well good afternoon and welcome everyone
my name is Barry Rabe I'm a professor here at the Ford school and I the
director of close-up the Center for local state and urban policy which was
one of the co-sponsors of today's event I want to begin by thanking my colleague
bonnie roberts for all of her hard work as always in organizing this event and i
also want to acknowledge our co-sponsors poverty solutions where we recognize the
very exciting things that are going on under loop Schafer's leadership and the
opportunity to work more and more in collaborative ways
I want to thank Luke the director of poverty solutions and our Ford school
students Omar Ansari and Ryan Ridge zero or zero excuse me who will sort through
questions that you can submit the notecards to our speaker after his talk
we've reserved about 25 minutes at the end of the session for Q&A we want to
have good discussion after what I'm sure will be a very interesting presentation
so please write any questions that you have on three about three by five cards
and staff will begin picking those up in about half an hour so just be mindful of
all of that yeah we do a number of events here at Ford and close-up has
done a fair number over the years as well for a long time I really felt on
today find some way to focus a bit on the unique governance circumstances of
our nation's capital Washington DC not quite a city not quite a state but with
interesting interesting policy issues and questions and I've often wanted for
us to find as a center ways to engage the topics related to the Earned Income
Tax Credit particularly sub federal variations and versions of it an issue
that has become even more ripe for conversation in this state since
Governor Whitmer proposed substantial changes to the Michigan AITC through was
probably better known proposals to elevate the Michigan gasoline tax to the
highest rate in the US lots of reasons to think about talking about these two
issues et Cie at the sub federal level but also a Washington DC
context I wanted to do these things for a long time but also for at least a few
years wanted to try to figure out someone to get Bradley Hardy here to
give a talk so you can argue today as a triple crown or a triple threat because
Bradley we are delighted to have you join us Bradley is an associate
professor in the School of Public Affairs at American University he is
currently a visiting scholar at the Russell Russell Sage in Washington DC he
is also a non-resident senior fellow in the economic Studies program at the
Brookings Institution and many of you know his work he is making a real impact
across a number of areas of social poverty policy considerations and was
just a natural person for both poverty solutions and close up to come together
in this event on a more personal note I actually got to meet Bradley for the
first time three years ago when I shared an office of courtesy office I had
during a sabbatical at American University down the hall and I realized
what an engaging thoughtful scholar he is in every sense of that term and just
a very positive and constructive presence and so I am just absolutely
delighted and honored to be able to welcome and introduce Bradley Hardy
Bradley welcome okay well Barry thank you for that introduction and
thanks to close up and poverty solutions for for hosting me and happy to kind of
talk about this this project that I have that's joint with Dan Mohammed and
Marcus Casey and a former student Ruta Samudra you know my work has broadly
been thinking about the social safety net and a lot of folks here at Ford go
to class and you're talking about these issues here as well social safety net
but then even thinking about social mobility what policy you know
interventions do we have and DC's been interesting because you know as it turns
out they've been quite aggressive on these sorts of policy interventions like
EITC but not limited to a ITC some other interventions as well here we're focused
on the earned income tax credit so you know
give some overview I think it's an interesting thing because depending on
the classes you're taking or your area of scholarship you might know a lot or a
little about the program so hopefully we'll bring everybody up to speed
throughout the talk okay and so you know the work relies on administrative tax
data in the city so we're grateful to the government of District of Columbia
as well as Upjohn Institute and Russell Sage for supporting the work and this is
kind of boilerplate that you know I'm going to be prescriptive in here talk
about income inequality talk about a lot of the trends we're seeing but you know
neither I nor our colleagues are speaking for the the government or or
mayor Bowser who just released her 2020 budget in in DC and a lot of interesting
issues there related to homelessness and and affordable housing policies so
interesting stuff going on in the city okay so at the federal level if you're a
student of poverty policies social welfare policy you know you'd find that
the the federal EITC it's been around for a while but it's undergone sort of
substantial expansions throughout the 80s and 90s and even 2000's typically
during tax reform efforts that's the federal level the the the city enacted
its own EITC and in 2001 but it was only 10% of whatever federal credit a worker
would receive but it's ratcheted up over the 2000s to equal 40 percent of
whatever federal Earned Income Tax Credit that the father receives today
and by our estimation it makes it the the most generous sub-national credit
there are some other states that have something akin to 40% on the docket but
it comes with a bunch of provisions that DC doesn't have we'll talk a bit more
about this in a couple of slides but really you can think of the Earned
Income Tax Credit as a wage subsidy it's just operating through the tax code
and so this is really making work pay a bit more creating positive incentives
for folks to work in the first place and there's been a whole battery of labor
economics and Social Policy Research more or less showing that this subsidy
this this tax credit does in fact incentivize work it boosts consumption
it does have quite a bit of benefit and then interestingly you know when you
talk to people about what they think welfare is even to this day it's quite
fascinating twenty nineteen and there are images that many citizens have of a
very generous cash welfare state and by and large with with maybe some some
state exceptions where there's more generosity that hasn't been the case
since about the mid to late 1990s standard welfare or TANF goes to a bunch
of important at times but non-cash activities may be you know job
assistance job training even some childcare subsidies transportation
subsidies but other states are doing a lot of work in welfare on a marriage
promotion but oftentimes not putting money into the cash benefit
interestingly then the Earned Income Tax Credit is actually the largest cash
transfer that's going to go to the poor in America so kind of a not well known
fact and you know they talk about burying the lede one thing I would say
