Authors: Janet C. Gornick, David Brady, Ive Marx, and Zachary Parolin
Institution: Stone Center Working Paper Series. no. 84
Date: April 2024
Abstract:
Income supports in the U.S. rely heavily on targeting based on means testing, categorical eligibility, or both. One result is that some groups are relatively underserved, often because they fall between the cracks of existing categories. One such group in the U.S. is non-elderly, nondisabled, childless adults. We assess poverty rates and poverty reduction—the extent to which taxes and transfers reduce market-generated poverty—in the U.S. compared to six other high-income countries: Canada, Czech Republic, Finland, Ireland, Netherlands, and the United Kingdom. Each of these countries reduces poverty more than does the U.S. and/or achieves lower post-tax-post-transfer poverty rates. Based on our cross-national comparative assessment—drawing on both microdata and country-level indicators—we offer some lessons for the U.S. First, the U.S. workforce is notable for its large share of low-wage workers. The U.S. could lower the incidence of low-paid work, and thus reduce poverty among the employed, by increasing the minimum wage at the federal and/or state and local levels, and by expanding the share of the workforce covered by collective agreements. Second, both income taxes and social contributions are pushing childless adults into poverty—more so in the U.S. than elsewhere. The U.S. could mitigate poverty among childless adults via any of a number of tax-related reforms. Third, our results indicate that U.S. income transfers, for this group, stand out in how meager they are. The U.S. could ameliorate poverty in this often-overlooked group by providing more-extensive income transfers, to those both in and out of work.