A report released last month provides the first view of a pilot program being conducted in New York City to expand the childless worker EITC. The report doesn’t provide results (which won’t be available for at least another year), but its early implementation findings reinforce the importance of waiting for evaluation evidence before making major policy decisions.
Expanding the earned income tax credit for workers without dependent children (“the childless worker EITC”) has broad support from lawmakers across the political spectrum. Separately, President Obama and Speaker Paul Ryan previously proposed expansions, and former governor Jeb Bush made a similar proposal in his presidential campaign’s tax plan. Additional proposals to expand the childless worker EITC go back at least until 2007, with certainly some frustration that nothing has been done.
New York City. Twenty20.
But reasons for caution remain, which is why the pilot programs in New York City and Atlanta, Georgia, are so important. First, the EITC has a high error rate and fixing it may be a prerequisite for many lawmakers. Second, it’s still unclear whether an expanded childless worker EITC will increase employment among Americans with limited skills, especially young men – a group that has particularly struggled in recent years and is the main target of an expansion.
Fortunately, the pilot program, called Paycheck Plus, is testing a number of outcomes (including employment) using a random assignment design. Paycheck Plus increases the maximum childless worker EITC to $2,000 (from $500 currently) and expands eligibility to a maximum income of $30,000 (up from $14,500). It has operated in New York City in tax years 2014, 2015, and 2016 and tax years 2016, 2017, and 2018 in Atlanta.
The December 2015 report by research-firm MDRC provides a preliminary view of the New York City pilot program. Approximately 6,000 are participating, with 3,000 randomly assigned to Paycheck Plus and the other 3,000 eligible for the current EITC. The characteristics of those in the study provide a glimpse of those who might benefit from a larger expansion:
The broad recruitment effort succeeded in enrolling a group that reflects the diversity of low-wage workers. For example, about 40 percent of the study participants are women, 49 percent were age 35 or older when they enrolled, about 12 percent were noncustodial parents, and 18 percent had been incarcerated at some point. The group is also quite diverse in terms of employment and earnings. Although nearly all of them had worked at some point in the past, just under 30 percent had no earnings in the year prior to enrollment. Another 30 percent had worked in the previous year but earned less than $7,000.
In terms of the program, the report found that:
For the 2015 tax season [2014 tax year], about half of the participants in the Paycheck Plus group filed taxes or brought prepared taxes in to a FBNYC VITA site, and 46 percent were found eligible for a bonus. The average bonus given was about $1,400.
So the main conclusions so far include: (1) those eligible for the childless worker EITC expansion include many women and individuals over age 35, and about one-third did not work in the year prior to the study and (2) many also didn’t work in the first year of implementation, if filing taxes (or at least telling the researchers that they filed taxes) is any indication. This second conclusion offers a possible preview of results to come.
But it’s really too early to know anything about impacts of a childless worker EITC expansion. Lawmakers are right to be cautious before passing a full expansion until the results from these evaluations are available and debated. Unfortunately, this will push out any action another few years.
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