though is that the one policy challenge and folks that forward would grapple
with this is that you only get this if you're working in the first place
so you can kind of imagine that there's a lot of benefits there's a lot of
buy-in to this program politically a lot of different reasons people have tended
to support the federal EITC but nonetheless this is part of a general
result that we see more and more sort of general welfare benefits going to folks
who are maybe poor and near poor and in many instances fewer
benefits going to folks who are in deep poverty and so there's folks like like
Luke who've done a lot of this interesting work thinking about folks
who are well below the federal poverty line right so that's a that's an
interesting fact that kind of carry with you as we move forward we want to
understand whether or not the the city-state intervention
combined to lower inequality with the federal EITC so you've got this DC
Earned Income Tax Credit you've got the federal EITC that's being
received concurrently does it reduce inequality and then we also wanted to
understand if we saw any evidence of increased earnings and income I'm going
to focus the limited time we have here really thinking through the the
inequality results we have and then kind of in closing I'm going to tell you
about sort of what we're thinking about in terms of income growth over the over
the 2000s many of you in this room will use secondary data sets like the current
population survey Michigan's panel study of income dynamics here we're using
actual tax return data for tax filers in the District of Columbia and so this has
a bunch of interesting opportunities but also some limitations and so you know we
do find pretty substantial post AITC reduction in inequality here's the good
news but we also see some interesting evidence that the the well-documented
transitions economically within DC are also showing up in this data so for
those of you who aren't really familiar with the context of the District of
Columbia we've experienced like rapid gentrification rapid neighborhood change
the neighborhood transition and it's really kind of a tale of of two sides
and so far as this has put quite a bit of strain on low and moderate income
residents and I'll show you a little bit of what this looks like in terms of the
composition of the city at the end of the talk but then on the other hand
the improved property tax base improved income tax base this actually allows the
city to be able to finance you know in our view the most generous sub-national
credit so both things are happening here so it's interesting you know I've taken
aside now it's interesting for me talking about tax policies like yeah
it's like really exhilarating right I love it I don't know how you all feel
but you know yeah welcome this morning I was a little sluggish and you know you
know is that dinner but very last night and this is not to do with taxes I said
well you know barium I starting to feel kind of allergic reaction
I get allergies I'm swelling and stuff like that to figure out you know what
was going on and you know I woke up this morning and I figured it out my granddad
my mom and my dad have PhDs from Michigan State Spartan through my I'm
allergic I didn't even know you know so I bear with me you know I was going to
say two people two people lead with that or in with that that's right I'm from
North Carolina so that's a whole nother issue but okay so moving forward now
you're awake now so if you go into the background on the ITC in the 70s there
is this larger conversation about tax burdens on low-income workers there were
also proposals percolating around things that look a lot like universal basic
income negative income tax experiments and so the EITC in some sense was born
out of these conversations that sort of said well you know at a minimum we could
we could really try to reduce this large implicit tax on on earnings and work as
people are cycling off of welfare and then hitting you know tax burdens that
we want to we want to know fi that and get rid of that as a disincentive
work and so then there's been this big literature at the federal level more or
less documenting that you know when you use the Earned Income Tax Credit as more
or less a proxy for an income shock so as a clever identification strategy to
kind of ask a bigger question about the role of income in driving educational
outcomes things like this we see the EITC does in fact promote higher
educational outcomes we see positive effects on what we'd call extensive
margin employment so you know right now in this country we have relatively low
and unemployment rates there's still a lingering conversation about when people
would call the labor participation rate so you've got folks who just aren't even
looking in the first place that's of concern to policy makers with a
particular attention to men in many parts of the country how do you get
people to then enter in the first place the ITC has generally been found to be
effective at that so-called extensive margin right so we know a lot of the
federal level and there have been great think tanks to think hard about what's
going on in terms of poverty reduction colleagues at the Center on Budget and
Policy Priorities they'll do a lot of these like accounting exercises you know
count before and after the ITC how many people are lifted above poverty but we
don't know as much at the sub-national level again as I said at the outset
you've got quite a bit going on which I'll try to summarize but we've seen the
federal credit have big expansions Tax Reform Act of 1986 had a big expansion
we had another big expansion well recently in the the Recovery Act during
the Great Recession but then concurrent with this you've had the DC credit
enacted around 2000 2001 and then have these kind of credit expansions
throughout the 2000s so I'll show you this in a table but they started off at
10 percent of the federal you move up to 25 percent of the federal and
mm – then you go to 35% of the federal credit you know 6 and then finally 40%
of the federal credit in 2009 and and so a lot of what we're doing in our our
studies because we've gotten some some work done prior to this project and we
have future ideas just to kind of understand how these expansions over the
2000s have related to issues like inequality like mobility across the city
and and really just trying to do an evaluation in a test case that might
represent where some policymakers would want to go with a more generous credit
in their own States or even nationally okay so what we're showing in the map
here is that over half the states have now enacted supplemental EIT sees now
the the gold-coloured ones are not refundable right so you know Virginia
for example they're just trying to offset any tax burden that you have so
the the sorts of mechanisms and effects that you know we're talking about from
the federal EITC you know you might surmise that you don't expect that from
something that's non refundable some local context you guys here in Michigan
to have an Earned Income Credit that's equal to 6 percent of the federal EITC I
