Earned Income Tax Credit should be restored

lewis-hine-workers-ny A North Carolina household of two adults and two children must earn $52,275 annually to afford housing, food, child care, health care, transportation, taxes and other necessities, based on the Budget & Tax Center’s Living Income Standard (LIS) for 2014.

More than a third of two-adult, two-children households in the state earn less than that, and more than three-fourths of families with one adult and two children fall below the standard, which varies by family size.

The breakdown of households with incomes below the LIS:

  1. 59 percent are women;
  2.  56 percent are working age;
  3. 63 percent have a high school diploma or less education;
  4.  8 percent of the total white population lives below the LIS;
  5. 23 percent of the total Latino population is below LIS;
  6. and 14 percent of the African-American community.

The LIS provides a more comprehensive picture than more traditional economic measures of what it takes for a family to make ends meet. Under the official federal measure of poverty, a family of four would not be classified as needy unless it earned less than $23,550. The Federal Poverty Level does not take account of major expenses like child care or regional differences in the cost of living.

Policymakers have the tools to ensure that well-paying, high-quality jobs are created and that more families are able to earn a wage that can support their family. Among these strategies are:

  1. Raising the minimum wage and adjusting it automatically with inflation, as well as ensuring that wage standards are enforced;
  2. Reinstating the state Earned Income Tax Credit, which would boost the incomes of low-wage working families in North Carolina.
  3. Providing other effective supports for low-wage families to ensure that they can meet basic needs like health care, child care, and a nutritious diet.
  4. Requiring all taxpayer-supported jobs — including direct government employment, contracting and jobs created through subsidies to corporations — to meet a living income standard and provide benefits that can support retirement security.
  5. Investing in education at all levels and ensuring that workers can get skills training that meshes with job opportunities where they live.

Work not only allows individuals and families to meet most basic needs, it also opens the door to new opportunities and a sense of dignity and purpose, all of which have driven America’s economic growth for generations. Restoring the promise of work in well-paying jobs with benefits is the central challenge confronting North Carolina as the state maps its course out of the Great Recession. The LIS can be a measure of how successful the state is at creating high-quality jobs and it can support local efforts to understand that for families to make ends meet, their wages must match the costs of basic household goods.

Taken in part from an article by Alexandra Forter Sirota, Tazra Mitchell, and Cedric Johnson of the Budget & Tax Center