December 4, 1998

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December 4, 1998

PRESIDENT CLINTON:
SUPPORTING WORKING FAMILIES

If we are to continue to add new jobs, raise wages, cut poverty, and give families the tools they need to live up to their dreams, we must continue to help restore growth abroad and strengthen our economy at home. If we work together -- and we use America's momentum and confidence wisely -- I know we can do just that.

President Bill Clinton
December 4, 1998

Today, President Clinton holds a White House event to announce the release of a report by the Council of Economic Advisors (CEA) that shows the benefits the Earned Income Tax Credit (EITC) and the increase in the minimum wage have had on low-income families.

An Economic Strategy That Is Helping Working Americans. President Clinton's economic strategy of fiscal discipline, investments in our people, and opening markets abroad has helped spark an investment-led economic expansion of great strength. The success of this comprehensive economic strategy, supported by specific policy achievements such as the EITC and increase in the minimum wage, have dramatically improved the economic well-being of low income working families:

Sharp Increases In Real Wages. The strongest labor market in a generation has resulted in particularly large gains among low-wage and disadvantaged workers. From 1979 to 1993, the real wages of low-wage workers fell sharply; recently, low-wage workers have experienced sharp increases in real wages: For low-wage men, wages are up 5.7 percent after inflation since 1996, and for low-wage women, real wages have risen 6.1 percent;

Steep Decline In Unemployment. Strong wage gains have been accompanied by a steep decline in unemployment for low-skilled workers. In 1993, 11.1 percent of workers without a high school diploma were unemployed; today that rate is 7.2 percent. Among high school graduates with no college background, the unemployment rate has fallen from 6.6 percent to 3.9 percent. Low-wage workers are gaining both by working more and by earning more for every hour that they work;

Expanding The EITC Has Helped Millions Of Americans. The effects of a strong economy have been reinforced by successful policies designed to make work pay. Expansions in the EITC since 1993 are supplementing the incomes of low-wage working parents. The EITC is one of our most successful programs for fighting poverty and encouraging work:

The EITC lifted 4.3 million Americans out of poverty in 1997 -- more than double the number in 1993;
In 1997, the EITC reduced the number of children living in poverty by 2.2 million. Today's report shows that over half of the decline in child poverty between 1993 and 1997 can be explained by changes in taxes, most importantly, the EITC;
In 1992, almost 74 percent of single women with children were in the labor force. In 1997, more than 84 percent of single women with children were in the labor force. The percentage of single women with children who received welfare and did not work has been cut by more than half -- from 19.3 percent in 1992 to 8.3 percent in 1997. Studies suggest that the increase in labor force participation among single mothers is strongly linked to the expansion in the EITC;

The EITC And Minimum Wage Are Enhancing The Lives Of Low-Income Working Families. The increase in the minimum wage from $4.25 to $5.15 has been important in raising the earnings of low-wage workers. Empirical research suggests that recent minimum wage increases have had little or no adverse effect on employment. The combined effects of the minimum wage and the EITC have dramatically increased the returns to work for families and children. Between 1993 and 1997, families with one child and one earner who worked full-time at the minimum wage experienced a 14 percent increase in their income, after inflation, just because of these two policies alone. Similar families with two children experienced a 27 percent increase in their income.

CEA Report on Expansions in the EITC and the Minimum Wage

December 4, 1998

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