Making Work Supports Work in Texas: How NCCP’s Family Resource Simulator Can Help Nancy K. Cauthen, Deputy Director Sarah Fass, Research Assistant February 22, 2006

Who We Are  NCCP is a non-partisan, public interest research organization at Columbia University’s Mailman School of Public Health.  NCCP uses research to promote the economic security, health, and well-being of America’s low- income children and families. National Center for Children in Poverty

Given the national context, questions for state policymakers include: 1.How effective are work supports in our state at helping low-wage workers make ends meet, i.e., to achieve income adequacy? 2.How well do our existing policies—and combinations of policies—encourage and reward employment? 3.Are there policy alternatives that would better support work? If so, what would they cost to implement? Making Work Supports Work

The Family Resource Simulator  To help state policymakers address these questions, NCCP developed a new policy analysis tool. –The FRS is a state-specific, interactive, web- based tool. –Simulators have been developed for 10 states and DC (available at nccp.org): AL, CT, DC, DE, GA, IL, MA, MD, NY, PA, TX Making Work Supports Work

Making Work Supports Work How the FRS Works The user creates a hypothetical family. Makes choices about:  City and state  Family characteristics  Child support income  Assets  Debts

What the FRS Does  It calculates the aggregate impact of federal, state, and local policies on family resources and expenses as earnings increase. Making Work Supports Work

Making Work Supports Work What the FRS Does (cont.) Includes these benefits:  Child care subsidies  Food stamps  Public health insurance  Section 8 housing vouchers  TANF cash assistance

Making Work Supports Work What the FRS Does (cont.) Includes these tax policies:  Federal, state, and local income taxes  Federal income tax credits (EITC, child/dependent care credit, child tax credit)  State and local income tax credits  Federal payroll taxes

Making Work Supports Work What the FRS Does (cont.) Includes these expenses:  Child care  Food  Health insurance  Housing  Transportation  Other necessities

What the FRS Does (cont.) FRS results show the interaction of:  Earnings (from $0 to state median income)  Public benefits (cash and in-kind)  Taxes  Basic living expenses Making Work Supports Work

Houston, TX: Single-Parent Family of Three Receiving TANF, child care subsidies, food stamps, public health insurance, and income tax credits

Houston, TX: Single-Parent Family of Three Receiving TANF, child care subsidies, food stamps, public health insurance, and income tax credits

Houston, TX: Single-Parent Family of Three Receiving TANF, child care subsidies, food stamps, public health insurance, and income tax credits

Houston, TX: Single-Parent Family of Three Receiving TANF, child care subsidies, food stamps, public health insurance, and income tax credits

Five Major Cities: Single-Parent Families of 3 Receiving food stamps, public health insurance, income tax credits

Making Work Supports Work  A new, collaborative project in which state and national partners formulate policy improvements that would better support low-wage workers and their families.  Goal: Engage key stakeholders to identify workable, state-specific policy solutions to reduce high marginal tax rates while not sacrificing income adequacy. Making Work Supports Work

Project Objectives  Identify aspects of the current structure of work support policies that lead to high marginal tax rates.  Identify policy alternatives that would better support low-wage workers and use NCCP’s FRS to simulate their effects.  Estimate the cost of policy alternatives. Making Work Supports Work

Making Work Supports Work in Texas  Complements Bridging the Gap project.  State and national partners: –Center for Public Policy Priorities –National Center for Children in Poverty  Similar projects underway in Illinois and Connecticut. Making Work Supports Work