Childless workers

Box 3: Expanding EITC for Workers Not Raising Children Would Improve Equity

Expanding the EITC for workers not raising children in their home would ensure that the credit offers a hand up to more workers struggling to get by on low wages.a The federal EITC for these workers is very limited and small, even though they are integral members of their communities and local economies. Many are non-custodial parents or future parents.

Partly because the EITC for these workers is so small, they are the lone group that federal income and payroll taxes push into or deeper into poverty. Proposals to expand the federal credit for these workers — such as the nearly identical proposals of former President Obama and former House Speaker Paul Ryan — would help address this problem.b

An expansion also would modestly reduce the income disparity between high- and low-income households by boosting incomes at the bottom. Some 13 million workers would benefit from the Obama/Ryan proposals — people who do important but low-paid work in hospitals, schools, office buildings, and construction sites across the country. Just under half of them are women, more than half are under age 35, and more than half are white. People of color would benefit substantially, since they are likelier than whites to have low incomes. Lesbian, Gay, Bisexual, Transgender, and Queer (LGBTQ) people also would benefit, both because LGBTQ adults are more likely to earn low wages than heterosexual adults and because same-sex couples are less likely to be raising a qualifying child than other families.c

In addition to making work pay and boosting incomes at the bottom of the wage scale, an expansion of the EITC for workers not raising children in the home would likely produce other benefits. Research indicates that it can increase employment rates among workers not raising children,d as EITC expansions in the early 1990s did among single mothers. It also could strengthen attachment to the labor force among less-educated, younger workers, whose rates of employment and incomes have fallen over the last couple of decades.

States need not wait for an expansion of the federal credit for childless workers. The District of Columbia expanded its own EITC to fully match the federal credit for workers without children in the home in 2014. In 2017, Minnesota expanded its Working Families Credit so that young workers without dependent children can qualify at age 21. In 2018, California extended its EITC to workers 18 and over, and Maryland eliminated the credit’s lower age limit. In 2019, Maine extended its credit to workers 18-24 without children in the home and enabled them to receive a credit worth 25 percent of the federal EITC. Several other states are considering similar expansions.