was having a nice conversation this morning and close up where it came to my
attention that 6% is a relatively new and lower level and that puts you all an
interesting company because North Carolina my home state is to my
knowledge the the other state that actually had any ITC but in the case of
North Carolina I think they removed it all together and so that's this sort of
an interesting context to think about another piece of this context we're
thinking about is that at least in prior years you might not know this but you
know this is impressive look at all these states that are due
the stuff on the ITC California is doing some expansions as well
but it turns out that states can use their their welfare TANF Block Grants
and particularly the maintenance of effort sub component to fund the actual
stay di t sees themselves not all do it Michigan was doing this in in previous
years and so that's just sort of an interesting interplay to consider as we
think about earned income tax credits alongside other state level policies
TANF minimum wages that that in some instances you're actually drawing from
parts of that DEP that grant that Block Grant to support this this other social
policy intervention okay so again if you're someone who's in the
weeds of like Tax Policy Center tables and things like that then this is a
familiar table but the main thing I'd want to call your attention to is the
following I told you that the the EITC
incentivizes work and so really what's happening is that at the initial phase
in or beginning point of the EITC you can think about this as the going from
no earnings to one dollar earned if we looked at a maybe a single parent with
two kids the way you read this is that 40 cents is subsidized on every dollar
earned right so a dollar earn becomes a dollar 40 up to basically this minimum
income just beyond $13,000 at which point this family finds themselves
receiving the maximum EITC of about $5,500 and so like any other social
program there's some interesting graphics by jean sterling and co-authors
they basically show that with our programs these all have so-called
benefit reduction rates we phase out the program program doesn't go on
indefinitely what goes up must come down and so the program phases out at around
$18,000 again keep in mind this is tax year 2014 you lose 21 cents of this
benefit for every dollar earned and you'd see this same sort of phase-out in
other social programs you know snap food stamp benefits for example right but
then importantly if we look at this last dollar amount an interesting point here
is that for better or worse this is a program that's hitting families that are
perhaps what we think of as near poor moderate income but but not strictly
poor in the classic sense right so so this is kind of how the program's
designed I think I have an interesting little slide in the back the classic
stair-step figure for EITC I'm not convinced that that's more or less
helpful sometimes okay so the policy context here is that you had really
engaged nonprofit actors DC fiscal policy institute they are kind of a
subset of the Center on Budget and Policy Priorities
and the DC FBI was instrumental in pushing the DC Council and the mayor at
the time Anthony Williams to enact a state EITC and I think this context is
important your public administration and policy students these things don't just
happen there's actual political pressure and put forth on policymakers and so
this is just what I was talking about before that you you see the credit
expanding over the 2000s it is worth noting that we do now have a childless
EITC credit that's been around for a couple years that that's also not been
evaluated also worth noting that as we're talking about these DC level
changes throughout the tooth thousands you know you still do have the
federal credit that's being adjusted upward for inflation and you also have
some expansions during the Recovery Act during the Great Recession that that
made the credit a bit more generous for large large families right so I'm just
showing you DC policy variation but there's other stuff going on to be sure again some subset of the room travels
back and forth to DC quite a bit I'll make the general conjecture that for
people who visit DC they're oftentimes spending time in the upper northwest
part of the city that's not the entire city though and there's a great rich
history east of the river and east of the river I would say has greater
heterogeneity and income these are the wards seven and eight east of the
Anacostia River and by no stretch are those wards sort of dominated by poverty
but nonetheless the highest poverty census tracts are situated in Ward 7 and
8 and so I'll show you some inequality results that more or less confirmed that
the inequality reduction has its largest impact actually east of the river and
some other stuff having to do with where the the composition of EITC filers are
seen to be shifting over the period and I think largely it kind of follows what
you might expect ok so again you know if you put your secondary data hat on
you're thinking about drawing data on the population of interest in this area
we've thought hard about what would sort of be thought of as the modal poverty
population and this has traditionally been families headed by one adult
typically that adults a woman and so we follow in the tradition of this
literature to think hard about trying to isolate these single parents we also
compare two married families or married Pam
parents again it's a bit in the weeds but for our purposes it's not a
secondary data set so we're taking tax definitions and trying to kind of bring
them in to what we would think of in the secondary data world so folks who are
filing as household heads are typically these single parents and we're gonna
refer to them as such in our results and then we're going to look at people who
are married filing jointly to additional considerations that the research team
continues to grapple with are that we were thinking about this as on the one
hand looking at families that stay in the city all 14 years and then we have
another version of this data where we allow for people to be in and out of the
sample over that time period part of the thinking on this is that there's a whole
literature that's worried about welfare migration more generally so if I'm
really generous in the District of Columbia and you live in Virginia maybe
you'd move to DC to take advantage of the more generous social policy regime
my reading of that literature is that there's there's very weak evidence that
that's an actual problem policymakers who I've interacted with have more so
voiced concerns about city level policies may be including DC's emergency
shelter law basically it particularly during cold cold weather days if you are
not housed if you're homeless you're guaranteed some some housing benefit or
provision again I don't know that there's actually evidence that there's
serious welfare migration there but but nonetheless in response to this on the
one hand we we try to think about people who are in the sample all 14 years but
