child care - Digital Library Collections

THE STATE OF AMERICA'S CHILDREN YEARBOOK 1998
for a family of three (see figure 1.4). Although the
minimum wage needs to be boosted further to
reach the above-poverty levels that existed during
most ofthe 1960s and 1970s, the 1996-97 increase
was well-targeted. According to the Economic Policy
Institute, 10 million workers (almost 9 percent
of the U.S. labor force) will benefit from the 90­
cent increase phased in over two years. These are
largely adult breadwinners in the lowest brackets of
the income scale. (Contrary to the assertion by
opponents of the increase that most minimum
wage workers are teens, more than 70 percent are
over 18.)
Tax relief. In 1997 Congress passed a child tax
credit that is worth $400 per child in 1998 and
rises to $500 per child in subsequent years. Some
45 million children in 27 million families are expected
to benefit from this credit. However, another
20 million children in families with too little
income to have a tax liability will not be helped.
Efforts by the Clinton Administration and
Democratic leaders in Congress succeeded in making
the new credit available to some moderateincome
working families who would not have benefited
from earlier House and Senate versions. As
enacted, the child tax credit is computed before the
Earned Income Tax Credit. Thus a two-parent family
with two children and an income of $23,000 in
1997 will get $675 from the credit to wipe out its
income tax liability and will still qualify for a
$1,668 refund through the EITC. Families with
three or more children can receive a higher child
tax credit, available as a refund, to the extent that
their Social Security payroll taxes exceed their
EITC. Ifthe credit had also been made refundable
for low-income families with fewer children, it
would have reached more poor children in working
families. As it stands, two-parent families with incomes
as high as $110,000 and single-parent families
with incomes up to $75,000 will benefit from
the credit.
As noted earlier, the EITC continues to be one
of the most significant forms of assistance to lowincome
working families. In 1996 the EITC was
worth $25 billion to 18.7 million low-income families-eonsiderably
more than the $16 billion disbursed
each year through the Temporary Assistance
for Needy Families (TANF) block grant, the
successor to AFDC. In 1997 families with two or
more children received a maximum EITC of
$3,656 if their earnings were between $9,140 and
Figure 1.4
Inadequacy of the Minimum Wage
Even after the 1997
increase in the
minimum wage,
earnings from a
130
120
110
100
Annual minimum wage earnings for full-time, year-round work
as a percentage of the poverty level for a family of three
Poverty line
full-time, year-round,
90
minimum wage job
do not come close to
80
70
60
lifting a three-person
family out of poverty.
o
1960
1965
1970
1975
1980
1985
1990
1995 1998
Source: U.S. Deportment of Commerce, Bureau of the Census. Calculations by Children's
Defense Fund.
6 CHILDREN'S DEFENSE FUND