Women increased their employment in response to the bonus. Overall, male participants did not. Given low employment rates among men without dependent children, this is discouraging. But among the subgroup of men who had been incarcerated or who were noncustodial parents ordered to pay child support, Paycheck Plus increased employment rates by a whopping 10 percent in the final year of the program.
These men face significant barriers to work, and Paycheck Plus suggests an expanded EITC might serve as a ladder of opportunity into employment for them.
Such ladders are likely to be increasingly necessary. As technology marches forward, workers with more skills — who can use technology to be more productive — will see their wages continue to increase, and lower-skilled workers will see their relative wages stagnate or fall. Low wages keep lesser-skilled individuals out of the labor market. The trends of the past several decades could continue, and even accelerate.
Americans will be under stronger pressure to decide on principle whether employment in itself is a good thing – and if so, how vigorously public policy should encourage it. Are we comfortable with the federal government providing, say, half of the financial rewards from working? Or more? What if that is what’s necessary to attract a large share of people without a college degree into the workforce?
The EITC uses social resources to encourage work and to help keep working households out of poverty. Paycheck Plus suggests that the EITC can help people who face particularly strong barriers to employment to find jobs and earn their own success. If wage growth does not accelerate for all income groups over the coming years, a growing battle line in public policy may be just how important work is, and how many resources should be committed to supporting it.
Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute. He is the editor of “The U.S. Labor Market: Questions and Challenges for Public Policy.”
This article was provided by Bloomberg News.