there's concerns if this is kind of overly restrictive right these are kind
of things that you think about when you're doing this sort of research okay
so a couple thing is to kind of call your attention to here like I just
mentioned this balance versus unbalanced data they really are different samples
and importantly if we call attention to the first two columns the first point to
make is that you think about mean income and earnings that you would see at the
national level at the mean and median DC looks quite a bit better you can see
that in the mean statistics for adjusted gross income or earnings you got very
high earners and you could you could start to tell stories about kind of the
lawyer lobbyists class and in DC that that are driving up that mean relative
to what you would see in a typical metropolitan area right it doesn't look
as distorted at the median but but nonetheless you know we see there's
pretty stark differences here if we look at these sample statistics for so-called
single-parent households either again the head of household filers comparing
across groups you know the first thing you see is that well you know in general
most filers aren't receiving much if any AITC
but when we restrict to this kind of sample group of interest we start to see
that you know on average federal and city level EITC receive does start to
jump up a bit as we would expect right but the main takeaway here is that we're
talking about a pretty advantaged sample overall but amid a city where we've
typically had steady state poverty of about 20 percent so there is a quite a
bit of income inequality in the city pockets of poverty stew the river a
large worker base that does perform services in the service economy food
service economies so on and so forth married households really don't have
nearly as much meaningful AITC credit levels they do you participate
but the levels tend to be far far lower and and so this is just a sample where
if anything you know I know it's a bunch of numbers but that's pretty big for for
a city right over $200,000 whether you're looking unbalanced or balanced so
that's the quite affluent part of our sample in general we also show the
sample statistics for tax filing units that are below the the middle of the
earnings distribution and and we think of this as an important group to isolate
mainly because when we're thinking about some inequality reduction and I'm going
to show you some basically some rank rank changes along the distribution
later on you'd be worried that if you're just looking at overall any quality
reductions say the difference in income xander nning x' between the 90th the top
of the earnings our income distribution versus the tenth that even with a really
generous social policy intervention I mean you know I'm showing you these
these statistics for AGI and earnings you're not gonna move you're not going
to move the needle that much on the 90/10 right so thinking about how we
maybe compare the relative performance of EITC recipients as compared to the
middle of the earnings distribution and again you can see that the middle and in
my own view starts to look a bit more like America frankly you know and with
respect to AGI adjusted gross income and earnings okay so first off one of the things we find
just looking over the period is that the EITC is providing something on the order
of five to six thousand dollars of benefits if we kind of pool all the
recipients together and you know thinking about what this means as a as a
subset of overall earnings it's it's quite substantial and if you kind of
call some attention to this orange bar running through as you see it getting a
bit thicker you know this is kind of concurring with the federal credit
moving up a bit but also importantly those city level expansions that I was
talking about earlier those are occurring in the data as well
a similar snapshot if we focus on again single parents I'm using the head of
household tax definition here you get two conclusions here like I kind of
showed you before that largely the impacted tax unit are these head of
households single parent filing units you know there's something else I want
to mention while I'm on this slide and it'll it'll come up a bit later I think
but while I'm thinking about it the the tax data allow us to leverage a lot of
interesting information including across the city we do know from the American
Community Survey current population survey that the the modal a I T C
recipient is a black woman with children who's working this is consistent with
the demographics of DC DC just stopped being majority black maybe within the
last year or two it's still the largest racial group within the city but one of
the challenges with this research endeavor using the tax data is that on
the one hand we have quite a bit of confidence in the
earnings and income that people are reporting but then on the other hand we
don't have interesting demographics and so in a lot of my work I'm using the
secondary data sets and often times I prefer those because you know I care
about the demographics I care about maybe the reported educational
attainment of the individuals and families you know care about a whole
range of other issues and self-reported characteristics that the family might
bring to the surveyor and that's that's not contained in this data so there's
things that we can do that are nice but there are limitations and so you know
the research team we view this as you know we're one piece of the puzzle kind
of trying to triangulate around what's going on in DC we can't do it with one
data set though so this is just one piece of the puzzle here we're following
a method that Pat Bayer and Kerwin Charles implemented and looking at
basically cross-race earnings inequality and basically here what we want to do is
think about EW I see recipients and put them in the bins with respect to people
who are receiving anywhere from the smallest to the largest
EW I see credits and we want to understand whether and how that EITC
credit move then moves them up the rank if we were to list people from Lois
Turner to highest earner right and so in this exercise we're doing it for our two
data sets of interest the balanced and the unbalanced and as I was saying
before these really are different samples and so in this case what I'd
like to call your attention to is that for the largest di T C credit on average
you're moving people three percentile points in the balanced panel these are
folks who are forced to live in the city and our data kind of criteria in 14 out
of 14 years and then in the unbalanced panel were actually moving them 5% out
points and so you know this is non-trivial and
yet at the same time as I mentioned before we might still think that that's
not quite the right distribution to think about in terms of whether and how
the the EITC is moving people up that earnings rank and so when we just cut
that sample off to be a Nadder below 50% of the earnings distribution when we
really focus attention on folks who are receiving the largest EITC s we see
