender Survey (see page 5) found that 15 percent of respondents were unemployed (compared to 5 percent of the total population at the time), and 29 percent of respondents were living in poverty (12 percent in total U.S. population).
  93. Human Rights Campaign. 2020. U.S. Supreme Court Is on the Right Side of History for LGBTQ.
  94. Chai and Maroto 2019 inspect the various sources of economic insecurity for gay and bisexual men in recent decades.
  95. The Financial Diaries Project and The Fragile Families and Child Wellbeing Study delve into income instability, and Jonathan Morduch, Kathryn Edin, and Katherine Newman have all contributed extensively to this literature.
  96. In income volatility literature, “permanent” and “transitory” shocks to income are frequently discussed. The former describes a shock with a “long-lasting effect which does not go away, even partially,” and the latter, a shock that affects earnings over a short period of time but does not permanently impact one’s future earning trajectory. While permanent negative shocks are more harmful, transitory negative shocks can be extremely difficult for households to manage as well. “Gross volatility” encompasses both permanent and transitory shocks.
    Moffit and Zhang 2018 “find that both gross volatility [of male income] and the component consisting of only the variance of transitory shocks have experienced a large increase during the Great Recession after following similar trends to those previously established showing upward trends from the 1970s to the 1980s followed by a stable period until the Recession.” Last, Western et al. 2016 find that large income losses have become more common than large income gains for low-income children between the mid-1990s and 2010. Moffit and Zhang provide an extensive overview of existing literature on income volatility in Tables 1–3 on pages 43–48.
  97. Hardy, Bradley, and James P. Ziliak. 2014. Decomposing Trends in Income Inequality: The “Wild Ride” at the Top and the Bottom. Economic Inquiry. Vol. 52, No. 1. p. 459–476.
  98. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Income. Table 6.
  99. Gennetian, Lisa A., Sharon Wolf, Heather D. Hill, and Pamela A. Morris. 2015. Intrayear Household Income Dynamics and Adolescent School Behavior. Demography. Apr;52(2):455-83. doi: 10.1007/s13524-015-0370-9. PMID: 25735265.
  100. See U.S. Financial Diaries.
  101. 83 Charts to Describe the Hidden Financial Lives of Working Americans. Chart 2.4. These data do not include income shocks from tax refunds or credits.
  102. 83 Charts to Describe the Hidden Financial Lives of Working Americans. Charts 4.1–4.2.
  103. Board of Governors of the Federal Reserve System. 2020. Report on the Economic Well-being of U.S. Households in 2019–May 2020. Banking and Credit. Table 12.
  104. U.S. Bureau of Labor Statistics. Table A-3. Employment Status of the Civilian Noninstitutional Population by Sex and Age, Seasonally Adjusted. Labor Force Statistics from the Current Population Survey.
  105. Mead, David, Karen Ransom, Stephen B. Reed, and Scott Sager. 2020. The Impact of the COVID-19 Pandemic on Food Price Indexes and Data Collection. U.S. Bureau of Labor Statistics. Table 4.
  106. In December 2020, Congress passed another relief bill after many of the provisions of the CARES Act were set to expire (H.R.133 – Consolidated Appropriations Act, 2021). At the time of our writing, additional relief bills are being proposed. None of the relief mentioned below was available to noncitizens.
  107. Cole, Bethany. 2020. Paid Leave Provisions in Recent Federal COVID-19 Response Legislation. National Academy of Social Insurance.
  108. Due to the exemption of private employers with over 500 employees and the limitations on “qualified reasons for leave,” the provision was not very effective in increasing paid leave in 2020.
  109. Federal Student Aid. Coronavirus and Forbearance Info for Students, Borrowers, and Parents. U.S. Department of Education.
  110.  Learn about Mortgage Relief Options and Protections. Consumer Financial Protection Bureau.
  111. O’Leary, Christopher J. 2020. Food Stamps and Unemployment Compensation in the COVID-19 Crisis. Upjohn Institute for Employment Research.
  112. Ibid.
  113. Ibid.
  114. Arnone, William. 2020. CARES Act Rebates: Who, How Much, When, and How? National Academy of Social Insurance.
  115. U.S. Census Bureau. 2020. Week 12 Household Pulse Survey: July 16–July 21. Stimulus Table, Table 1.
  116. U.S. Department of Labor, Wage and Hour Division. History of Changes to the Minimum Wage Law.
  117. At full-time work (forty hours per week, fifty-two weeks per year), a minimum wage worker earning the federal minimum wage earns $15,080 annually. Had the minimum wage increased with inflation using the Consumer Price Index for All Urban Consumers since January 2009, it would have been $8.86 as of January 2021 ($18,429 annually). Had it increased with median weekly earnings since the first quarter of 2009, it would have been $9.74 as of the fourth quarter of 2019 ($20,259 annually). Had it increased with average hourly earnings in the private sector since January 2009, it would have been $9.88 as of January 2021 ($20,550 annually) (January 2021 data preliminary at time of extraction).
  118. U.S. Department of Labor, Wage and Hour Division. 2021. Consolidated Minimum Wage Table.
  119. UC Berkeley Labor Center. 2020. Inventory of US City and County Minimum Wage Ordinances.
  120. In 2014, SeaTac became the first city in the U.S. to institute a $15 minimum wage as a result of employers at SeaTac playing “hardball” during union negotiations. As leverage, union organizer David Rolf put a $15 minimum wage on the city ballot. Much to his surprise, it passed, and since then many other cities, counties, and states have followed suit (Bergman 2015).
  121. The National Law Review. 2020. Florida Minimum Wage To Increase. Vol. X, No. 366.
  122. Bureau of Labor Statistics. 2020. Characteristics of Minimum Wage Workers, 2019.
  123. The 2021 federal poverty guidelines indicate that a household of four earning less than $26,500 is in poverty. At $12.75 for forty hours a week, fifty-two weeks a year, an individual would take home $26,520. This calculation does not take into consideration payroll taxes, income taxes, sales taxes, or tax credits.
  124. Oregon Minimum Wage. 2021. Oregon Bureau of Labor and Industries.
  125. Average wages are used to update the threshold for wages subject to FICA. The wage threshold changes every year based on average wage growth (Social Security Administration, Contribution and Benefit Base).
  126. U.S. Department of Labor, Wage and Hour Division. Wages and the Fair Labor Standards Act.
  127. U.S. Department of Labor, Wage and Hour Division. Subminimum Wage.
  128. According to the Department of Labor, “a worker who has disabilities for the job being performed is one whose earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury. Disabilities which may affect productive capacity include blindness, mental illness, developmental disabilities, cerebral palsy, alcoholism and drug addiction” (U.S. Department of Labor, Fact Sheet #39: The Employment of Workers with Disabilities at Subminimum Wages).
    An investigation into the use of subminimum wage practices for workers with disabilities by the U.S. Commission on Civil Rights found that its use violated the civil rights of workers with disabilities, did not lead to higher employment, and recommended repealing the section of the Fair Labor Standards Act (14(c)) that allows for subminimum wages (U.S. Commission on Civil Rights, Subminimum Wages: Impacts on the Civil Rights of People with Disabilities).
  129. Defined as “a student who is at least 16 years of age (or at least 18 years of age if employed in an occupation which the Secretary of Labor has declared to be particularly hazardous), who is receiving instruction in any accredited school, college or university and who is employed by an establishment on a part-time basis, pursuant to a bona fide vocational training program” (U.S. Department of Labor, Instructions for Form WH-205: Application to Employ Student-Learners at Subminimum Wages).
  130. The industries in which employers may apply for certificates granting exception include “those that manufacture: women’s apparel; knitted outerwear; gloves and mittens; buttons and buckles; handkerchiefs; embroideries; and jewelry. There are two different types of certificates.” One is for individuals facing circumstances that limit their ability to work outside the home, and the other is for employers to employ homeworkers more broadly; this certificate does not apply to the women’s apparel industry (U.S. Department of Labor, Industrial Homeworker).
  131. U.S. Department of Labor, Wage and Hour Division. Fact Sheet #32: Youth Minimum Wage—Fair Labor Standards Act.
    Minimum wage laws in each state are available at minimum-wage.org.
  132. The minimum wage for tipped employees exceeds $2.13 in all but fifteen states (U.S. Department of Labor, Minimum Wages for Tipped Employees).
  133. All agricultural workers are covered by the federal minimum wage except in cases of “work performed on a farm which is not incidental to or in conjunction with such farmer’s farming operation” and “operations performed off a farm if performed by employees employed by someone other than the farmer whose agricultural products are being worked on.” Other exemptions include:
    1) Agricultural employees who are immediate family members of their employer; 2) Those principally engaged on the range in the production of livestock; 3) Local hand harvest laborers who commute daily from their permanent residence, are paid on a piece rate basis in traditionally piece-rated occupations, and were engaged in agriculture less than thirteen weeks during the preceding calendar year; and 4) Non-local minors, 16 years of age or under, who are hand harvesters, paid on a piece rate basis in traditionally piece-rated occupations, employed on the same farm as their parent, and paid the same piece rate as those over 16 (U.S. Department of Labor, Fact Sheet #12: Agricultural Employers Under the Fair Labor Standards Act (FLSA)).
    Only seven states cover agricultural workers in their state’s minimum wage laws. In two of those, such workers have a specified lower wage than other workers. In twenty-three states, some agricultural workers are covered, but there are limitations/exceptions. In the remaining twenty states, agricultural workers are either altogether excluded from the state’s minimum wage laws or the state has no minimum wage laws (Farmworker Justice, Wages Map).
  134. Hale v. Arizona in 1993 ruled that prisoners are not entitled to the minimum wage under the FLSA (Hale v. Arizona, 993 F.2d 1387 (9th Cir. 1993)). Lynn Gibson of the Government Accountability Office testified on the matter before the Senate Committee on Labor and Human Resources.
  135. Sources: Prison Policy Initiative. 2017. How Much Do Incarcerated People Earn in Each State? and State and Federal Prison Wage Policies and Sourcing Information.
  136. The issue of whether ride-share drivers in particular should be treated as employees or independent contractors, and what sorts of benefits the drivers should be entitled to, has come to a head in California.
  137. U.S. Commission on Civil Rights. 2020. Subminimum Wages: Impacts on the Civil Rights of People with Disabilities. p. 179.
  138. This proposal was included under Section 2(b) of the H.R. 1010 (113th): Fair Minimum Wage Act of 2013.
  139. U.S. Department of Labor, Wage and Hour Division. Overtime Pay.
  140. U.S. Department of Labor, Wage and Hour Division. Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA).
  141. Specifically, “Using pooled 2018/2019 [Current Population Survey–Merged Outgoing Rotation Group Earnings] data to represent the July 2018 through June 2019 period, a salary level of $684 corresponds to the 20th percentile of earnings for full-time salaried workers in the South Census Region and/or in the retail industry.”
    The same rules are related to the overtime threshold for highly compensated employees, which is currently $107,432 per year using data for the 80th percentile of weekly, full-time salary workers nationally. This exempts employees who are highly compensated annually but do not receive a consistent salary (U.S. Department of Labor, Highlights of the Final Rule on Overtime Eligibility for White Collar Employees).
  142. Lambert et al. 2019 explore the extent to which U.S. workers deal with precarious work schedules and how such work schedules contribute to economic insecurity. In a 2020 essay, Lambert lays out the “dimensions of problematic work schedules,” evidence from states that have taken action, and how better scheduling benefits both employers and employees in the long run. Harknett et al. 2021 inspect the impacts of Seattle’s Secure Scheduling Ordinance in the second year after its implementation and found “increased work schedule stability and predictability, 2) increased job satisfaction and satisfaction with work schedules, 3) increased overall happiness and sleep quality, and 4) reduced material hardship” for Seattle workers. From the employer perspective, Kamalahmadi et al. 2019 find that day-of scheduling reduces both worker productivity and profit levels in the restaurant industry. The Center for Popular Democracy outlines the goals of “The Fair Workweek Initiative.”
  143. Oregon, for example, requires that employers notify employees at least fourteen days in advance of their shift (or their “on-call” shift) (Oregon Bureau of Labor & Industries. Predictive Scheduling).
  144. In New York City, for example, fast-food workers must “consent in writing before being scheduled to work or working two shifts over two calendar days when the first shift ends a day and there are less than 11 hours between shifts.” For such shifts, employers must pay the employees a $100 premium (NYC Department of Consumer and Worker Protection, Fair Workweek Law: Frequently Asked Questions).
