Family Support Services

Because of a combination of demographic trends and inadequate income supports, children comprise the demographic group at greatest poverty risk in the United States. In the mid-1970s, there was grave concern about elderly poverty, as nearly one in three elderly adults lived in poor households. Since then, the indexing of social security benefits to inflation has allowed benefits to better keep up with living costs. As a consequence, the elderly are now less likely to be poor than most other Americans. Alongside this success story of social policy ameliorating poverty, however, is the unfortunate fact that children have replaced the elderly at the low end of the U.S. economic ladder.

While the percent of children living in single-parent homes increased from 10 percent in 1960 to 31 percent in 1998, in 2000 more than half of poor families were headed by unmarried mothers. A minority of children will experience a childhood in which both parents are present, and, though mothers are more likely than ever to be employed, many are the only earner in their household. Mother-only families not only rely on lower wages than those typically earned by males but also must manage child-care and other parenting responsibilities alone. Income supports become increasingly important in these instances.

As more middle-class mothers become employed, income support for parents has increasingly required work participation. This trend culminated in the passage in 1996 of the Personal Responsibility and Work Opportunity Reconciliation Act, which created the principal program for poor families, Temporary Assistance to Needy Families. Cash support for families is limited. In response to concerns over work disincentives and fraud, in-kind benefits have become more common than cash. These in-kind benefits, particularly food stamps, health insurance, and health care, are available to more families than are income supports.

Specific Income Support Programs

There are six family income support programs, divided into cash supports and tax benefits. The Earned Income Tax Credit (EITC) blurs the line between the two categories. No program alone raises families from poverty, but the EITC, coupled with full-time work, can raise a small family just above the poverty line. To make ends meet, low-earning, single-parent families must often supplement income supports with child-care and housing subsidies, medical assistance, and food stamps.

Temporary Assistance to Needy Families (TANF). The TANF program, which is the best-known income support program, is often generically referred to as "welfare." This program replaced Aid to Families with Dependent Children (AFDC) as part of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. TANF provides time-limited cash support to families with minor children. While states have discretion in defining program details, particularly benefit levels, states may not use federal money to offer families cash grants for more than two consecutive years or for more than five years over their lifetime. Adult recipients are also mandated to participate in work, or work-related activities, for at least thirty-two hours per week. Certain provisions exempt a small number of parents, such as those with newborns or those caring for children or relatives with disabilities.

Supplemental Security Income (SSI). SSI provides cash assistance to elderly persons or persons with disabilities whose income falls below the federal poverty line. Originating as Aid to the Blind and Aid to the Aged, part of the Social Security Act of 1935, then as Aid to the Disabled in 1950, SSI was created in 1972 from the consolidation of existing programs for the disabled and indigent elderly. Eighty-nine percent of SSI recipients also receive Social Security. Children with disabilities are also eligible for SSI.

SSI funding comes solely from the federal government, and it is administered by the Social Security Administration. As a result, benefits and eligibility are uniform across states. The maximum allowable annual federal SSI benefit in 1999 was $6,000. Over-all, SSI income support is about 75 percent of the poverty level.

General Assistance (GA). While no federal program exists to aid able-bodied adults under sixty-five years of age, most states and localities offer minimal cash grants. Most recipients are single adults, but others receiving benefits may include parents with children in public custody, parents previously convicted of a felony (making them ineligible for TANF), and parents who have timed off of TANF. GA grants are generally intended to offset minimal living expenses, not as a substitute for work, and offer support well below the poverty level. In 1992, forty-one states offered GA programs. Since then, there have been severe cutbacks in GA programs, with some states, such as Michigan, eliminating the programs altogether.

Earned Income Tax Credit (EITC). The EITC program was originally established in 1975 to address a major criticism of AFDC–that it encouraged single parenting and discouraged work by limiting eligibility to nonworking single parents. The EITC, which is administered by the Internal Revenue Service, functions like a negative income tax, supplementing the earnings of low-income workers who have children. While tax policy is more often used to assist middle-class families, in the form of mortgage deductions and business credits, the EITC uses tax policy for a program targeting low-income families.

In 1996 a family with one child with earnings of up to $25,000 per year would be eligible for a tax refund under the EITC program. The tax credit has survived several important revisions over the years. Eligibility has expanded to include nearly all low-income families with children. The credit can be paid in installments throughout the year, instead of as a year-end refund. The maximum grant is paid to minimum-wage, full-time workers, with the consequence of lifting their wage up to poverty level. Proponents argue that the credit must be sufficient to ensure that full-time workers, even at minimum wage, do not have to raise their families in poverty.

Tax deductions and credits. Nearly all families benefit from tax code provisions, most often from the $600 per child tax credit and the $2,900 per person tax exemption. Tax code also allows for the deduction of certain child-care expenses. Unlike most benefits to families and children, these are universal supports to families regardless of income. Other tax policies, such as mortgage interest deductions, disproportionately assist middle-and upper-income families.