anywhere from 5% I'll point move to 11% I'll point move up the earnings
distribution and so again part of what we're trying to get a feel for in this
exercise is just the different ways in which the EITC is having this inequality
reduction right and so clearly what's happening here then is that you have
people who are receiving generous EITC s who are then moving a bit above people
who are just outside of qualifying for the credit right and all the while as
you're listening to me present this it's worthwhile considering that unlike say a
monthly cash benefit or monthly snap benefit I haven't done my taxes yet
actually you get it at tax time and you might get a little bit before tax time
if you use a tax preparation service but this is lumpy and so if you're thinking
about consumption smoothing thinking about sort of broader so well-being
implications even as I'm showing you some I think you know important
inequality reductions it's not necessarily clear if we prefer the lumpy
to the smooth there's been some interesting qualitative research that's
documented the fact that in many instances families love receiving the
credit as a lump sum that it feels like precautionary savings it's an
opportunity to frankly feel like you did save
some important expenses so there's been a lot of good work in this area kind of
thinking about whether it's actually better to think about this in some sort
of smoothed out context maybe we'll talk about that bit more in the in the QA
okay so I'm going to show you now what are more like sort of standard
inequality trend figures a lot of people would put up the Gini coefficient or a
tile you know this is a bit more transparent just comparing earnings at
the 50th of middle of the income earnings distribution relative to the
10th percentile of the earnings distribution doing the 50th percentile
the earnings distribution relative to the 25th and so if we call attention to
the to the blue trend the top one comparing blue to orange is just
thinking about this 50 10 ratio before accounting for the DC and federal EITC
and then after so like this is doing what you expect it to do there's an
inequality reduction it might be a bit subtle from the seats but the inequality
reduction starts off and holds at around 15% but then that that gap closes to
more like 12 percent by the end of the period and then importantly you see some
evidence of some overall trend increase in inequality occurring note 2 that the
reduction from 50 to 25 pre and post EITC is a pretty trivial about 2% but
where we've begun to push and I think we're gonna do more interesting work is
to kind of think about what's going on within the city and I think there's a
lot of work that is now acknowledging whether it's the opportunity insights
group they're not the first just acknowledging substantial heterogeneity
or sort of diversity within an area you know it's very need sometimes to talk
about you know the north versus the south or you know
Durham North Carolina versus Fayetteville where Fort Bragg is you
know actually some of the interesting variation is within Durham County
pockets of poverty near downtown not far from Duke University parts of suburban
Durham that are that are quite affluent and have residents who work in the
Research Triangle Park these differences matter in DC they matter we see
inequality reduction from the Earned Income Credit
in what is really the more affluent part of DC the the west part and also pool
some parts of Northeast DC but we still see the the overall trend in curious
inequality when we compared to those wards 7 & 8 that I highlighted at the
outset a couple things jump out first of all in this pretty transparent measure
of inequality you learned that one inequality is just lower overall in
these poor relatively poorer or you know moderate income parts of the city the
post tax or post EITC inequality reduction is also larger and sort of
absolute percentage terms as well that's both the case for the fifty ten and the
50 25 so you know in a sense I told you that this was a big refundable tax
credit and in some respects this is doing what you might expect it to do now
again another piece running in the background is that you know I described
Ward 7 & 8 as poorer on the other hand Ward 7 and 8 it's likely to be where
many of us in this room could afford a house maybe if we were to try to move to
DC right now so you've got a lot of economic transition occurring in that
side of the city and you got to be careful painting with too wide of a
brush but nonetheless there are certainly census tracts that have
relatively deep and persistent poverty okay so you know I want to close out
with two additional figures here there's a report that came out just today in the
Washington Post more or less saying what I think a lot of us social scientists
have known which is that DC's experienced quite a bit of neighborhood
transition and in fact it's just heightened over the last couple of years co-author dan Muhammad put together this
really interesting graphic and the main point to make is that at the outset of
the Earned Income Tax Credit in 2001 you still saw quite a bit of a ITC use in
Ward seven and eight this is a bit subtle here but if you look at by the
end of the period what you'll notice is that even more EITC use has moved east
of the river and so again this is kind of consistent with what you would think
which is that if people do want to stay in DC they are moving to the relatively
more affordable side of the city this also has all sorts of interesting
implications about sort of geographic access to jobs when most of you visit DC
you will stay in hotels and eat in restaurants that are more likely to be
in the West maybe northeastern part of the city so a
lot of the job opportunities are going to be across town as well
so we see the shifting of low and moderate income the last thing I'll show
you is that the likelihood of actually receiving the EITC has dropped from
almost 20% likelihood to just over maybe 12% so again this is sort of evidence
that in the overall sample a lower lower proportion of the filing universe or
even qualifying for this in the first place
so this is also some descriptive evidence again it doesn't paint the
whole picture but it's certainly consistent with the notion that just the
overall composition of the city is changing quite a bit and it's something
to keep an eye on this is actually an interesting one that
the team kind of wants to push a bit further on okay so we talked about
inequality and the role of the larger EITC as a result of DC supplement this
is just inside of $9,000 at the max back in 2014 and I showed you that we did see
some posts EITC inequality reduction but nonetheless it's rising throughout the
city overall in terms of some future work that we're thinking about you know
at the outset I kind of described for you that we really had these two stark
choices that we made for folks who are concerned about welfare migration we
made this decision to restrict the sample to people who were in 14 out of
14 years on the one hand that might also be a bit too restrictive so we also have