  145. Wykstra 2019 offers an overview of the breadth and goals of Fair Workweek laws.
  146. Average wages are used to update the threshold for wages subject to FICA. The wage threshold changes every year based on average wage growth (Social Security Administration, Contribution and Benefit Base).
  147. National Women’s Law Center. 2019. State and Local Laws Advancing Fair Work Schedules.
  148. See Remove Barriers to Opportunity for People with Criminal Records under Equity policy for more details.
  149. Avery, Beth, and Han Lu. 2020. Ban the Box: U.S. Cities, Counties, and States Adopt Fair Hiring Policies.
  150. Washington, DC, enacted ban the box legislation with the Fair Criminal Record Screening Amendment Act of 2014. The law prohibits employers with eleven or more employees “from asking job applicants about: arrests; criminal accusations made against the applicant that are not pending or did not result in a conviction; or criminal convictions. However, an employer may ask about criminal conviction(s) after extending a conditional offer of employment (the employer can never ask about arrests or criminal accusations that aren’t pending). An employer who properly asks about a criminal conviction can only withdraw the offer or take adverse action against the applicant for a legitimate business reason that is reasonable under the six factors listed in the Act” (DC.gov Office of Human Rights, Returning Citizens and Employment). Stacy and Cohen 2017 review the impacts of DC’s legislation and discuss improvements, including stronger equal employment legislation and enforcement, provision of training for employers, better outreach to those with criminal records, and others.
  151. National Association of Professional Background Screeners. 2019. How Human Resources Professionals View and Use Background Screening in Employment.
  152. H. R. Dive. 2020. Salary History Bans.
  153. Bessen, James E., Chen Meng, and Erich Denk. 2020. Perpetuating Inequality: What Salary History Bans Reveal About Wages. SSRN.
    The authors discuss their findings here.
  154. Washington Center for Equitable Growth. 2021. Executive Action to Combat Wage Theft Against U.S. Workers.
    This piece also outlines how the WHD might “prioritize strategic enforcement” to increase the perceived cost of labor law violations and “pursue co-enforcement with community-based organizations” to help uncover violations in industries where workers fear retribution for speaking up.
  155. The full report of the Office of the Inspector General can be found here.
  156. Workplace Fairness. Right to Work Laws.
  157. Laufer and Loustaunau 2020 document how U.S. employers engage in anti-unionization activities, from mandatory anti-union meetings to threats of job loss. They find that U.S. employers “collectively spend $340 million per year on ‘union avoidance’ consultants who teach them how to exploit the weaknesses of federal labor law to effectively scare workers out of exercising their legal right to collective bargaining.”
  158. “Sectoral bargaining—also known as multiemployer, industrywide, or broad-based bargaining—is a form of collective bargaining that provides contract coverage and sets compensation floors for most workers in a particular occupation, industry, or region” (Center for American Progress, What Is Sectoral Bargaining?).
  159. Woodbury 2014 provides an overview of U.S. unemployment insurance programs, as do Whittaker and Isaacs 2019.
  160. Bloom 2010 discusses existing evidence around transitional jobs programs, goals for transitional jobs programs, and the testing of new strategies in transitional jobs programs.Yahner and Zweig 2012 inspect which components of transitional jobs programs have the most impact in terms of positive employment and nonrecidivism for participants. The duration of one’s transitional job is the component that has the greatest impact on one’s likelihood of receiving unsubsidized employment following the transitional job. Those “who spent 30 workdays or more in a transitional job during the first six months of the follow‐up period (at a rate of four workdays per week, which equates to two months of time) were 14 [percentage points] more likely than other TJ program participants to obtain an unsubsidized job in the subsequent six months (45% vs. 31%; see Figure 1, Model A).”Barden et al. 2018 discuss the findings of the Enhanced Transitional Jobs Demonstration, which “tested seven transitional jobs programs that targeted people recently released from prison or low-income parents who had fallen behind in child support payments,” and tracked participants’ outcomes over thirty months following their enrollment in the programs. On average, those in the programs earned $700 more than the control group in the final year of the study and saw an employment rate of 64 percent compared to 60 percent in the control group in the final year.
  161. Section 134 (a)(2)(A)(i)(II) of the Workforce Innovation and Opportunity Act, Public Law113–128—July 22, 2014, 128 STAT. 1520, 29 USC 3174.
  162. This sort of program is modeled after the United Kingdom’s Jobseeker’s Allowance. Strengthening Unemployment Protections in America outlines the creation of jobseeker’s allowance in the U.S., who such a program would target, and how it might be implemented (West et al. 2016).
  163. Federal legislation to carry this option out was introduced in 2021 as the “Jobs for Economic Recovery Act” by Danny Davis (D-IL) in the House and by Ron Wyden (D-OR) in the Senate.
  164. “Job Corps is the largest nationwide residential career training program in the country and has been operating for more than 50 years. The program helps eligible young people ages 16 through 24 complete their high school education, trains them for meaningful careers, and assists them with obtaining employment. Job Corps has trained and educated over two million individuals since 1964” (What Is Job Corps, U.S. Department of Labor).
  165. The Workforce Innovation and Opportunity Act and the One-Stop Delivery System outlines the many avenues through which WIOA funds workforce development activities (Bradley 2015, Congressional Research Service).
  166. CTE, also known as vocational education, focuses on equipping students with skills that translate more directly to the labor market. Catherine Gewertz discusses CTE in Education Week. Brunner et al. 2019 state that there is “increasing evidence that high-quality CTE programs in high school are actually complements—they can improve high school completion, employment, and earnings, all while not sacrificing general learning outcomes.” Their research found a 10 percentage point increase in graduation rates and a 30 percent increase in quarterly earnings for participants in CTE high schools in Connecticut, though all positive impacts accrued to males.
  167. The Academy’s Report to the New Leadership and the American People on Social Insurance and Inequality draws on Robert M. Ball’s nine guiding principles to define social insurance (see pages xxi–xxii). In broad strokes, the benefits of social insurance programs tend to be more strongly based on and linked to one’s work history and one’s earnings history than those of social assistance programs. A vast majority of a nation’s population is covered by social insurance programs, whereas a much smaller portion tends to be eligible for social assistance programs.
  168. The Tax Foundation defines these terms as follows:
    “A tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly.”
    “A tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state/local taxes paid, mortgage interest, and charitable contributions.”
    “A tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the IRS, preventing them from having to pay income tax.”
    Page 3 of Sammartino and Toder 2020 goes into more detail about the various forms of tax expenditures.
    The IRS lists the various tax credits and tax deductions available to both individuals and businesses on its website.
  169. See An Overview of Tax Expenditures for more information about the significance of tax expenditures in the U.S. (Bipartisan Policy Center, 2018).
  170. The UIB is classified as a social assistance program because, although its universality is unique in comparison to other social assistance programs, its core goal is to provide income stability to low- and middle-income households. At higher incomes, a large portion of the benefit will be taxed back.
  171. Increases in spending warrant increases in tax revenue, which we discuss in the finance section of the report.
  172. See Low Income Home Energy Assistance Program (LIHEAP) (Department of Health and Human Services (DHHS)) and LIHEAP: Program and Funding (Congressional Research Service (CRS) 2018).
  173. See Medicaid.gov, Policy Basics: Introduction to Medicaid (Center for Budget and Policy Priorities (CBPP) 2020), and Medicaid Primer (CRS 2020).
  174. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) ended cash entitlement for welfare for very low-income families and replaced it with TANF. Rather than individuals qualifying for a benefit based on income and family situation, states are sent a block grant of funds to spend on cash assistance to low-income families or on any program that meets the overall goal of the legislation of encouraging work, encouraging marriage, and reducing out-of-wedlock births.
    This report does not include TANF as a benefit policy because the program design is not conducive to assuring income on a federal basis, and it does a poor job of assuring income on a state basis; only 23 percent of families in poverty in 2019 received TANF cash assistance (CBPP 2021). For more, see What Is TANF? (DHHS), Policy Basics: Temporary Assistance for Needy Families (CBPP 2021), and The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions (CRS 2021). Falk 2017 details the low portion of TANF beneficiaries who receive cash assistance.
  175. These individuals are termed “able-bodied adults without dependents,” or ABAWDs. That phrasing, however, can be considered pejorative for individuals with disabilities, and it incorrectly implies that disabilities are only physical. See SNAP Work Requirements (U.S. Department of Agriculture (USDA)).
  176. In fiscal year 2018, 67.1 percent of SNAP beneficiaries were in households with children, 15.7 percent of beneficiaries were in households with “elderly individuals,” 18.6 percent of beneficiaries were in households with non-elderly individuals with disabilities, and 8.1 percent of beneficiaries were adults ages 18–49 without recognized disabilities and in childless households. Overlap between households with children and with elderly individuals is not clear, and overlap in households with non-elderly individuals with disabilities and other households is not clear (Cronquist 2019. Table A.1, p. 41).
  177. SSI is the largest program that continues to have and apply asset tests in every state. Many means-tested programs that once had asset tests either no longer have them or do not apply them. Medicaid for families with children, the CTC, CHIP, WIC, and rental assistance, for example, do not have asset tests. Most states have eliminated asset testing in SNAP.
    A straightforward example of an asset test would be “you must have less than $2,000 in your checking account/cash in order to qualify for….” Programs differ in what they consider assets and what resources are exempt from counting as assets. Typically, at least one car is exempt and the value of one’s home (up to a limit) is exempt.
  178. McDonald et al. 2005 review the literature on the impact of asset tests on savings, and they state that “both theory and the available evidence suggest that this disincentive can reduce and distort saving among moderate- and lower-income families.” Chen and Lerman 2005 acknowledge the role that asset tests play in targeting benefits to those with the least resources and lowest incomes, while drawing a similar conclusion from existing literature: “In general, the studies find that asset limits lower the net worth of potentially eligible low-income individuals and families.”
  179. Grehr 2018 finds that “states that have eliminated asset limits have found that the resulting administrative cost savings significantly outweigh any increase in the number of families receiving benefits.”
    A 2017 issue brief by The Pew Charitable Trusts found that, although lifting asset tests does not significantly increase savings among benefit-eligible populations, a number of positive effects were associated with lifting asset tests. Benefit-eligible households in states without asset tests were more likely to have a checking or savings account, and those in states with eliminated or relaxed vehicle limits were more likely to own a vehicle and to have liquid/semi-liquid assets exceeding $500. The Pew brief also reports that lifting asset tests does not yield increased administrative costs or caseload growth. The most recent information on asset tests for program eligibility is produced by the Prosperity Now Scorecard.
  180. Mauer and McCalmont 2013 discuss the 1996 legislation and its impact on individuals with drug felony convictions, as do Mohan et al. 2017. Polkey 2019 provides the most recent data on the degree to which each state continues to ban this group from receiving SNAP benefits. The Network for Public Health Law released a two-part issue brief in 2020, exploring both the public health consequences of the eligibility ban for individuals with felony drug convictions and how states have reacted to the federal ban.
  181. Broder et al. 2015 explain how the 1996 legislation altered the eligibility status of many immigrants who were potential future beneficiaries of SNAP, TANF, and other federal and state programs. Immigrants who were already benefiting at the time the legislation was enacted did not have their eligibility rescinded. The National Immigration Law Center provides a general overview of immigrant eligibility for federal programs and a more specific body of resources on changes to immigrant eligibility. The National Immigration Forum created a frequently asked questions document in 2018 with regard to immigrants and access to public benefits.
  182. Thompson 2019 explores the recent uptick in the number of states subjecting potential beneficiaries of TANF and other public programs to various forms of drug screening. A 2016 USDA report lays out various potential “modified bans” for those with drug felonies. These restrictions include “1) limiting the circumstances in which the permanent disqualification applies (such as only when convictions involve the sale of drugs); 2) requiring the person convicted to submit to drug testing; 3) requiring participation in a drug treatment program; and/or 4) imposing a temporary disqualification period.”
  183. Thirty-five states and Washington, DC, have already removed the asset limit for eligibility for SNAP. Three states—Idaho, Indiana, and Texas—have raised their asset limit to $5,000, and Michigan and Nebraska have limits of $15,000 and $25,000, respectively. Of the forty states with increased or removed asset limits, sixteen impose asset limits of $3,500 on households with seniors or people with disabilities and gross income exceeding 200 percent of the poverty threshold.
  184. While Medicaid removed asset tests for low-income families including pregnant women in 2014, asset tests still exist for the income-poor sixty-five and older population and people with disabilities. This asset test is especially relevant to the extent that many in these groups qualify for Medicaid via SSI, which continues to have the most prohibitive asset test. Individuals with especially high health care costs might also qualify for Medicaid, though these individuals are also subject to the asset limit. To qualify, they must “spend down” their countable assets.
