The Unfinished Work of “Making Work Pay”: Expanding the EITC for Childless Workers

By Lavanya Mohan and Elizabeth Lower-Basch

The city of New York recently announced a plan to test the effects of expanding the Earned Income Tax Credit (EITC) for low-income childless workers. The four-year pilot program will offer up to $2,000 in refunds for three consecutive years to participants earning $26,000 per year or less. The city is in the process of developing the details of the pilot, including phase-in and phase-out tax rates and age qualifications.

The EITC is one of the most effective anti-poverty and pro-work programs in the United States, lifting 5.7 million people out of poverty in 2011, including 3.1 million children. However, childless workers, including non-custodial parents, benefit the least from the federal EITC program, receiving no more than $475 a year. Moreover, they lose eligibility for the EITC if they earn just $14,340 or more a year. This means that a minimum wage worker working full-time, year round still earns too much to qualify for the EITC. According to Wider Opportunities for Women’s basic economic security table, in the US the average cost of living for a single childless worker (whose employer provides benefits) is $29,004, which is much higher than both the EITC income cut off and the current federal poverty threshold.

The New York City pilot program will test the possibility of using an expanded EITC for childless workers to fight poverty and promote work among adults without dependents, including noncustodial parents. Expanding the EITC to include noncustodial parents could promote financial security for children. The pilot program also hopes to address the disproportionate number of young men who are not participating in the labor market and/or those who work in low-wage jobs.

Current trends show a rise in low-wage jobs, particularly among low-income adults.  Therefore, expanding the EITC could increase both workforce participation among childless workers — especially those with low-wages and fewer skills – and income among this demographic. New York City’s pilot program, if expanded to the rest of the country, could benefit millions of households. While federal legislation has attempted to expand the EITC for childless workers, the New York City pilot program is the most promising new development in promoting employment and increased income for low-wage workers regardless of family status. This effort to “make work pay” is one that has great potential for working poor in the Big Apple and beyond.