some samples where we basically don't impose that mobility restriction if
we're thinking about something in the middle and I was actually talking with
Luke about this maybe it's five years maybe it's six years in sample we're
playing with these these sorts of decisions the other piece is that you
know we've got a series of regression models that we've been working with for
months and months now but we've really been thinking about hard sort of what do
we think we're picking up particularly given the last slide that I showed you
where the composition of the city itself is actually just shifting quite a bit
and so you know the team we've been talking about some other approaches may
be like simulated instruments and that's true sort of a fancy way of saying if we
could sort of take a snapshot of tax filers and residents at the beginning of
the period and then more or less simulate what we think they would look
like in 2014 after receiving these benefits that might be an interesting
way to kind of think harder about what this sort of policy is doing with
respect to income growth so that's kind of a side from the inequality stuff I
showed you and then finally we just want to continue to push
this sort of neighborhood context you know that I'm telling you about and
these these maps and so not just thinking about inequality but
differences in crime interactions with TANF policy and minimum wages DC is also
going to a $15 minimum wage by 2020 2021 so I've got some separate work looking
at that interestingly and some of our forecasting models we do show that the
EITC along with minimum wages is a net net benefit you might reduce the EITC a
little bit but on balance those workers tend to be better off overall so you
know again we're trying to push in these directions last slide and just to kind
of consider that you know we do see an inequality reduction here I'm a little
more circumspect about the increase in income and I didn't even really talk
much about those models I didn't show those a bit more circumspect there but I
think it's worth considering that you know the EITC is quite popular sort of
on a relatively bipartisan basis if I'm going to generalize many liberals or
progressives like it because it's sort of a wage supplement wage subsidy many
conservatives tend to like it because it it promotes work and only goes to people
who are working in the first place ostensibly but how do you compete with
cities where there's really pronounced cost-of-living issues right and in that
sense for a subset of the population that's not really receiving much in the
way of historical earnings growth like you know Ford grads are going to go out
and on average you're going to see a rising earnings profile but a lot of
folks who are operating kind of at the the lower earnings end of the of the
labor market important work but work that's not paying as much these sorts of
supports like EITC look increasingly permanent just kind of a permanent part
of the package that people have and then again just a reminder that this is a
generous benefit that you have no access to if you're not working in the first
place so it's a qualified yes in terms of inequality reduction but in our view
with quite a few caveats so that's the project it's it's multi-year there's a
bunch of different things we're trying to do so you know the questions and
suggestions are are not only helpful but they would they would enter into the
sorts of things we want to improve upon so thanks thank you so much for coming
and speaking to us today and thank you to close up and poverty solutions for
hosting this event my name is Amara and I'm a graduating
master's in public policy student here at the University of Michigan and we've
got some really interesting questions from the audience so yeah I think we're
gonna move on to Q&A okay so the first question that the audience has posed to
you is if you have any data on how many tax filers who would actually be
qualified for the EITC but end up not taking advantage of it yeah questions so
I do not have that number for the District of Columbia but nationally
there's been some good work I want to say it Maggie Jones yeah so Maggie Jones
has this work I'm looking at Kathy Michael Moore who does a lot of the ITC
work also among others but I think it's around 80% that that
actually are participating and that's at the national level and if you think of
the EITC as a social program and that could be your own argument it's
administered to the tax system but 80 percent looks you know quite good
relative to other other welfare programs hi my name is Ryan Ruggiero my first
year master public policy student a next question there's evidence of a lot of
low income workers in Michigan that they don't know they are eligible for the
state's CITC would there be any way to use the nudge movement to have these
people to fall into claiming the EITC that's interesting so
you know again this is I'm gonna answer kind of like the question I wish I was
asked here right so I think there's a lot of people who would wonder about a
regime where we had a tax system that really kind of automatically took care
of this for people so you know just in general like you think about being
automated into savings a tax system where you you weren't really having to
go in and make that that filing choice I would say that for Michigan and the
other states there are interesting questions about nonprofit outreach so
many of you are going to go to work and nonprofits
many of the nonprofits in DC engage in very aggressive outreach billboards on
buses so on and so forth free tax preparation that that moves the needle
quite a bit on getting people to know that they qualify for this benefit
another issue which again it's it's kind of a splashy topic right now but to the
degree that you have people who are engaged in it's not 1099 work
necessarily but its its contract work or whatever the form on the you know
contract work gig economy work that is growing I think it's easy to overstate
the degree to which that's a factor but you do have this complexity where you
know on the one hand if you have your your big box employer who's sending you
the forms they might even have folks who are letting you know that you qualify
for the EITC if you're on your own you may or may not know this be aware of it
so I think that's also kind of a running issue those are the sorts of things
you'd want to confront to get participation up yeah the next question at 6% Michigan's EITC
is very small when compared with DC's 40% is there a low point cutoff where an
ET ITC policy just isn't even worth it or are there other benefits to having an
AIT C policy even if it falls at a lower rate so my own view and I think opinions
would vary here but my own view is that I mean if the EITC is offsetting tax
liability for for low and moderate wage workers that still seems like sensible
public policy and if you have that architecture in place I mean I'm a fan
of the the policy so if you have that architecture in place then it can be
ratcheted up over time right so you know my own view is that look there's a