  185. The Social Security Administration outlines the existing asset test for SSI, including what resources do and do not count as assets and how beneficiaries may save some resources via a “Plan to Achieve Self Support (PASS)” and an “Achieving a Better Life Experience (ABLE)” account.
  186. In fiscal year 2021, eleven states continued to use asset tests to limit eligibility for LIHEAP (see DHHS 2021).
  187. Had the asset tests for individuals and couples in SSI kept pace with CPI-U inflation since 1989, they would have been $4,320 and $6,480 respectively in January 2021. Had they kept pace with inflation since they were implemented at $1,500 for individuals and $2,250 for couples in 1974, they would have been $8,420 and $12,630 in January 2021.
  188. The ASSET Act, sponsored by TJ Cox (D-CA) in the House and by Christopher Coons (D-DE) in the Senate in 2020, would prohibit asset tests in TANF, SNAP, and LIHEAP, while increasing limits in SSI to $10,000 and $20,000 for individuals and couples, respectively, and indexing them to inflation.
  189. One type of phase-out might decrease benefits by 8.33 percentage points per month when one exceeds the asset threshold, thus completely phasing out when one has exceeded the threshold for twelve months. Another might decrease benefits as one’s asset levels further exceed the threshold, completely phasing out when one has doubled the asset limit.
  190. The federal government also excludes most immigrants from eligibility for SSI. Immigrant restrictions were intensified with the passing of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (Title V, Subtitle A, Sec. 501).
  191. The Center for American Progress, using data from 2010 to 2014, found that almost 10.75 million individuals in the U.S. share a household with an undocumented immigrant. Twersky 2019 does not find evidence of a chilling effect in SNAP in the early 2000s but does observe a lower likelihood of SNAP enrollment among immigrant families relative to “native-born” families. The implementation of the “public charge” rule—which allows for immigrant applications for admission and residency in the U.S. to be denied on the basis of having received public benefits in the past and on the basis of whether one is deemed likely to receive public benefits in the future—in February 2020 has immediately renewed the conversation around chilling effects. Early data analyses from The Urban Institute show that, between 2018 and 2019, the portion of adults in benefit-eligible immigrant families with at least one nonpermanent resident that experienced a chilling effect (i.e., did not enroll in public benefit programs out of fear of immigration consequences) increased from 21.8 percent to 31.0 percent. Capps 2020 discusses the findings of the report and interviews its lead author.
  192. See Supplemental Nutrition Assistance Program (SNAP) (USDA) and Policy Basics: The Supplemental Nutrition Assistance Program (SNAP) (CBPP 2019).
  193. USDA, Center for Nutrition Policy and Promotion. Thrifty Food Plan, 2006.
  194. See Carlson 2019 for a discussion of the Thrifty Food Plan and why it fails to meet the needs of low-income households.
  195. Center on Budget and Policy Priorities. 2020. A Quick Guide to SNAP Eligibility and Benefits.
  196. Center on Budget and Policy Priorities. 2021. States Are Using Much-Needed Temporary Flexibility in SNAP to Respond to COVID-19 Challenges.
  197. Food and Nutrition Service. 2021. SNAP COVID-19 Emergency Allotments Guidance. U.S. Department of Agriculture.
  198. Gassman-Pines and Bellow 2018 find a statistically significant relationship between students’ test scores and the recency of a SNAP benefit transfer. Gennetian et al. 2016 find that students in Chicago public schools that receive SNAP benefits are more likely to commit “disciplinary infractions” at the end of the month than nonrecipients.
  199. USDA, Food and Nutrition Service. 2021. SNAP Benefit Changes: October 1, 2021.
  200. The Urban Institute finds that the average per meal SNAP benefit fell $0.50 short of the average cost per meal in 2015. Over a month, this shortfall comes to $46.50, or just over $10 per week per person. For those eligible for SNAP in the “ten percent of counties with the highest average meal cost, the monthly shortfall is $82.04 per person,” or roughly $20 per week per person.
  201. See footnote 183.
  202. Center on Budget and Policy Priorities. 2020. A Quick Guide to SNAP Eligibility and Benefits.
  203. In the summer of 2018, only 13.1 percent of children who received free and reduced-price school lunches participated in a summer food service program (Children’s Defense Fund, Table 12). Nord and Romig 2007 found higher levels of food insecurity, especially among households with children, during the summer months.
  204. U.S. Department of Agriculture. 2021. Help to Put Food on the Table: Facts on Nutrition Assistance in the American Rescue Plan.
  205. U.S. Department of Agriculture, Food and Nutrition Service. 2020. What Can SNAP Buy?
  206. The Bipartisan Policy Center’s 2018 report titled Leading with Nutrition: Leveraging Federal Programs for Better Health lays out options to change SNAP to emphasize better nutritional outcomes. Two specific recommendations include eliminating the purchase of sugar-sweetened beverages and strengthening incentives to purchase fruits and vegetables.
  207. See Supplemental Security Income Home Page—2020 Edition (SSA 2020), Policy Basics: Supplemental Security Income (SSI) (CBPP 2021), and Supplemental Security Income (SSI) (CRS 2020).
  208. Social Security Administration. 2021. SSI Federal Payment Amounts For 2021.
  209. Congressional Budget Office. 2012. Supplemental Security Income: An Overview. Figure 2.
  210. Social Security Administration. 2020. SSI Annual Statistical Report, 2019. Table 9.
  211. SSA 2020 states that “the first $65 of earnings and one-half of earnings over $65 received in a month” are not counted as income for SSI, and that they “subtract your ‘countable income’ from the SSI Federal benefit rate.” SSI also allows a $20 exemption for unearned income, which may be counted against earned income if one does not have $20 in unearned income. In other words, after $85 in earnings (if one has no unearned income), for every dollar a beneficiary earns, 50 cents are subtracted from their benefit. While earned income above the threshold is deducted at 50 cents per dollar earned, unearned income exceeding the threshold is offset dollar for dollar.
  212. In 2021, the annual federal poverty level for a household of one was $12,880, or $1,073 per month. The maximum individual federal SSI benefit in 2021 of $794 per month was only 74 percent of monthly poverty level income.
  213. For purposes of illustration, in 2021, with a federal minimum wage of $7.25, this change would allow for roughly $1,257 of individual earnings per month prior to benefit reductions ($7.25 per hour × 40 hours of work per week × 4.33 weeks per month).
  214. Social Security Administration. 2021. Understanding Supplemental Security Income Living Arrangements.
  215. Social Security Administration. 2021. SSI Federal Payment Amounts for 2021.
  216. In 2011, Puerto Rico’s Aid to the Aged, Blind, or Disabled program provided benefits to 34,401 individuals per month. The Government Accountability Office finds that “average monthly participation in SSI would have ranged from 305,000 to 354,000” if residents were eligible.
    Government Accountability Office. 2014. Information on How Statehood Would Potentially Affect Selected Federal Programs and Revenue Sources. GAO-14-31, p. 78.
  217. Congressional Research Service. 2021. Proposed Extension of Supplemental Security Income (SSI) to American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands. IN11793.
  218. Balmaceda, Javier. 2021. Build Back Better Permanently Extends Economic Security to Puerto Rico and Other Territories. Center on Budget and Policy Priorities.
  219. See Assured Income (NASI 2019).
  220. The UIB should not be confused with the universal basic income (UBI). The former aims to provide a small cash base of income, but not one that could reasonably be expected to fill all basic needs. The latter is a larger benefit that would require significant increases in government spending or the elimination of large parts of the existing safety net so that the monthly benefit would provide enough income to meet a “basic” standard of living.
  221. Alaska 529 allows for Alaskans to contribute their permanent fund dividend directly to a tax-advantaged savings account for educational expenses. Pick. Click. Give. allows for Alaskans to donate their dividend to charities and causes within their state. More information about the dividend and the Permanent Fund can be found on Alaska.gov.
  222. See Old-Age & Survivors Insurance Trust Fund (SSA), Social Security Benefits, Finances, and Policy Options: A Primer (NASI 2020), and Social Security Primer (CRS 2020).
  223. See Unemployment Insurance (U.S. Department of Labor), Policy Basics: Unemployment Insurance (CBPP 2021), and Unemployment Insurance: Programs and Benefits (CRS 2019).
  224. Although workers’ compensation remains a state-run program, the National Commission on State Workmen’s Compensation Laws—which was established by the Occupational Safety and Health Act and whose members were appointed by President Nixon—submitted its report in 1972 indicating that “State workmen’s compensation laws in general are inadequate and inequitable.” The report made eighty-four recommendations to improve state workers’ compensation programs and designated nineteen of these as “essential and particularly suitable for Federal support to guarantee their adoption.” The Commission called on Congress to guarantee compliance with the nineteen essential recommendations by July 1, 1975, after an evaluation of state compliance. As of 2021, no federal oversight or federal legislation to regulate state workers’ compensation programs exists. The CRS report Workers’ Compensation: Overview and Issues summarizes the work of the National Commission and ensuing changes to state policy. It notes progress with regard to the Commission’s recommendations in the initial years after its work, followed by a rolling back of benefits and eligibility beginning in the 1990s. As of 2015, a ProPublica analysis done in consultation with the National Commission’s chairman, John F. Burton Jr., noted that only seven states follow more than fifteen of the Commission’s nineteen essential recommendations. A 2018 analysis by Elliot Schreur for the Workers’ Injury Law and Advocacy Group found that every state follows at least eight of the nineteen essentials; twenty-nine states follow twelve or fewer, and twenty-one states follow thirteen or more.
    The Academy publishes an annual report on the benefits, costs, and coverage of workers’ compensation programs in the U.S. For a summary of workers’ compensation laws by state, see Appendix D (p. 94) of the 2020 report.
  225. The Academy’s 2020 report Examining Approaches to Expand Medicare Eligibility: Key Design Options and Implications explores in detail how policy makers might adapt Medicare to cover more individuals in the U.S. to make health care less of a cost burden for more households.
  226. See Old-Age & Survivors Insurance Trust Fund (SSA), Social Security Benefits, Finances, and Policy Options: A Primer (NASI 2020), and Social Security Primer (CRS 2020).
  227. See Disability Insurance Trust Fund (SSA) and Policy Basics: Social Security Disability Insurance (SSDI) (CBPP 2020).
  228. Social Security Administration. 2021. Contribution and Benefit Base.
  229. Congress raised the full retirement age to sixty-seven for all individuals born in 1960 and later. A full retirement age of sixty-five applies to individuals born before 1938, and a full retirement age of sixty-six for individuals born between 1943 and 1954. All other birth years reach full retirement at two-month increments in between the whole-number ages (SSA 1983).
  230. To qualify for Social Security benefits, an individual must have at least forty “quarters of coverage,” or “credits.” In 2021, one credit is received per $1,470 of covered earnings up to a maximum of four credits per year. So in 2021, for example, one needed to earn 4 × $1,470 = $5,880 in covered earnings in order to receive four credits (SSA 2021). Certain groups of workers are not covered by Social Security.
    Berry 2020 offers more information regarding how Social Security benefits are calculated.
  231. An example of a progressive benefit structure is as follows: Person A averaged inflation-adjusted earnings of $40,000/year over their thirty-five highest earning years and receives $20,000/year in retirement benefits. Person B averaged inflation-adjusted earnings of $100,000/year over their thirty-five highest earning years and receives $30,000/year in retirement benefits. Although Person A receives $10,000 less per year in retirement benefits, their replacement rate is 50 percent ($20,000 / $40,000) compared to Person B’s replacement rate of 30 percent ($30,000 / $100,000). The Office of the Chief Actuary provides more detailed examples of how Social Security benefits are calculated.
    Claiming one’s Social Security retirement benefit before one’s full retirement age (i.e., before turning sixty-seven for individuals born after 1959) reduces the monthly benefit, while claiming benefits after one’s full retirement age increases the monthly benefit. In this regard, the benefit structure may not appear progressive if two people claim at very different times due to the penalty for claiming early and the credit for claiming late. See Early or Late Retirement on the SSA’s website for information on the extent to which benefits are decreased and increased depending on when one claims.
  232. The special minimum benefit is calculated based on one’s special minimum primary insurance amount, which is a function of the number of years one has earnings at or above a certain threshold (Li 2020).
  233. Feinstein 2013 shows that, although the last minimum benefit was awarded to a worker who became eligible for benefits in 1998, a small number of workers and family members of workers continue to receive benefits based on the special minimum primary insurance amount.
