Human Services News

Center on Budget and Policy Priorities:

In the early 1990s there was basic agreement that parents working full time should not have to raise their children in poverty.

The yardstick used to measure achievement of this goal was whether a minimum-wage earner in a family of four earned enough (after subtraction of payroll taxes), together with the Earned Income Tax Credit (EITC) and food stamps, to have an income at or above the poverty line.

As shown in included Table 1, this goal was reached in the late 1990s, as a result of an EITC increase enacted in 1993 and a minimum-wage increase enacted in 1996.

In 1998, a typical family of four with a full-time, minimum-wage worker had income above the poverty line when food stamps and EITC benefits were considered.

However, ten years of inflation have eroded the minimum wage to its lowest inflation-adjusted level in more than 50 years.

While an increase in the minimum wage would raise the earnings of many workers and lift some families above the poverty line, some minimum-wage workers would remain poor.

Low-wage jobs often have high turnover rates, and low-wage workers sometimes have to leave their jobs to care for an ill family member or when child care arrangements fall through.

Low-income working parents typically work close to full-time when they are employed, but have periods of joblessness over the course of the year.

The poverty line was established in the 1960s and was calculated by multiplying the cost of feeding a family by three, under the assumption that families spend, on average, one-third of their income on food.