political economy process that we're operating within and you guys were what
20% at one point so you know six is less than 20 but I think it still it still
matters I do think that it starts to raise an interesting question about a
program that's now defunct called advanced EITC so advanced EITC was
giving filers the option to receive their Earned Income Credit more or less
on a monthly basis my sense is that it wasn't heavily hiked there wasn't a lot
of information about it so there's quite a bit of low participation I mean a pin
with white brush here but it might raise the question about whether or not at
sufficiently high or low levels do some families then maybe prefer figure well
you know this isn't that big of a bump at tax time maybe I do want to kind of
smooth out on the order of you know 25 bucks a month or something like that
maybe I'd rather have that so I don't think six is too small to be meaningful
no 6 is greater than zero in your earlier map some of the poorest
states in the country in Appalachia West Virginia Mississippi for example it
looked like they did not have the EITC credit at the state level do you know
why that is and as a follow up do you have any advice or best practices you
would suggest to these states who would want to implement an EITC or states who
would want to improve their credit yeah so I don't know that blend well thinking
about how I want to say this I mean this is consistent with a range of social
policies that in the labor market context kind of skew towards being a bit
less generous so this would have a broader conversation about sort of
unionization worker protections wage theft minimum wages et Cie and if you
were pretty confident about this if you to kind of run that the very
parsimonious regression on where are the states that have higher minimum wages
above the national average states that have supplemental EITC s the south is
going to come in as a negative there so that's just kind of how it's been I
think that as far as guidance goes I think that at the same time you've got
the EITC as being a relatively popular social policy intervention look across
the ideological spectrum if you looked at Paul Ryan's big poverty
recommendation plan from maybe 2 or so years ago he speaks glowingly about CITC
expansions and so think what you will about the the Ryan opportunity grants
and that idea it does signal that among the things you
might find some support for any ITC could have some relative traction
I guess the other point to make though is that there's substantial
heterogeneity within the southeast and so I mentioned here that Montgomery
County New York City they have EITC s it's worth mentioning that their cities
that are trying to do minimum wages there are probably cities within the
South Birmingham comes to mind that tried to do this they actually got shot
down by the state legislature I guess I mean to say that the tax base may or may
not be designed for a city to do this but I do think that there's substantial
kind of diversity of thought within the southeast such that you probably do have
quite a bit of support for this just a matter of whether or not you can get
that done through it through a governor and a legislature so you showed us
earlier a graph that depicted a decrease in inequality for those who earned more
earned more because of the EITC what are your thoughts on how it has impacted
affordability and has there been has the gap in affordability especially when it
comes to housing and food had all been reduced because of the EITC so I think
that in DC we don't know this is the kind of thing that you know the research
team you want to do more work on a subset of the team did do a study on
this back in 2016 we were specifically trying to understand whether the
combined EITC DC and federal reduced basically mobility out of a
transitioning neighborhood a secularly people refer to it as a gentrifying
neighborhood and we basically found that the answer was no the credit doesn't
seem to buffer against you know low and moderate incomes moving out of these
these neighborhoods that are getting more and more expensive so and I think
this is consistent with the the scale of price increases so many of the
professorial in Washington DC don't actually live in
Washington DC and you know housing benefits are not an entitlement
so just because you qualify for a voucher doesn't mean you get one and
there's big housing affordable housing shortages in DC mayor Bowser was just
proposing to ratchet up money into the sort of that housing assistance fund
from a hundred million to a hundred and thirty million and while that sounds
like a big number what it translate to translates to in terms of actual units
there's more work to be done there yeah that's good questions our undocumented
workers eligible for a ITC and if so how do they claim it that is a good question
that I am actually not sure about and so that's one of those that thank you to
the audience or someone online I'm going to go back and look into that one I mean
from the purposes of the tax office they need a valid tax ID or social so it's
you know you can't rule out in a sense that that this is coming to folks but
but I'm not sure yeah that's a good question
DC recently eliminated its 60 month time limit for TANF recipients how should the
city prioritize efforts to expand safety net programs like TANF and the EITC
which may serve different populations sure well I mean I think in part DC in
the other states let's let's let's pretend DC's a state right now the DC
and the other states are also constrained by federal TANF policy that
hasn't done much to update the size of the actual Block Grant itself and so if
you think about what these Block Grants look like in 1996 dollars that they've
really not gone up much if at all they haven't had we keep on pushing TANF
reform you know down the road a bit further right and kicking the
and so you know part of my response is that you know part of DC's ability to do
more for its residents through these programs is also tied to having a you
know a TANF program that kind of allows for the resources there that said I like
the fact that relative to other states DC tends to and my view put quite a bit
of the the Block Grant into actual cash assistance kind of a again I was
alluding to this earlier many states after 1996 maybe especially the late 90s
if you looked at the proportion of the Block Grant allocated to so-called basic
assistance that's actual cash many states went from allocating say 70 or 80
percent to basic to well under maybe twenty fifteen percent nice work by
Marion Butler and Hillary Hoynes looking at this and a Hamilton paper so I guess
what I'm saying is I think DC is doing relatively well on Tanith I think
they're doing relatively well on EITC my own opinion is that kind of the missing
link here is housing and and so this isn't a paper about housing but the the
questioner questioner rightly notes that how do these things all work together there's four people here who would speak
to this even more authoritative Lee in general we're getting out of the
business of running public housing in the u.s.