  234. See Types of Beneficiaries on the SSA’s website for more information.
  235. About 6.1 million children—8 percent of all children in the U.S.—are estimated to have either received benefits directly in their own right or indirectly as the result of living in households that received income from Social Security in 2018. In that year, Social Security benefits reduced child poverty by 1.6 percentage points, from 17.8 percent to 16.2 percent. Put differently, Social Security lifted almost 1.2 million children out of poverty (Romig, 2020).
  236. The primary insurance amount is the average, inflation-adjusted earnings of the relevant worker’s thirty-five highest earning years during which they contributed to Social Security.
  237. See footnote 230 for information on a sufficient work history to qualify for Social Security benefits.
  238. Although both SSDI and SSI provide income to individuals with disabilities, they are very distinct programs. A 2018 CRS report outlines the many differences between the two programs. The report outlines the five-step process used to determine whether one’s condition meets the disability standard for SSDI and SSI adult eligibility. This process considers one’s current ability to earn income and the extent of the disability.
  239. A DAC beneficiary receives benefits from the trust fund from which their parent is receiving benefits. If, for example, the parent of a DAC beneficiary is receiving retirement benefits, the DAC beneficiary will receive benefits from the Old-Age and Survivors Insurance Trust Fund as well, not the Disability Insurance (DI) Trust Fund. As a result, most DAC beneficiaries do not receive benefits out of the DI Trust Fund.
  240. Social Security Administration. 2021. Beneficiary Data: Number of Social Security Recipients
    at the End of Dec 2020.
  241. “The Social Security full retirement age (FRA) is the age at which workers can first claim full (i.e., unreduced) Social Security retired-worker benefits.” As of 2021, the FRA was sixty-six and ten months and is sixty-seven in 2022 (The Social Security Retirement Age, Congressional Research Service).
  242. In 2021 the monthly SGA amount was $1,310 ($15,720/year) for nonblind individuals and $2,190 ($26,280/year) for blind individuals. The monthly threshold must be exceeded “net of impairment-related work expenses,” and “[t]he amount of monthly earnings considered as SGA depends on the nature of a person’s disability” (Substantial Gainful Activity, Social Security Administration).
  243. If an individual exceeds the SGA threshold for nine months in a rolling sixty-month period, they will no longer receive disability benefits (Trial Work Period, Social Security Administration).
  244. This estimate of poverty uses the Supplemental Poverty Measure. Secondary Social Security beneficiaries faced the following poverty rates in 2012 (ordered from largest quantity to smallest): aged widow(er)s 19.7 percent, aged spouses 13.4 percent, disabled adult children 37.6 percent, disabled widow(er)s 31.0 percent, child-in-care widow(er)s 23.5 percent, and child-in-care spouses 33.8 percent (Poverty Status of Social Security Beneficiaries, by Type of Benefit, Bridges and Gesumaria 2016).
  245. Social Security Administration. Primary Insurance Amount. The summary of potential changes to the PIA formula can be found at Provisions Affecting Monthly Benefit Levels.
  246. Countable earnings are gross earnings minus applicable exclusions. An example of an exclusion is impairment-related work expenses.
  247. A 2015 Bipartisan Policy Center report lays out options for policy makers to improve work incentives, to increase experimentation around returning to work, and to improve interagency coordination to better help people with disabilities remain in the workforce in some capacity.
    Fichtner and Seligman 2018 explore changes to SSDI that would allow for benefits to be received for temporary and partial disabilities.
  248. The Social Security Administration provides a brief overview of spousal benefits.
  249. In 2010, about 4 percent of the elderly population was not eligible for current or future Social Security benefits due to insufficient earning histories. The poverty rate of this group was estimated to be about 44 percent (Whitman et al. 2011).
  250. Social Security Finances: Findings of the 2020 Trustees Report discusses how Social Security is financed and how the Office of the Chief Actuary at the SSA projects revenue and outlays each year over the next seventy-five years, summarized, as well over the ensuing nineteen, twenty-five, and fifty years. Whereas federal budgetary actions are measured over a ten-year window by the Congressional Budget Office, Social Security is projected much farther into the future.
  251. The exact year in which the OASDI trust funds are projected to become depleted while projected outlays exceed projected revenue tends to vary with the economy. The more people who are working, generally, the more revenue goes to the trust funds. To take into account economic uncertainty, the Trustees Report projects low-cost, intermediate-cost, and high-cost scenarios for the OASDI trust funds over the time horizons previously mentioned. Over time, the projected year in which reserves will be fully drawn and outlays will exceed revenue has moved somewhat closer in time than when first projected, though some time around 2035 remained the consensus as of early 2020. The impact of the pandemic recession does not appear to change the trust fund depletion date by more than six months to a year, according to the SSA as of late 2020.
  252. The Social Security program operates two separate trust funds: the OASI Trust Fund and the DI Trust Fund. They are generally discussed as a group (OASDI), however, because if one of these trust funds were depleted before the other and still had unmet obligations, it is anticipated that the excess reserves in either fund would be used to pay out any unmet OASDI obligations. The use of the excess reserves would, however, require legislation passed by Congress and signed by the president. Read more about the trust funds in this CRS report from 2020.
  253. Arnone, William, and Jay Patel. 2020. Social Security Finances: Findings of the 2020 Trustees Report. National Academy of Social Insurance.
    Board of Trustees. 2020. Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Social Security Administration.
  254. An Academy report from 2009 titled Fixing Social Security: Adequate Benefits, Adequate Financing lays out options that shore up the finances of the trust funds while also ensuring that benefits paid to those who most rely on them in retirement and in life are not reduced and in some cases are increased. The Office of the Chief Actuary projects the impact on the trust funds’ finances of many changes to Social Security, including certain benefit cuts.
  255. See “Category E: Payroll Taxes” proposals E1.1 through E1.10 in Summary of Provisions That Would Change the Social Security Program.
  256. Whiteman, Kevin. 2009. Distributional Effects of Raising the Social Security Taxable Maximum. Social Security Administration. Policy Brief No. 2009-01.
  257. In 2021, the taxable wage cap was $142,800.
  258. Congressional Budget Office. 2018. Increase the Maximum Taxable Earnings for the Social Security Payroll Tax.
  259. See “Category E: Payroll Taxes” proposals E2.1 through E2.15 and E3.1 through E3.19 in Summary of Provisions That Would Change the Social Security Program.
  260. Internal Revenue Service. 2020. Self-Employment Tax (Social Security and Medicare Taxes).
  261. There are several 1099 forms, based on the type of income and who issued it and how it was paid. In most cases, independent contractors will receive a Form 1099-K, a Form 1099-MISC, or a Form 1099-NEC from the person or entity that pays them compensation. You can read an overview here: What Is an IRS 1099 Form? Who Gets One and How It Works (Orem, 2021).
  262. Board of Trustees. 2020. Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Table II.B1. Social Security Administration.
  263. See Unemployment Insurance (U.S. DOL), Policy Basics: Unemployment Insurance (CBPP 2021), and Unemployment Insurance: Programs and Benefits (CRS 2019).
  264. The SUTA tax base and tax rate are determined by state legislatures. The base must be a minimum of $7,000 but may be higher. There is no constant minimum rate. State tax bases vary from the minimum of $7,000 to $52,700, and rates vary from 0 percent to 14.37 percent. Within each state, however, there is a minimum and maximum tax rate depending on an employer’s “experience rating,” or the likelihood that former employees successfully claim unemployment benefits. The higher the likelihood, the higher the tax rate. In Massachusetts, for example, the maximum rate is 14.37 percent, but the minimum rate is 0.94 percent. In addition, if a state’s trust fund is low (or if states are paying back a loan because their trust fund was depleted), some states automatically increase the SUTA tax rate until the funds are restored or the loan is paid back. SUTA taxes collect in a state’s trust fund and are used to finance benefits.
    For more information about state unemployment tax bases and rates, see Table 2 of Unemployment Insurance: Programs and Benefits (Congressional Research Service 2019).
  265. The FUTA tax base is $7,000 and has not been increased since 1983. The FUTA tax rate is notionally 6.0 percent, but states with programs in good standing have their FUTA tax rebated to 0.6 percent. No program has ever not been in good standing; hence the FUTA tax is 0.6 percent on the first $7,000 of earnings, or $42 per employee per year. FUTA taxes are collected into a federal trust fund and are used to reimburse states for the program’s administrative costs (Whittaker, Julie M. 2016. Unemployment Compensation: The Fundamentals of the Federal Unemployment Tax (FUTA). Congressional Research Service).
  266. During the Great Recession, thirty-six states had federal trust fund loans (Unemployment Insurance: States’ Reductions in Maximum Benefit Durations Have Implications for Federal Costs, Government Accountability Office, p. 13).
  267. See Time to End the Race-to-the-Bottom on Unemployment Insurance for further comments on this phenomenon (Atkinson 2020, American Compass).
  268. Whittaker, Julie M., and Katelin P. Isaacs. 2019. Unemployment Insurance: Programs and Benefits. Table 1. Congressional Research Service.
  269. Will States Take the Wrong Lesson About Unemployment Insurance’s Failings? comments on this phenomenon (Edwards 2021, The RAND Blog).
  270. As far back as 1993, the Government Accountability Office issued a report titled Unemployment Insurance: Program’s Ability to Meet Objectives Jeopardized, which found that “the deteriorating financial solvency of state trust funds has led to changes in state laws affecting eligibility and compensation levels and adversely affected the percentage of unemployed persons receiving unemployment benefits,” among other key findings, suggesting critical problems in unemployment insurance programs. A New York Times piece published in January 2021 depicts the problematic trends in the unemployment insurance system in a number of telling graphics.
  271. Isaacs, Katelin P., and Julie M. Whittaker. 2020. Unemployment Insurance Provisions in the CARES Act. Congressional Research Service.
  272. In a report issued on November 30, 2020, the Government Accountability Office recommended that the “DOL (1) revise its weekly news releases to clarify that in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits, and (2) pursue options to report the actual number of distinct individuals claiming benefits, such as by collecting these already available data from states.”
  273. The National Employment Law Project explains PUA and other boosts to unemployment insurance benefits that were enacted early on in the pandemic. Since that piece was written, benefits were extended beyond December 2020.
  274. See Putting Short-Time Compensation to Work: How Employers Can Avert Layoffs and Reduce Training Costs for more information on short-time compensation in practice in the U.S. and the impact it has on companies and states where it is practiced.
  275. Houghton, Charlotte, and Mariette Aborn. 2021. As the Economy Continues to Struggle, Can Short-Time Compensation Offer Relief?. Bipartisan Policy Center.
  276. Pirtle, Jennifer. 2020. STC State Websites. WorkforceGPS.
  277. See Designing Universal Family Care (NASI 2020) and Paid Family and Medical Leave in the United States (CRS 2020).
  278. As of March 2020, 21 percent of private, state, and local workers had access to paid family leave (U.S. Bureau of Labor Statistics. National Compensation Survey: Employee Benefits in the United States, March 2020. Table 31).
  279. U.S. Department of Labor, Wage and Hour Division. Family and Medical Leave Act.
  280. National Academy of Social Insurance. 2020. Designing Universal Family Care. pp.145–146.
  281. Life Insurance and Market Research Association (LIMRA). 2017. Combination Products Giving Life Back to Long-term Care Market.
  282. Sammon, Alexander. 2020. The Collapse of Long-Term Care Insurance. The American Prospect.
  283. Designing Universal Family Care notes that
    The majority of LTSS today is provided by family and friends, often to the detriment of their health and financial security. In the coming decades, most professional care will be paid for by families out of pocket. Most of the remainder of paid care will be covered by Medicaid, the primary public payer of LTSS. To qualify for Medicaid, however, a person must have low income and may not have assets above a certain level. Many middle-income people “spend down”—they use their assets to pay for care until they have very little left and qualify for Medicaid. Those individuals who qualify for Medicaid (whether low- or middle-income) must contribute most of their income to their care costs, losing financial independence, and may be forced to enter a nursing home because they cannot access sufficient home- and community-based services or afford to remain at home. (p. 143)
  284. In practice, because it is nonrefundable and because of how it interacts with other tax policies, the CDCTC offers minimal benefits to workers earning less than $25,000; in 2018, those with adjusted gross incomes of less than $25,000 received 3.2 percent of benefits in spite of accounting for 5.6 percent of returns claiming the credit. Households earning at least $75,000 in adjusted gross income in 2018 accounted for 58.0 percent of aggregate CDCTC dollars spent. The income brackets that determine one’s tax credit rate are not adjusted for inflation annually and have not been updated by legislation since 2001 (Congressional Research Service, Child and Dependent Care Tax Benefits: How They Work and Who Receives Them, Table 1).
