Submitted by Andrew Moran of The Epoch Times,
As many as 1.5 million working parents could exit the labor market as more U.S. households receive the expanded Child Tax Credit (CTC) benefit, a new study predicts.
According to a recent analysis (pdf) from University of Chicago economist Bruce Meyer, approximately 2.6 percent of parents could drop out of the workforce after being given monthly entitlement checks based on family income.
Under the American Rescue Plan that was passed in March, lawmakers expanded the CTC from $2,000 to as much as 3,600 per child. Half of the CTC funds were sent to households or deposited into bank accounts in the form of monthly checks from July to December. Parents are not required to work to receive the CTC and its monthly payments.
Meyer explained that some parents could choose to quit working because of the payments and if they can gather enough money from public assistance and family and friends.
“The proposed expansion would get rid of the strong work incentives under the prior CTC; it would essentially eliminate a tax credit that encouraged work and replace it with something that discourages work,” Meyer told CBS MoneyWatch.
“In the end, those at the bottom may not be better off.”
He added that it would be “a good idea” to insert a work requirement. The economist endorsed Sen. Joe Manchin’s (D-W.Va.) proposal of requiring an employment prerequisite.
As part of the previous CTC, beneficiaries needed to work to receive the full credit.
Still, Meyer anticipates that the tax credit, even if 1.5 million parents were to quit their jobs, would alleviate child poverty. He projected that child poverty could decline by 22 percent because of the payments.
Others dispute his suggestion that more than one million working parents would be submitting their letters of resignation.
Researchers at Columbia University’s Center on Poverty and Social Policy argued in a recent paper (pdf) that the data show that CTC payments have not led to a noticeable impact on payrolls or the labor force participation rate.
“Real-world data in the immediate wake of the CTC expansion do not support claims that the elimination of the phase-in portion of the CTC has discouraged work among parents in any meaningful way,” the researchers stated.
Speaking to reporters aboard Air Force One on Dec. 17, White House press secretary Jen Psaki stated that President Joe Biden could double the CTC payments in February if the $1.75 trillion social-spending and climate change plan is enacted in January.
“If we get it done in January, we’ve talked to Treasury officials and others about doing double payments in February as an option,” she told the press. “The president wants to see this move forward. It’s a priority for him as soon as Congress returns.”
While the administration and Democrats want to extend the payments as part of the legislative push, the bill is not guaranteed to pass amid hesitancy from Manchin. In addition, many congressional Democrats have conceded that they do not have a considerable backup plan to maintain the monthly payments prior to their expiration.
Ultimately, experts concede that the United States has, for many decades, refrained from offering variations of basic income similar to the CTC payments. Therefore, they aver, there are still many unknowns and uncertainties.
Child Care Costs a Financial Burden
For many parents, it might be economically beneficial to resign from their positions since daycare is costly.
It is no secret that the cost of child care is expensive. According to the Bureau of Labor Statistics (BLS), the price of daycare and pre-school advanced by 2.7 percent year-over-year in November.
Families nationwide spend an average of $8,355 per child for year-round child care, with some estimates going as high as $16,000.
“Monthly child-care costs can feel like an extra mortgage payment, especially if you live in an expensive area or have more than one kid,” said Ted Rossman, Bankrate’s senior industry analyst, in a news release.
Biden’s American Families Plan possesses proposals to diminish child-care prices. For households earning less than 1.5 times their state median income levels, they would not pay for child care. Others earning above that level would pay no more than 7 percent of their income on child care.
The Latest from The Great Resignation
Employers are coming across a myriad of challenges in this economy, and labor has been one of the chief obstacles in this market.
According to the BLS, about 4.2 million Americans quit their jobs in October, bringing the total number of people leaving employment to nearly 39 million in the first 10 months of 2021.
It is expected that 2021 will set a new record if workers leave their jobs at comparable levels in November and December.
The so-called quit rate for public- and private-sector workers is high for many reasons. Many people are quitting because of concerns over contracting the coronavirus, being unable to find or afford care for their children or aging parents, or they have located employment opportunities with better compensation.
Indeed, the number of job openings in the United States increased to almost 11 million in October, with the figure concentrated in education, hotels, manufacturing, and restaurants.
Experts contend that the labor market pendulum has swung in the direction of the workers. As a result, companies have been raising wages, expanding their perks and benefits, and introducing a wide range of bonuses to attract talent.
Continue: Zerohedge.com
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