More voucher based systems many
of the low low income and affordable housing interventions work with you know
private developers and so you get these deals where you had a you had a plot of
land where a hundred low-income workers had housing and with the new development
oftentimes it'll be some some sub component of that maybe maybe thirty
maybe fifty right so you worry about that sort of piece so you know if I had
to wave a wand I'd say big focus on affordable housing would be key single mothers experience meaningful
costs associated with working which as we know is a requirement for the EITC
including transportation and especially childcare costs which are very high is
the benefit of the EITC large enough to offset these costs I don't think so
anyway these are like really hard questions I don't think so though I
think that this is one of these examples where metaphorically
you know advil is a great medicine advil is not going to solve your broken ankle
though and sometimes like metaphorically meaning that we push something to do
more than it's designed to do again TANF reform we could do more on cash
assistance housing right now is not an entitlement you could think about some
interesting proposals one from Jim's iliac at Kentucky also a Hamilton
project paper where he proposes bumping up food stamp benefits SNAP benefits and
he links it to higher transportation costs that the the food basket and
calculations for how we designed snap is really thought of in a time period when
more families poor and non poor we're going to do more and more food
preparation at home commuting times are probably a bit lower
I mean stylized kind of fact in DC there's been some great kind of research
and reporting looking at you know people who ride this popular bus line sixteenth
Street and these are kind of second and third
shift workers and they document how folks are taking two and even three
hours to get home in Maryland so I think that the answer is no the EITC in my
opinion isn't enough but there's other programs that could be beefed up to
maybe meet that need given that the EITC necessitates that
the beneficiary work it often leaves out people who often don't have the
resources to find work and by extension cannot receive AITC benefits
are there ways that we can improve on a ITC or rebrand it reframe it restructure
it so that those who consistently look for employment opportunities but don't
find them can receive the help they need yeah no I think that's a great question
and again you all were here as witnesses this is not a talk about TANF but
nonetheless I do think this is another case where cash welfare protocol welfare
program Temporary Assistance for Needy Families that question to me really kind
of maps into things that that program can do so for example what are the
structures in place to allow for and provide for job training right now it's
something like typically 12 months of Education can be counted as a work
activity and if you start to think about some of the certificates that people
could sort of actually get into to increase their work readiness for you
know sort of a high quality job some of them might take a bit more than 12
months what type of safety net do we provide for job training right now
believe it or not you don't have a lot of coordination in all states between
what's called we OA within the Department of Labor
they provide sort of educational opportunities and job training for
disadvantaged workers economically economically disadvantaged workers you
don't have a lot of coordination with TANF in some states and you know I've
argued this in a little policy brief from a few years ago if you think about
your own story you or maybe some of the friends you had did benefit from
scholarships maybe family and friends who would even provide some safety net
while you were training and upgrading your skills maybe you have access to
student loans so I think that part of the question about how we get people who
are not working into work involves bringing the bear the TANF program using
that in innovative ways and there's also been some interesting work including
some stuff out of AEI where the policy prescriptions for TANF even include
good jobs of last resort so you know there's been a lot of talk about federal
job guarantees among other kind of progressive policy interventions this
isn't that but it does kind of get it the questioners point that you know what
do you do for people who maybe are discouraged who are like trying to work
they're having a hard time finding it so I think it's a great question thank you
so much for all your responses today and we have one final question what are
possible drivers of increasing inequality starting in 2009 in the
balanced panel so I think this is something we don't know for sure if you
think about 2009 nationally you have kind of the core of the big economic
recession that was occurring in the country and yet DC due in part federal
stimulus really didn't experience the recession in that way at least in the
city and in fact he could maybe argue that there was there were more resources
ramped up in the city at that time period but I also think this is where a
standard economic model kind of struggles to fully account for the fact
that you had rapid development of other amenities restaurants housing there's
just been a broader secular move to the city and that's not just DC that's
that's all sorts of cities throughout the country and and so with that said
this sort of set into motion in my view at least part of the inequality story
and so I think part of that is just a broader move back to cities but I would
also argue that given our interest in the inequality trends like this is
something we actually want help with and what I understand better so it's a great
question yeah okay I want to just thank you again and note
that we will be having to want an additional amount at this term your
close up statement local renewable energy policy symposium a student
Resnick podium on Monday April 29 there's more information on that in your
bulletin that said except for this party reference I couldn't help it much for
joining us at this illuminating issue especially as this issue really picks up
in Michigan in some very interesting ways thank you all