  285. Income eligibility thresholds and work/training requirements vary by state, as the CCDF typically functions in coordination with each state’s TANF program. For more information, see Child Care Entitlement to States, Congressional Research Service.
  286. National Academy of Social Insurance. 2020. Designing Universal Family Care. pp. 15–16.
  287. Chapter 3: Long-Term Services and Supports of Designing Universal Family Care makes the case for state action on long-term care insurance via a social insurance design. The chapter lays out finance, coverage, and benefit options. The coverage options mentioned here are outlined in Table 1 on page 176.
  288. Spoerry, Scott. 2011. Obama Drops Long-Term Health Care Program. CNN.
  289. Chernof, Bruce, et al. 2013. Commission on Long-Term Care Report to the Congress. U.S. Senate.
  290. Chapter 1: Early Child Care and Education of Designing Universal Family Care outlines the childcare landscape in the U.S. and proposes three potential social insurance models for states to improve early childcare and education including “1. a comprehensive universal early child care and education program, 2. an employment-based early child care and education contributory program, and 3. a universal early child care and education subsidy program.”
    In Ending Child Poverty Now, the Children’s Defense Fund proposes both: 1) Expanding federal childcare subsidies to all families with incomes less than 150 percent of the poverty line and exempting these families from copays; and 2) Making the CDCTC fully refundable with cost reimbursements up to 50 percent (from 35 percent) for lower-income families (see Chapter 2, policies 5 and 6). Other proposals for improving the CCDF and CDCTC come from the National Academies of Sciences, Engineering, and Medicine (see Appendix D, 5-3, p. 415, of A Roadmap to Reducing Child Poverty), the Center for American Progress in A New Vision for Child Care in the United States, and Title III of H.R. 3300: Economic Mobility Act of 2019.
  291. See Earned Income Tax Credit (EITC) (IRS 2021), Policy Basics: The Earned Income Tax Credit (CBPP 2019), What Is the Earned Income Tax Credit? (Tax Policy Center 2020), and The Earned Income Tax Credit (EITC): How It Works and Who Receives It (CRS 2021).
  292. Credit levels are updated each year by the IRS in the Earned Income and Earned Income Tax Credit Tables.
  293. With the passing of the American Rescue Plan Act of 2021, the maximum credit for workers without children at home increased to $1,502 for 2021, and fully phased out for joint filers at earned income of $27,367 (Tax Policy Center 2021, EITC Parameters).
  294. This analysis/calculation is based on an individual working forty hours per week, fifty-two weeks per year.
  295. Marr, Chuck, Chye-Ching Huang, Cecile Murray, and Arloc Sherman. 2016. Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty. Center on Budget and Policy Priorities.
  296. Internal Revenue Service. 2021. State and Local Governments with Earned Income Tax Credit.
  297. The American Rescue Plan Act of 2021 implemented a temporary (for tax year 2021) increase in both benefit size and eligibility for workers without dependents at home. This option would make this expansion a permanent part of the EITC (Congressional Research Service 2021, The American Rescue Plan Act of 2021 (ARPA;P.L. 117-2): Title IX, Subtitle G—Tax Provisions Related to Promoting Economic Security).
  298. Prior to passage of the ARP, the maximum credit for workers without dependents was $543 and phased out completely at $21,920 for married filers.
  299. A 2019 Urban Institute blog post further discusses the degree to which an age-eligibility expansion of the EITC would help older workers both in the short term and in retirement.
  300. Maag, Elaine. 2021. Increasing the Childless EITC Is a Good Start; It Should Include Students Too. Tax Policy Center.
  301. Thompson, Darrel, Whitney Bunts, and Ashley Burnside. 2020. EITC for Childless Workers: What’s at Stake for Young Workers. Center for Law and Social Policy.
  302. Maag et al. 2020 explore the impacts of extending EITC eligibility to “low-income students who are in school at least half time and independent for tax purposes [such that they] would receive the maximum credit even if their earnings are too low to qualify for the maximum. Essentially, being in school would be treated as meeting the earnings requirements in place for most credit recipients.”
  303. See About Publication 972, Child Tax Credit and Credit for Other Dependents (IRS 2021), Policy Basics: The Child Tax Credit (CBPP 2019), What Is the Child Tax Credit? (Tax Policy Center 2020), and The Child Tax Credit: How It Works and Who Receives It (CRS 2020).
  304. The ARP granted households with seventeen-year-old children eligibility for the $3,000 credit in 2021.
  305. In 2019, the National Academies of Sciences, Engineering, and Medicine issued a report titled A Roadmap to Reducing Child Poverty, which outlined options to cut child poverty in half in ten years. The report draws on existing literature to conclude that “poverty in early childhood . . . [is] associated with worse child and adult outcomes,” and that “income poverty itself causes negative child outcomes, especially when it begins in early childhood” (pp. 73, 89).
  306. Haider, Areeba. 2021. The Basic Facts about Children in Poverty. Figure 4. Center for American Progress.
  307. Prime Minister of Canada. 2020. Prime Minister announces annual increase to the Canada Child Benefit.
  308. Greenstein, Robert, Elaine Maag, Chye-Ching Huang, and Chloe Cho. 2018. Improving the Child Tax Credit for Very Low-Income Families. U.S. Partnership on Mobility from Poverty.
  309. The NAS report outlines two options for this proposal on page 148:[1)] Pay a monthly benefit of $166 per month ($2,000 per year) per child to the families of all children under age 17 who were born in the United States or are naturalized citizens. In implementing this new child allowance, we would eliminate the Child Tax Credit and Additional Child Tax Credit as well as the dependent exemption for children. The child allowance benefit would be phased out under the same schedule as the Child Tax Credit. . . . [2)] Pay a monthly benefit of $250 per month ($3,000 per year) per child to the families of all children under age 18 who were born in the United States or are naturalized citizens. (As with Child Allowance Policy #1, we would eliminate the Child Tax Credit and Additional Child Tax Credit as well as the dependent exemption for children.) The child allowance benefit would be phased out between 300 and 400 percent of the poverty line.
    The report projects the former proposal to reduce child poverty rates by 3.4 percentage points (13.0 to 9.6) and the latter proposal by 5.3 percentage points (13.0 to 7.7) (see Figure 5-1).
    National Academies of Sciences, Engineering, and Medicine. (2019). A Roadmap to Reducing Child Poverty. Washington, DC: The National Academies Press. doi: https://doi.org/10.17226/25246.
  310. High-income households may see their credits vary if the credit phases out at high incomes (as it does under current law). A higher credit for younger children might introduce some unpredictability, too; impending declines in monthly benefits should be communicated to households well ahead of time.
  311. See The Negative Income Tax and the Evolution of U.S. Welfare Policy (Moffitt 2003).
  312. This $4,500 benefit is calculated by taking the NIT threshold ($39,000) minus income ($30,000) and multiplying the difference by the NIT rate (50 percent).
  313. Passell, Peter, and Leonard Ross. 1973. Daniel Moynihan and President-Elect Nixon: How Charity Didn’t Begin at Home. The New York Times.
  314. Retirement accounts vary by who establishes them and when the tax preference occurs (among other things). The full list of those types with tax preferences can be found on the IRS page Types of Retirement Accounts, which is part of the large section on Tax Information for Retirement Plans. The Balance—a personal finance website—provides explanatory articles for the three most common types: individual retirement accounts, 401(k)s, and 403(b)s.
  315. The tax code contains numerous exceptions to this general principle. Individuals may withdraw early with a penalty or withdraw early without a penalty if they meet certain circumstances. Individuals may also borrow from their 401(k) accounts in certain circumstances. Contributions were capped at $19,500 in 2021 but, if permitted by one’s 401(k) plan, may be as high as $26,000 for the fifty and older population (see “catch-up contributions”). The IRS has a Retirement Plans FAQ that details many of these scenarios. The Balance has guides to Early Distribution of Funds and 401k Loans.
  316. National Compensation Survey, Bureau of Labor Statistics, Employee Benefits, Table 1.
  317. Report on the Economic Well-being of U.S. Households, 2020, Figure 36.
  318. See Tax Incentives for Retirement Savings, Tax Policy Center. In related findings, lower retirement savings are reported for individuals who are younger, Black, or Hispanic (Report on the Economic Well-being of U.S. Households 2020, Table 30.)
  319. The income and contribution eligibility for the Saver’s Credit can be found on the IRS page Retirement Savings Contributions Credit (Saver’s Credit). The Balance also has an explanatory article, Retirement Saver’s Credit for 2021.
  320. A straightforward example of an asset test would be “you must have less than $2,000 in your checking account/cash in order to qualify for….” Programs differ in what they consider assets and what resources are exempt from counting as assets. Typically, at least one car is exempt, and the value of one’s home (up to a limit) is exempt.
  321. McDonald et al. 2005 review the literature on the impact of asset tests on savings and state that “both theory and the available evidence suggest that this disincentive can reduce and distort saving among moderate- and lower-income families.” Chen and Lerman 2005 acknowledge the role that asset tests play in targeting benefits to those with the least resources and lowest incomes, while drawing a similar conclusion from existing literature: “In general, the studies find that asset limits lower the net worth of potentially eligible low-income individuals and families.”
  322. Grehr 2018 finds that “states that have eliminated asset limits have found that the resulting administrative cost savings significantly outweigh any increase in the number of families receiving benefits.” A 2017 issue brief by The Pew Charitable Trusts finds that, although lifting asset tests does not significantly increase savings among benefit-eligible populations, a number of positive effects were associated with lifting the tests. Benefit-eligible households in states without asset tests were more likely to have a checking or savings account, and households in states with eliminated or relaxed vehicle limits were more likely to own a vehicle and to have liquid/semi-liquid assets exceeding $500. The Pew brief also reports that lifting asset tests does not yield increased administrative costs or caseload growth. The most recent information on asset tests for program eligibility is produced by the Prosperity Now Scorecard.
  323. The federal government might, for example, incentivize retirement account managers to notify participants and potential participants of Saver’s Credit eligibility dependent on one’s income and clarify for participants what information is needed in order to claim the credit.
  324. The Impact of Leakages on 401(k)/IRA Assets, Center for Retirement Research. The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout Leakage, The Employee Benefits Research Institute.
  325. See Topic No. 558 Additional Tax on Early Distributions from Retirement Plans Other Than IRAs for more information about rules around separations from service. The IRS states the following as exempt from the 10 percent penalty, which we refer to as separation from service: “Distributions made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary. If these distributions are from a qualified plan other than an IRA, you must separate from service with this employer before the payments begin for this exception to apply.”
  326. Cashing Out: The Systemic Impact of Withdrawing Savings before Retirement provides a literature review of the impact of withdrawals following separation from service. This study finds that, each year, between 6.5 percent and 9.5 percent of 401(k) participants “cash out” following a job change, resulting in $60 billion to $105 billion in lost savings annually.
  327. Internal Revenue Service. 2020. Retirement Topics: Hardship Distributions.
  328. Access to savings during an emergency such as a medical event or extended unemployment is generally less controversial. An Aon Hewitt testimony before the Senate in 2013 stated that “more than a third (34 percent) of African-Americans and 29 percent of Hispanics say the ability to take loans from their plans if they need the money is a ‘strong’ influence on their decision to invest in a DC plan, compared to 17 percent of Asian-Americans and 13 percent of Whites.” Proposals may also consider access to retirement savings for certain wealth-building opportunities, such as financing an education, starting a business, or purchasing a home. A related proposal is detailed in A Birthright to Capital: Equitably Designing Baby Bonds to Promote Economic and Racial Justice. Specifically, “4. Allowable Uses of Funds” on page 19 discusses how access to savings—in this case, to those accrued by a system of baby bonds—might be implemented to create the best wealth-building outcomes.
  329. Mitchell et al. 2005 find that offering the option of a loan on one’s 401(k) does not raise overall participation rates, but contribution rates rise “by about 10 percent among non-highly-paid participants.” Moore et al. 2021 state that “the 401(k) system is de facto income and expenses insurance of the last resort. . . . Because other countries have better unemployment insurance and health insurance, they do not need as much pre-retirement liquidity in their pension system.” To this extent, improvements to income security outside of the retirement system are likely to increase retirement contributions. See the Labor and Benefit sections for more information on such improvements.
