Tag: EITC

Interactive: A Look at Child Poverty across California

[vc_row][vc_column][vc_column_text]Governor Newsom’s first budget proposal included notable efforts to address poverty—especially child poverty—by increasing CalWORKs cash assistance grants, expanding assistance to low-income parents pursuing higher education, and further expanding the state’s Earned Income Tax Credit (CalEITC, which he proposed renaming the Working Families Tax Credit).

California has a troublingly high child poverty rate of 21.3%, or about 1.9 million children, according to our latest estimates from the California Poverty Measure (CPM). The CPM is a joint research effort between PPIC and the Stanford Center on Poverty and Inequality that, unlike official poverty metrics, takes into account the cost of living and benefits from social safety net programs.

While poverty rates in the state are also high, child poverty rates tend to be even higher, particularly in the most populous counties. For example, in Los Angeles County, 24.3% of all residents—but 27.8% of children—live in poverty. Altogether, 17 counties, 29 congressional districts, 21 senate districts, and 42 assembly districts have child poverty rates of more than about 20%.

State and federal policies play an important role in lowering child poverty. Our estimates indicate that over a third (35.3%) of children would be in poverty, were it not for programs like CalFresh food assistance, the federal and state Earned Income Tax Credits, and CalWORKs cash assistance. PPIC research also shows that new policies could reduce child poverty even further, although effects vary across the state. We will continue to track and analyze poverty and child poverty to provide this critical information to policymakers and stakeholders.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_raw_html]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[/vc_raw_html][/vc_column][/vc_row]

1 in 4 Child Care Workers in California Lives in Poverty

While preschools and child care providers in many parts of California are straining to fill a unmet need, the state’s child care workers are poorly paid and almost twice as likely to live in poverty than workers overall.

California’s child care workers earn significantly less than their school-based counterparts. Given that about 95% of child care workers not based in schools are women, and 53% are African American or Latina (compared with 43% of the overall workforce), women—particularly women of color—are most affected by low pay in the child care workforce.

UC Berkeley found that in 2017, the median hourly wage for child care workers in California was $12.29—just one-third the median wage for kindergarten teachers. Earnings among child care workers track more with low-wage workers across California (defined as those earning less than two-thirds of the median wage). These low wages translate to about a quarter of child care workers living in poverty as compared to 14% of all working adults (ages 18-64)—according to the California Poverty Measure, developed by PPIC and the Stanford Center on Poverty and Inequality.

Low wages are just one piece of the poverty puzzle. Relative to all working adults, child care workers are more likely to have only part-time work (more than a third, compared with less than a quarter of the overall workforce), which is associated with dramatically higher poverty rates than full-time employment. Many have completed some college credit or have an associate’s degree (44%), but just a fifth have a four-year degree, in a workforce where more than a third of working adults have four-year degrees. And while people working in child care are as likely to have children as the average working adult, those who do are more likely to be parenting alone (11%) than the average worker (6%).

The social safety net is an important part of helping child care workers make ends meet. Half of all child care workers benefit from at least one safety net program or tax credit, with the two largest being CalFresh (25%) and the federal Earned Income Tax Credit (37%). Without this assistance, poverty among child care workers would be even higher—2.5 points higher without the Earned Income Tax Credit, and 2.1 points without CalFresh. Minus all major safety net programs, one in three child care workers would live in poverty.

Recent policy changes could start to boost incomes for child care workers. Expanded eligibility for 18–24-year-olds for the state’s new Earned Income Tax Credit, starting in 2019, will specifically help the 20% of the workforce who are under 25. Steady increases in California’s minimum wage could improve earnings of child care workers employed by providers subject to minimum wage laws. Yet many workers are self-employed, providers often operate with limited incomes, and the cost of care itself is already high for low-income families. Minimum wage increases will likely result in a better-paid child care workforce only if they are accompanied by sector-wide changes aimed at making child care both affordable and accessible.

The needs of child care workers will affect efforts to improve and expand California’s complex child care system. While the state and federal governments have begun to increase access to child care with expanded programs and additional funding, improving living standards for child care workers will be a major challenge for California’s next governor.

California’s New Tax Credit

Starting this year, California tax filers with very low incomes from wages are now able to claim a tax credit that builds on the federal Earned Income Tax Credit (EITC). Californians without dependent children can claim the credit if their wages are less than about $7,000, and those with children can claim it if their wages are less than about $14,000.

California joins 25 other states that have their own EITCs. Since California’s credit is brand new, we do not yet know who will claim it. However, our research enables us to characterize the population of those likely eligible for the credit. These estimates are based on family characteristics and incomes reported for 2013.

About 3 million tax filers in California are eligible to claim the federal credit on behalf of themselves and their families. We project that roughly 600,000 filers will be eligible for the California EITC—or about a fifth of those eligible for the federal EITC. If we broaden the scope to include both filers and their family members who will also benefit from the credit, the number of Californians affected by the federal EITC increases to nearly 10 million and by the state credit to 2 million.

Single filers with dependents can generally claim the largest credit. Among those in this group who are eligible for the state EITC, we calculate that the state EITC amount is $932 on average and the federal EITC amount is $2,579, for a combined total of $3,511. This amounts to a 58% boost in earnings on average—20% from the state credit and 38% due to the federal credit. While these filers are working a substantial number of hours (29 hours per week on average), only 37% report working year round (48 weeks or more).

In contrast, single filers with dependents who are eligible only for the federal EITC because their earnings are too high to claim the state EITC see about a 16% increase in income. Compared to those who can claim the state EITC, those eligible only for the federal EITC typically work full time (40 hours a week on average) and year round (83% worked 48 weeks or more).

We know from the research literature that the federal EITC boosts family incomes both directly and indirectly by encouraging work. While it is still too early to assess the full impact of the new California EITC, this early glimpse suggests that the direct effects of the state EITC will be large, at least among a key group of filers eligible to claim the credit.