Work Requirements in Senate Budget Harm Low-Income People

Washington, D.C.—The Senate Budget Committee has passed a budget resolution that the full Senate will consider when it returns from recess on October 16. This proposal, as well as others from President Trump and the U.S. House of Representatives, would be deeply damaging to poor and low-income people by sacrificing critical revenue to subsidize more benefits for the wealthy. Congress should reject proposals like these that would significantly cut taxes for corporations and the wealthy, provide little if any benefit to low-income workers, and slash needed revenue for programs that support children, families, and individuals of modest means such as Temporary Assistance for Needy Families (TANF), Medicaid, the Children’s Health Insurance Program (CHIP), nutrition assistance, and the Earned Income Tax Credit (EITC).

The policies in this resolution are presented under the guise of economic growth, despite empirical evidence to the contrary. In reality, the budget proposal would exacerbate economic inequality that for decades has allowed the wealthiest individuals to claim all the benefits of increased productivity, while income for the middle class has stagnated. For example, the budget proposal would cut the top individual tax rate—which  benefits fewer than 1 in 100 households—and would lower taxes on “pass-through” income, providing the 400 highest income households with a windfall of $5.5 million each. Similarly, the proposal would lower the corporate tax rate despite economic evidence that corporate tax cuts benefit CEOs and investors, not workers.

CLASP is particularly concerned about Senator John Kennedy’s (R-LA) amendment to the budget resolution that would ease the path for Congress to add or expand so-called work requirements for all federal means-tested welfare programs. This is despite decades of experience showing that work requirements do very little to increase employment and economic security for those struggling to make ends meet. As the nonpartisan Congressional Budget Office has noted, states may use work requirements as a tool to "reduce enrollment and the associated costs."

We know these requirements are counterproductive and do not represent a serious effort to promote work because Federal laws already impose such requirements on people receiving cash assistance in TANF and in the Supplemental Nutrition Assistance Program (SNAP). Evidence from TANF and SNAP shows that work requirements do little to improve work outcomes. In fact these programs demonstrate that the main effect of work requirements is to discourage enrollment, keeping these critical benefits from those who need them the most. Low-wage workers may lose benefits simply because their employer won’t give them enough hours or because they fail to keep up with the paperwork needed to document changing shifts.

Ironically, so-called work requirements can make it harder for people to work. Research supports the common-sense idea that when additional red tape and bureaucracy force people to lose Medicaid or nutritional assistance, they are more likely to be sick or hungry and less likely to be able to work. Medicaid expansion enrollees from Ohio and Michigan reported that having Medicaid made it easier to look for employment and stay employed. Making critical supports more difficult to get could have the exact opposite effect on employment that supporters of work requirements claim to be pursuing.

If the Senate was serious about promoting work, it would adopt a budget that expands funding for child care assistance so that more families could afford the quality child care necessary to get and keep jobs. Moreover, they would invest sufficiently in job training so that workers could get the skills they need to successfully compete for jobs that pay family-sustaining wages.

Congress would also stop almost 8 million adults from being taxed into poverty by expanding the value of the EITC for adults without children. The EITC has enjoyed bipartisan support due to its pro-work effect and demonstrated benefits to families with children. However, low-wage workers without dependent children receive too small a benefit to offset their federal tax burden, meaning they are actually taxed into or deeper into poverty.

Most adults who are getting help from nutrition assistance and health insurance (Medicaid) are already working or are not expected to work due to age, disability, or caretaking responsibilities. They work at low-wage jobs that do not allow them to escape poverty and rarely provide health insurance. So-called work requirements that will make it even harder for these low-wage workers and their families to get help are solving the wrong problem. Congress should reject tax cuts for millionaires and instead provide needed help to those who are working hard but struggling to make ends meet.

For more information on work requirements, visit our Work and Public Benefits page.