  330. The Impact of Leakages on 401(k)/IRA Assets, Center for Retirement Research. The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout Leakage, The Employee Benefits Research Institute.
  331. This figure is from the Economic Well-being of U.S. Households annual report (Figure 14) produced by the Federal Reserve. When the question was first asked in 2013, 50 percent of households said they could meet the unexpected $400 expense. By 2019 this portion had risen to 63 percent. See page 21 for further discussion of the implications of the survey’s findings.
  332. This figure is from the Economic Well-being of U.S. Households annual report (Table 9 in 2020). Bills include rent, mortgage, water, gas, electric, credit card, phone, cable, student loan, car payment, and other unspecified expenses.
  333. This statistic is from the Economic Well-being of U.S. Households annual report (Figure 18 in 2020).
  334. Whether or not self-employers are to be mandated to create an account and provide a minimum contribution from their own income is an important question. At the very least, self-employers may have the option to contribute to a saving account under this arrangement.
  335. The tradeoffs of varying structures to implement an ESA are discussed in this exploratory paper. Mitchell and Lynne 2017 “explore the possibility of linking a short-term savings, or ‘sidecar,’ account to a traditional retirement account to better meet consumers’ short- and long-term financial needs.” Nest Insight is undertaking a multi-year trial with a “sidecar savings model” in which contributions are automatically deducted from payroll and allocated first to one’s liquid emergency savings account and, once the savings account cap is hit, then to one’s retirement account.
  336. Child Development Accounts, The Federal Reserve Bank of St. Louis.
  337. S. 2231 American Opportunity Accounts Act.
  338. The policies described here refer to federal government policies and actions, though states might be permitted to contribute to these accounts assuming administrative feasibility.
  339. This short piece from the Urban Institute discusses the potential effects of baby bonds on wealth and wealth disparity.
  340. The Eastern Band of Cherokee Indians, for example, administers a universal asset endowment within their tribe known as the Minors Trust Fund (Littledave, Sheyashe 2019, The Big Money). Upon turning eighteen, tribe members receive no-strings-attached disbursements which have grown to over $100,000 in recent years. To assist recipients in managing their wealth disbursement, the tribe has made an intentional effort to improve money management skills among the youth population. (See The Cherokee Preservation Foundation, Financial Literacy.)
  341. Two short histories of the Postal Savings System: from USPS and from Mehsra Baradaran, a postal banking proponent.
  342. Providing Non-Bank Financial Services for the Underserved, Office of the Inspector General, USPS.
    It’s Time for Postal Banking, Harvard Law Review.
  343. What Is a Predatory Loan? from The Balance and What Is Predatory Lending from Nerdwallet provide introductions to the concept of predatory lending. The National Consumer Law Center has a resource guide for the two loan types often accused of being predatory, Payday and Installment Loans. Both the New York Times and the Washington Post have recently examined the effect of these types of loans on borrowers.
  344. The Center for Responsible Lending investigated the geographic concentration of payday lenders in California in its report Predatory Profiling. Six years later, the state of California released a report that came to a similar conclusion, The Demographics of California Payday Lending. The Morning Consult also found that Black households reported having more payday lenders and pawn shops in their neighborhoods in “It’s What We Call Reverse Redlining.”
  345. Building the CFPB, CFPB.
  346. One prominent example is the reversal of payday lending regulations. See CNBC for coverage.
  347. The Pew Research Center Consumer Finance Project has been leading in research and policy design in the area of small dollar loans. Their head explains the advantages of the Ohio law in Ohio’s Payday Lending Law Could Be National Model.
  348. Bourke, Nick. 2018. Ohio’s Payday-Lending Law Could Be National Model. The Columbus Dispatch.
  349. Many summaries and descriptions of student loan debt are available. Educationdata, a website that compiles education data from publicly available sources, summarizes student loan statistics. In researching the well-being of U.S. households, the Federal Reserve includes annual estimates of student loans and other educational debt. When student debt forgiveness became a possible policy, the Brookings Institute released this Q&A guide, Who Owes All That Student Debt?
  350. Roll, Jabari, and Michal Grinstein-Weiss 2018 discuss the findings of the survey, stating that:
    student debt is strongly influencing decisions that can have large implications for household economic stability, e.g., emergency savings, and mobility, e.g., saving for a down payment on a home, starting a business, etc. In addition, student debt may be altering the structure of families themselves. Roughly 7 percent of respondents reported that they would be more likely to get married or have children if their student debt were forgiven, indicating that this debt burden is affecting even fundamental decisions about debt holders’ life trajectories.
  351. School fraud and servicer fraud are not the same thing. School fraud involves educational institutions that were found to have made fraudulent representations to their students, many of whom took out loans to attend. The large number of recent cases of educational institute fraud were Corinthian Colleges and ITT Technical Institute. The Department of Education has a time line of the decline for Corinthian and ITT, as well as student loan questions for former Corinthian and ITT students. The New York Times has coverage of the case against ITT and the case against Corinthian made by government prosecutors. Servicer fraud is when a financial institution that manages student loan repayments is accused of defrauding customers. In 2017 the CFPB sued Navient for deception, accusing it of having “illegally cheated borrowers of repayment rights.” The lawsuit was the result of years of research into issues related to student loan services, summarized in this report. Navient is the largest student loan service entity in the U.S. and was previously Sallie Mae. The CFPB lawsuit for mistreatment of borrowers is separate from the investigation of a whistleblower claim that Navient cheated the federal government; it was ordered to pay back $22 million to the federal government in early 2021.
  352. For example, the city of Ferguson, Missouri, was revealed to have relied on raising municipal court fees and fines to make up fully one-fifth of its $12.75 million budget in 2013. The Department of Justice’s Investigation of the Ferguson Police Department found that its focus on revenue from police-issued fines led to unconstitutional practices and exacerbated racial disparities.
  353. Past Due, The Vera Institute of Justice.
  354. Who Pays? The True Cost of Incarceration on Families. Ella Baker Center for Human Rights, Forward Together, and Research Action Design.
  355. Levine, Sam. 2020. Federal Court Rules Florida Felons Must Pay Off Debts to State before Voting. The Guardian.
  356. The American Bar Association working group on building public trust in the American justice system found that, as of 2020, “about 10 million low-income residents owe more than $50 billion in often unaffordable additional costs” (American Bar Association, New ABA Study Captures Impact of Fines, Fees on the Poor).
  357. The Fines and Fees Justice Center documents the economic insecurity and injustice brought by fines and fees across the U.S.
  358. How Bail Works, How Stuff Works.
  359. Bail Reform, . . . , Explained, Vox, and What You Need to Know About Ending Cash Bail from the Center for American Progress discuss bail and potential reform. Illinois recently passed the Pretrial Fairness Act, which ends all money bail.
    The Prison Policy Initiative finds that 74 percent of the 470,000 individuals in city and county jail on a given day are being held there pretrial due to an inability to pay bail. This population is extremely low income; average annual income for men and women who cannot afford bail is $16,000 and $11,000, respectively. Inability to pay bail is also a racial issue, as 43 percent of the pretrial population in jail is Black. The PPI provides more data in its report Mass Incarceration: The Whole Pie 2020.
  360. The National Conference of State Legislatures has a Child Support Tutorial to introduce the legal and regulatory issues around child support.
  361. Child Support Reforms in PRWORA: Initial Impacts, The Urban Institute.
  362. See Interest on Child Support Arrears, National Conference of State Legislatures, and Reforming Child Support to Improve Outcomes for Children and Families, the Abell Foundation.
  363. Child Support Pass-Through and Disregard Policies for Public Assistance Recipients, National Conference of State Legislatures.
  364. An overview of the issues and goals of child support reform can be found in the New York Times editorial Child Support vs. Deadbeat States, this overview Child Support Reform from Child Trends, and Transforming the Child Support System into a Family-Building System from the U.S. Partnership on Mobility from Poverty.
  365. See Appendix D, 5-10, p. 432, of A Roadmap to Reducing Child Poverty for analyses of child support guaranteed minimums of $100 and $150 per month.
  366. How We Work, Legal Services Corporation.
  367. Legal Services Corporation, American Bar Association.
  368. Code of Federal Regulations, Title 45, Subtitle B, Chapter XVI, Part 1611: Financial Eligibility provides the regulations, but more explanation of who is covered by LSC can be found at What Is Legal Aid? by the National Legal Aid and Defender Association, and Can LSC Grantees Represent Undocumented Immigrants? by Legal Services Corporation.
  369. Civil Legal Aid 101, Department of Justice.
  370. See the Legal Services Corporation’s report The Justice Gap: Measuring the Legal Needs of Low-Income Americans.
  371. Restricted activities for LSC funds are listed here LSC Restrictions and Other Funding Sources. The Center for American Progress proposed idea for Legal Services Reform is here: Making Justice Equal.
  372. For an introduction to the right to counsel, see Right to Counsel from the Cornell Legal Information Institute. For an introduction to the Supreme Court case that extended the right to counsel to state felony charges, see Gideon v Wainright from the Georgetown Law Library.
  373. The National Coalition for a Civil Right to Counsel keeps track of where states and localities have expanded the right to counsel, Major Developments. Evidence that counsel reduces eviction is based on a pilot expansion of right to counsel in New York City, summarized at Expand the Right to Counsel. Background on the right to counsel and proposals to increase are discussed in A Right to Counsel Is a Right to a Fighting Chance by the Center for American Progress.
  374. For an introduction to differences in wealth between Black and White Americans (often called the Black-White wealth gap or racial wealth gap), you can read The Racial Wealth Gap in the United States. Three reports provide an overview of how Black Americans benefit from Social Security: Social Security Helps African Americans Save for Retirement (AARP), African American Economic Security and the Role of Social Security (Urban Institute), or Social Security: A Vital Protection for African American People of All Ages (CBPP). In addition, the NAACP released this statement on Social Security: Viewing Social Security through the Civil Rights Lens.
  375. This review in the Proceedings of the National Academy of Sciences summarizes twenty years of field experiments to show that discrimination in hiring toward Black job applicants is large and consistent: Meta-analysis of Field Experiments Shows No Change in Racial Discrimination in Hiring over Time.
  376. Changes to OASDI fall primarily under the category of benefit policy for the purpose of this report and are thus not included in this section. With that said, establishing a new minimum benefit under OASDI has obvious equity implications.
  377. Table 11 of the Annual Labor Force Statistics tables from the Current Population Survey shows occupational distribution of workers by gender, race, and ethnicity.
  378. Even, William E., and David A. Macpherson. 2014. The Effect of the Tipped Minimum Wage on Employees in the U.S. Restaurant Industry. Southern Economic Journal, 80(3), 633–655.
  379. For a discussion of criminal records and the number of Americans who have them, see Just Facts: As Many Americans Have Criminal Records as College Diplomas from the Brennan Center for Justice.
  380. For more on the impact of criminal records on children, see Removing Barriers to Opportunity for Parents with Criminal Records and Their Children: A Two-Generation Approach from the Center for American Progress.
  381. Barrier to Work: People with Criminal Records, National Conference of State Legislatures.
  382. More on the difference between sealed and expunged records can be found on FindLaw.
  383. A University of Michigan study found that just 6.5 percent of eligible individuals were able to obtain a “set-aside” in Michigan within five years of becoming eligible.
  384. A guide to the process for restoration of rights in every U.S. jurisdiction is maintained by the Collateral Consequences Resource Center, Restoration of Rights Project.
  385. Follow these links to learn more about Clean Slate laws in Pennsylvania, Utah, Michigan, Virginia, Connecticut, Delaware, and California.
  386. Find out more about automatic record clearance at the Clean Slate Initiative.
  387. The bipartisan Clean Slate Act, introduced in the House in 2019 and 2020 and in the Senate in 2020, would create the first-ever federal record-clearing remedy and make the process automatic for certain drug records.
  388. More on the absence of federal record-clearing can be found in this overview by the Collateral Consequences Resource Center.
  389. Furman, Jason, and Laura Giuliano. 2016. New Data Show That Roughly One-Quarter of U.S. Workers Hold an Occupational License.
  390. The Institute for Justice provides more information on the “37 states and Washington, D.C. [that] have reformed their occupational licensing laws to make it easier for ex-offenders to find work in state-licensed fields” since 2015.
  391. Kent, Ana Hernández, and Lowell Ricketts. 2021. Wealth Gaps between White, Black and Hispanic Families in 2019. Federal Reserve Bank of St. Louis.
  392. U.S. Census Bureau. Housing Vacancies and Homeownership (CPS/HVS)—Historic Tables. Table 16, Q4 2020.
  393. Zonta documents evidence of the variety of “new forms of racial bias in housing” that have emerged in recent decades, including real estate agents steering “African Americans away from desirable neighborhoods and toward areas featuring larger concentrations of people of color, higher poverty levels, and lower housing quality compared with neighborhoods to where whites relocate.”
    Zonta, Michela. 2019. Racial Disparities in Home Appreciation. Center for American Progress.
  394. Neal, Michael, and Alanna McCargo. 2020. How Economic Crises and Sudden Disasters Increase Racial Disparities in Homeownership. Table 1. Urban Institute.
  395. Green, Dan. 2022. $25,000 Downpayment Toward Equity Act of 2021: Simplified. Homebuyer.com.
  396. Choi, Jung Hyun, and Janneke Ratcliffe. 2021. Down Payment Assistance Focused on First-Generation Buyers Could Help Millions Access the Benefits of Homeownership. Urban Institute.
  397. Gray-Lobe et al. 2021 find that “attendance at a public preschool in Boston boosts on-time college enrollment by 8 percentage points, an 18% increase relative to the baseline college-going rate of 46%. Children who randomly win a seat at a Boston preschool are 5.5 percentage points more likely to attend a four-year college by the fall after projected high school graduation and 8.5 percentage points more likely to attend a Massachusetts college.”
    Regarding the Head Start program, Schanzenback and Bauer 2016 find that it “improves educational outcomes— increasing the probability that participants graduate from high school, attend college, and receive a post-secondary degree, license, or certification” and that it “causes social, emotional, and behavioral development that becomes evident in adulthood measures of self-control, self-esteem, and positive parenting practices.”
    Gray-Lobe, Guthrie, Parag A. Pathak, and Christopher R. Walters. 2021. The Long-Term Effects of Universal Preschool in Boston. NBER Working Paper No. 28756.
    Schanzenbach, Diane Whitmore, and Laruen Bauer. 2016. The Long-Term Impact of the Head Start Program. Brookings Institution.
  398. “In the years since Washington, D.C., began offering two years of universal preschool, the city’s maternal labor force participation rate has increased by about 12 percentage points, with 10 percentage points attributable to preschool expansion.”
    Malik, Rasheed. 2018. The Effects of Universal Preschool in Washington, D.C. Center for American Progress.
  399. Martin et al. 2018 discuss two neighboring school districts in Texas. As of 2013/2014, the Edgewood school district received “about $5,000 less per pupil in education funding than Alamo Heights, a wealthier, neighboring school district.” As such, “core services that have a significant influence on instructional quality and student performance are systematically unavailable to students in low-income schools relative to students in higher-income schools. These critical services include early childhood education, quality teachers, and exposure to rigorous curriculum.”
    Indeed, Baker et al. 2018 find that seventeen states are regressive in their public school funding, meaning that higher-poverty school districts receive less funding per pupil than their lower-poverty counterparts. They also show the range of per pupil funding across states in 2015 at a high of $18,719 in New York to a low of $6,277 in Idaho.
    Martin, Carmel, Meg Benner, Ulrich Boser, and Perpetual Baffour. 2018. A Quality Approach to School Funding. Center for American Progress.
    Baker, Bruce, Danielle Farrie, and David G. Sciarra. 2018. Is School Funding Fair? A National Report Card. Education Law Center.
  400. Jackson et al. 2021, for example, find that during the Great Recession, when school budgets were being cut, “cohorts exposed to these spending cuts had lower test scores and lower college-going rates. The test score impacts were larger for children in poor neighborhoods. Evidence suggests that both test scores and college-going were more adversely affected for Black and White students than Latinx students.”
    Jackson, C. Kirabo, Cora Wigger, and Heyu Xiong. 2021. “Do School Spending Cuts Matter? Evidence from the Great Recession.” American Economic Journal: Economic Policy, 13(2): 304–335.
  401. According to the National College Attainment Network, only 23 percent of four-year public colleges were affordable for a student who received the average-sized Pell Grant in 2018–19, with an average affordability gap of $2,524. Ten states had no affordable four-year public institutions, and 38 states had five or fewer.
    National College Attainment Network. 2021. College Affordability.
  402. Carnevale et al. 2021 show that, at the median, compared to a high school diploma, lifetime earnings for a Black worker increase by 21 percent with an associate’s degree and 64 percent with a bachelor’s degree. For a Hispanic worker, those figures are 36 percent and 64 percent, respectively.
    Carnevale, Anthony P., Ban Cheah, and Emma Wenzinger. 2021. The College Payoff: More Education Doesn’t Always Mean More Earnings. Washington, DC: Georgetown University Center on Education and the Workforce.
  403. Feldman, David H., and Christopher R. Marsicano. 2021. Moving Beyond Free: A College Affordability Compact for the Next Generation. Third Way.
    Huelsman, Mark. 2014. The Affordable College Compact. Demos.
    Startz, Dick. 2020. Biden’s Plan for Higher Ed Is Good—But It Could Be Better. Brookings Institution.
  404. See Sherman’s Field Order No. 15 from the Georgia Encyclopedia, The Truth Behind 40 Acres and a Mule from PBS, and Black Reparations and the Racial Wealth Gap from authors William “Sandy” Darity and Kirsten Mullen.
  405. Text of HR 40, introduced by Shelia Jackson Lee. Veteran Congressman Still Pushing for Reparations in a Divided America provides an overview of the many years’ effort of John Conyers to introduce the bill in the House. More recent press coverage provides context for the discussion today, in the Washington Post, the Atlantic, and Vox.
  406. The language in Public Law 100-383 “Civil Liberties Act of 1987” begins by stating: “The purposes of this Act are to—(1) acknowledge the fundamental injustice of the evacuation, relocation, and internment of United States citizens and permanent resident aliens of Japanese ancestry during World War II; (2) apologize on behalf of the people of the United States for the evacuation, relocation, and internment of such citizens and permanent resident aliens.”
  407. See the New York Times’ coverage of the vote and the Densho Encyclopedia’s summary for more information about the act. In 2018 in Trump v. Hawaii, in which the U.S. Supreme Court upheld the travel ban aimed at certain nations, the Court took the occasion to overrule its decision in Korematsu v. United States, which had upheld the Roosevelt internment order.
  408. The Migration Policy Institute maintains a Frequently Asked Questions page with links to further reports and discussions of data, immigration in the U.S., and the number of immigrants in the U.S. The Department of Homeland Security has its own data page. The Pew Research Center produces an annual statistical portrait of immigrants in the U.S.
  409. This statement was fact checked by Politifact; see Overstayed Visas (fact checking Rep. Kevin McCarthy). All fact checks by Politifact on statements about immigration can be found on its webpage.
  410. Both Gallup and The Pew Research Center perennially poll Americans about their views on immigration and components of immigration policy. In a Gallup poll placed January 21–27, 2019, 34 percent of Americans said they strongly favor and 47 percent favor “allowing immigrants living in the U.S. illegally the chance to become U.S. citizens if they meet certain requirements over a period of time.” In a Pew poll placed June 4–20, 74 percent of Americans said they favor “Congress passing a law granting permanent legal status to immigrants who came to the U.S. illegally when they were children.” The Bipartisan Policy Center published similar findings in The New Middle on Immigration.
  411. 4 Myths about How Immigrants Affect the U.S. Economy from PBS gives an overview of the economic contribution of immigrants. The positive impact immigrants provide to the economy, even if they at one point need some form of social assistance, is explained in Immigrants Contribute Greatly to U.S. Economy, Despite Administration’s “Public Charge” Rule Rationale (CBPP). More information about why immigration is good for the U.S. can be found at the George W. Bush Presidential Institute and outlined in this essay, Benefits of Immigration Outweigh the Cost. In addition, the Bipartisan Policy Center has a large research portfolio on immigration policy in the U.S., including Immigrants and Public Benefits.
  412. Goss et al. 2013 estimate the net impact of “unauthorized immigrants” on the Social Security Trust Funds in 2010 to be an increase in reserves of $12 billion, with $13 billion paid in taxes and $1 billion paid out in benefits.
  413. The Migration Policy Institute has a history of IRCA and two summaries of potential lessons from IRCA, IRCA in Retrospect and Will Immigration Reform Ever Succeed Again? A separate report from the Urban Institute reviews the lessons from IRCA but considers how the population of undocumented immigrants has changed since 1986.
  414. Social Security wage and payroll contributions, which include 6.2 percent paid by the employer, are commonly thought to be “passed on” to workers through lower wages. That is, workers may bear the incidence, even though employers pay the cost. Melguizo and González-Páramo 2012 review decades of literature on the matter and find that “in the long run, workers bear between two thirds of the tax burden in Continental and Anglo-Saxon economies, and nearly 90% in the Nordic economies.”
    Minimum wage increases on the other hand may fall primarily on employers through an increase in labor costs. In some industries, however, the cost of labor might be passed on to consumers in the form of higher prices or even borne by the workers themselves through automation and lost jobs.
  415. This all-encompassing analysis is referred to as “dynamic scoring.” The Congressional Budget Office is the agency in charge of estimating the cost of federal legislation. They only provide dynamic scoring when it is requested by Congress, or when “the gross budgetary effects of a bill would equal or exceed 0.25 percent of gross domestic product (the economy’s total output) in any year” (CBO 2018). The Tax Policy Center provides an overview of dynamic scoring and dynamic analysis.
  416. James Chen of Investopedia explains the U.S. dollar as a reserve currency and its implications.
  417. This idea is more commonly known as modern monetary theory (MMT). These explainers by Vox, Business Insider, and The Conversation are a few of many. A Bipartisan Policy Center blog post lays out some of the more common arguments against undertaking an MMT framework in the U.S. moving forward.
  418. The federal budget is a key tool in shaping economic and social policy. For a background on the budget, the Peterson Foundation provides a webpage titled Understanding the Budget (PGPF 2020).
  419. Revenue-raising options are only one part of CBO’s report, which also includes spending reductions. The most recent CBO report, titled Options for Reducing the Deficit: 2021 to 2030, was released in December 2020.
  420. Although Medicare Part A receives almost all of its funding from payroll taxes, Parts B and D of Medicare receive a majority of funding from general revenues (Cubanski et al. 2019, Figure 7). Unemployment Insurance is also supported by general revenues (particularly during times of financial crisis); Walczak 2021 states that the federal government had spent almost $430 billion as of January 2021 to provide additional unemployment relief during the coronavirus pandemic. The need for general revenue spending might be mediated by better efforts to build and retain trust fund reserves.
  421. The Center on Budget and Policy Priorities provides a brief overview of payroll taxes (CBPP 2020).
  422. The Center on Budget and Policy Priorities provides an overview of the various sources of federal tax revenue (CBPP 2020).
  423. This example does not take into consideration adjustments to income or deductions to income. It is only after adjustments and deductions that federal income taxes take effect. Because adjustments vary significantly from person to person, we do not take them into account in this example. Most low- and middle-income filers take the standard deduction to income (as opposed to itemized deductions), which was $12,400 for individuals and $24,800 for joint filers for tax year 2020.
  424. El-Sibaie, Amir. 2019. 2020 Tax Brackets. The Tax Foundation.
  425. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 1—Increase Individual Income Tax Rates. p. 59.
  426. This idea is illustrated by the Laffer Curve, which shows that after a certain point, an increase in tax rates will decrease tax revenue because the behavior being taxed is disincentivized by the tax. In the case of income taxes, all else equal, work is disincentivized by higher tax rates.
  427. Nerdwallet. 2020. Standard Tax Deduction: How Much It Is in 2020–2021 and When to Take It.
  428. The Tax Foundation provides a concise definition of the state and local tax deduction.
  429.  Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 4—Eliminate Itemized Deductions. p. 62.
  430. The Tax Policy Center provides a four-part overview of taxes on capital gains and dividends and how they might be improved.
  431. The Balance explains how the IRS calculates and utilizes modified adjusted gross income (MAGI) (Fisher 2020).
  432. Orem, Tina. 2020. 2020–2021 Capital Gains Tax Rates—and How to Calculate Your Bill. Nerdwallet.
  433. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 2—Raise the Tax Rates on Long-Term Capital Gains and Qualified Dividends by 2 Percentage Points. p. 60.
  434. This idea is illustrated by the Laffer Curve, which shows that after a certain point, an increase in tax rates will decrease tax revenue because the behavior being taxed is disincentivized by the tax. In the case of capital gains taxes, all else equal, investments are disincentivized by higher tax rates.
  435. The Tax Policy Center explains the difference between these two terms and the implications of their use for the tax system.
  436. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 6—Change the Tax Treatment of Capital Gains from Sales of Inherited Assets. p. 64.
  437. Batchelder and Kamin 2019 estimate that this change (denoted “Tax Accrued Gains at Death and Increase CG/Dividends Rate to 28%” in Table 2) accompanied with an increase of the top tax rate for long-term capital gains and qualified dividends to 28 percent would raise $290 billion over ten years.
  438. The Tax Policy Center provides a brief, seven-part overview of the estate tax: what it is, who pays it, and options for reforming the estate tax in addition to options to tax other forms of wealth transfers (Tax Policy Center 2020). The Tax Foundation provides a concise definition.
  439. Tax Policy Center. 2020. How Many People Pay the Estate Tax?
  440. See What Is an Inheritance Tax? from the Tax Policy Center for more information about the differences between an estate tax and an inheritance tax.
  441. CBO does not offer revenue impact estimates of changes to the estate tax in Options for Reducing the Deficit: 2021–2030. The Urban-Brookings Microsimulation Model projects revenue impacts for nine variations of an inheritance tax (in lieu of current law) that varies along lifetime exemption levels and tax rates and institutes a change from the step-up in basis to the carryover basis in T19-0046 – Revenue Impact of an Inheritance Tax Proposal with Different Lifetime Exemptions and Tax Rates with the Current-Law Estate Tax Repealed, 2022–30. On the low end it estimates a net-revenue increase of $141 billion between 2022 and 2030 for a $2 million lifetime exemption and a tax rate of the larger of one’s marginal income tax rate plus 10 percent or 30 percent. On the high end it estimates a net-revenue increase of $646 billion between 2022 and 2030 for a $1 million lifetime exemption with a tax rate of the larger of one’s marginal income tax rate plus 20 percent or 40 percent. Other proposals and revenue estimates are presented by Batchelder and Kamin 2019, Sarin and Summers 2020, Philips and Wamhoff 2018, Sammartino et al. 2016, Auxier et al. 2016, and The Penn Wharton Budget Model (Bennet Plan and Sanders Plan).
  442. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 19— Increase the Corporate Income Tax Rate by 1 Percentage Point. p. 77.
  443. This idea is illustrated by the Laffer Curve, which shows that after a certain point, an increase in tax rates will decrease tax revenue because the behavior being taxed is disincentivized by the tax. In the case of corporate income taxes, all else equal, creating corporate income is disincentivized by higher tax rates.
  444. The Tax Foundation projects a ten-year revenue increase of $522 billion using conventional scoring and $392 billion using dynamic scoring for an increase in the corporate tax rate from 21 percent to 25 percent between 2022 and 2031. They project increases of $886 billion and $644 billion for an increase to 28 percent using conventional and dynamic scoring, respectively. Batchelder and Kamin 2019 project a ten-year revenue increase of $730 billion for a rate increase to 28 percent. Mermin et al. 2020 similarly project a ten-year revenue increase of $727 billion for a rate increase to 28 percent. The Penn Wharton Budget model projects the following revenue increases over ten years for the following tax rate hikes from 21 percent: 1) a rate of 25 percent yields an additional $592 billion; 2) a rate of 28 percent yields an additional $1,029 billion; 3) a rate of 30 percent yields an additional $1,315.3 billion.
  445. Greenberg 2018 provides an extensive overview of the pass-through deduction for the Tax Foundation.
  446. Internal Revenue Service. 2021. Tax Cuts and Jobs Act, Provision 11011 Section 199A: Qualified Business Income Deduction FAQs.
  447. York, Erika. 2019. Pass-Through Businesses Q&A. Tax Foundation.
  448. The IRS outlines the 2.9 percent self-employment tax for Medicare hospital insurance and the additional Medicare tax rate of 0.9 percent on “wages, compensation, and self-employment income above a threshold amount” (Internal Revenue Service, Self-Employment Tax (Social Security and Medicare Taxes)).
  449. Batchelder, Lily, and David Kamin. 2019. Taxing the Rich: Issues and Options. p. 5.
  450. The IRS lists relevant tax laws prior to the Tax Cuts and Jobs Act and what changed under the new law (Internal Revenue Service, Tax Cuts and Jobs Act: A Comparison for Businesses).
  451. Batchelder, Lily, and David Kamin. 2019. Taxing the Rich: Issues and Options. pp. 10, 37.
  452. Penn Wharton Budget Model. 2020. Senator Michael Bennet’s “The Real Deal” Tax Plan: Budgetary Effects.
  453. Leigh Thomas and David Lawder explain global minimum taxes for Reuters.
  454. The Tax Policy Center explains GILTI and provides an example of how it (and similar taxes) might work in practice.
  455. Clausing, Kimberly A. 2018. Profit Shifting before and after the Tax Cuts and Jobs Act. 73(4), National Tax Journal 1233–1266 (2020), UCLA School of Law, Law-Econ Research Paper No. 20-10.
    Mermin, Gordon B., Janet Holtzblatt, Surachai Khitatrakun, Chenxi Lu, Thorton Matheson, and Jeffrey Rohaly. 2020. An Updated Analysis of Former Vice President Biden’s Tax Proposals. Tax Policy Center.
  456. Committee for a Responsible Federal Budget provides an overview of accelerated depreciation in its blog post on Senator Max Baucus’s 2013 proposal.
  457. Batchelder, Lily L. 2017. Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing.
  458. U.S. Senate Committee on Finance. 2013. Baucus Works to Overhaul Outdated Tax Code.
  459. Congressional Budget Office. 2020. Options for Reducing the Deficit:2021-2030. Revenues Option 28— Impose a Tax on Emissions of Greenhouse Gases. p. 85.
  460. Rosenberg et al. 2018 find that rates of $73 per metric ton (+1.5 percent per year), $50 per metric ton (+2 percent per year), and $14 per metric ton (+3 percent per year) would raise $3.0 trillion, $2.1 trillion, and $742 billion respectively over ten years. Other proposals and revenue projections (in highest to lowest net revenue order) come from
    Horowitz et al. 2017, Pomerleau and Asen 2019, Huntley and Rico 2019, and Sobhani et al. 2019.Resources for the Future provides a Carbon Pricing Calculator which allows one to explore the impacts of a carbon tax on a variety of outcomes using their model.
    Fichtner 2019 makes the case for using carbon tax revenue to offset other taxes in order to promote economic growth.
  461. The Tax Policy Center explains the VAT and makes the case that it is “administratively superior to a retail sales tax.”
  462. In this regard, the VAT is considered regressive insofar as households with lower incomes spend a higher proportion of their income. Gale 2020 proposes a VAT which offsets regressivity by funding a universal basic income.
  463. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 27—Impose a 5 Percent Value-Added Tax. p. 84.
  464. Gale 2020 proposes a 10 percent VAT with certain exemptions and projects it would net $10.0 trillion over ten years. This projection includes the cost of increasing benefit payments in federal cash transfer programs to account for increased prices. If the revenue were used to fund a UIB at 20 percent of the federal poverty level ($2,576 per year, $215 per month in 2021), $2.9 trillion in new revenue would remain over ten years.
    Huntley et al. 2019 project a 1 percent VAT with certain exemptions and a progressive universal rebate would net $700 billion over ten years.
  465. The tax is levied on stocks when they are issued, only when they are exchanged between traders. Klein 2020 explains the financial transactions tax in further detail.
  466. As of February 2021, the financial transactions fee rate was “$22.10 per million of covered sales,” or 0.0021 percent.
  467. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 29—Impose a Tax on Financial Transactions. p. 86.
  468. Pollin et al. 2017 project that an FTT with rates of 0.5 percent of value for stock purchases, 0.1 percent of value for bond purchases, and 0.005 percent for derivative purchases along with a tax credit for moderate- to low-income filers would net $3.0 trillion in revenue over ten years. This figure is the product of 1.2 percent of GDP (from the paper) multiplied by CBO’s projected GDP as of July 2020.
    Batchelder and Kamin 2019 project $810 billion over ten years for a 0.1 percent FTT on all financial assets. Other projections come from Burman et al. 2016, Sammartino et al. 2016, Weiss and Kawano 2020, and Schulmeister 2008.
  469. This is the definition of net wealth put forth by Emmanuel Saez and Gabriel Zucman in How Would a Progressive Wealth Tax Work? Evidence from the Economics Literature. Saez and Zucman are considered two of the foremost experts on the wealth tax and assisted Senator Elizabeth Warren in developing one of her proposals for the 2020 presidential campaign.
  470. Breuninger, Kevin, and Tucker Higgins. 2019. Elizabeth Warren Proposes “Wealth Tax” on Americans with More Than $50 Million in Assets. CNBC.
  471. Asen, Elke. 2020. Wealth Taxes in Europe. The Tax Foundation.
  472. Batchelder and Kamin 2019 project that a 2 percent tax on the top 0.1 percent of net-wealth holders and a 3 percent tax on net wealth exceeding $1 billion over ten years would raise $6.7 trillion with no avoidance, $5.1 with 15 percent avoidance, and $3.5 trillion with 30 percent avoidance. They also project that a 2 percent tax on the top 1 percent of net-wealth holders would raise $3.3 trillion with no avoidance, $2.6 trillion with 15 percent avoidance, and $1.9 trillion with 30 percent avoidance.
    Other revenue projections include Li and Smith 2020 (analysis of two proposals), Leiserson 2020 (analysis of two proposals), Penn Wharton Budget Model 2020 (Sanders proposal), Saez and Zucman 2019, Penn Wharton Budget Model 2020 (Warren proposal), Gleckman 2019, and Sarin and Summers 2019 (which states that Warren’s proposal will bring in only 12–40 percent of projections).
  473. Gleckman 2019 discusses best practices for effectively taxing the rich, and Bunn 2021 discusses the difficulties other countries have faced in implementing their wealth taxes. The Tax Policy Center hosted a recorded event in 2019 that discussed the many questions around taxing wealth in detail.
  474. An accrual tax effectively repeals the stepped-up basis and is typically thought of as an alternative to a wealth tax due to its ability to tax asset growth every year.
  475. Under current law, net capital losses of up to $1,500 per individual per year can be deducted from taxable income. Net capital losses exceeding the limit can be carried over and deducted from taxable income in future years (Internal Revenue Service, Helpful Facts to Know about Capital Gains and Losses).
  476. Leiserson and McGrew 2019 provide an overview of mark-to-market taxation for the Washington Center for Equitable Growth. Eastman et al. 2019 evaluate a mark-to-market approach for the Tax Foundation.
  477. In 2019, Senator Ron Wyden (D-OR) made this proposal with certain exemptions to ensure that the tax affected the wealthiest taxpayers. His proposal also called for capital gains income to be taxed at the same rate as ordinary income.
  478. The Batchelder and Kamin 2019 analysis taxes capital gains as ordinary income and uses 39.6 percent as the top tax rate on ordinary income (plus 3.8 percent for the Medicare tax or the Net Investment Income Tax) and assumes a 15 percent avoidance rate for the revenue estimates listed here. The paper also shows revenue estimates for 0 percent avoidance and 30 percent avoidance.
  479. Penn Wharton Budget Model. 2020. Senator Michael Bennet’s “The Real Deal” Tax Plan: Budgetary Effects.
  480. Congressional Budget Office. 2018. Options for Reducing the Deficit: 2019–2028. p. 306.
  481. Erb, Kelly Phillips. 2015. Former IRS Commissioners Differ on Politics, United against Agency Cuts. Forbes.
  482. Congressional Budget Office. 2020. Options for Reducing the Deficit: 2021–2030. Revenues Option 31—Increase Appropriations for the Internal Revenue Service’s Enforcement Initiatives. p. 88.
  483. Faler, Brian. 2021. Biden Proposes Doubling IRS Workforce as Part of Plan to Snag Tax Cheats. Politico.
  484. Gibbs, Lawrence B., Fred T. Goldberg, Margaret M. Richardson, Charles O. Rossotti, and John Koskinen. 2021. Opinion: Five Former IRS Commissioners: Biden’s Proposal Would Create a Fairer Tax System. The Washington Post.
  485. Sarin, Natasha, Lawrence H. Summers, and Joe Kupferberg. 2020. Tax Reform for Progressivity: A Pragmatic Approach. The Hamilton Project.
  486. Fichtner et al. 2019 review the literature and conclude that “the aggregate cost of federal tax compliance for [U.S.] taxpayers probably exceeds $200 billion annually” and draw on IRS data in their discussion of the $458 billion in tax revenue per year that went uncollected between 2008 and 2010.