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America’s pro-work, pro-family consensus is under attack

September 29, 2021

By Cale Clingenpeel and Dr. Laurie Todd-Smith

There is perhaps no pillar more fundamental to the American dream than the opportunity to work hard to provide for one’s own family. Thriving families are the building blocks of a prosperous America, and hard work—coupled with the ability to benefit from the fruit of one’s own labor—is essential for families to thrive. Pro-work policy and pro- family policy operate in tandem, with each one complementary and necessary to the other’s success. Unfortunately, the multi-trillion dollar budget under negotiation by the Biden administration and Congress threatens these two intrinsically linked qualities of successful policy, and could have potentially devastating consequences for American workers and families.

Since its inception, one of the clearest examples of pro-work, pro-family policy is the Child Tax Credit (CTC). When created in 1997, the CTC aimed to help ease the financial burden that working families incur when they have children by reducing their tax liability dollar for dollar up to the amount of the credit for those with sufficient earnings. In 2017, the Tax Cuts and Jobs Act (TCJA) made this pro-work, pro-family relief more generous by doubling the CTC and expanding its refundability, benefiting 40 million American families that were able to receive an average credit of $2,200. Following TCJA and the associated CTC expansion, not only did family income soar, so too did participation in the labor force. Between 2017 and 2019—prior to the pandemic—real median household income increased by $5,000 to the highest level on record. Simultaneously, labor force participation among prime-age workers between the ages of 25 and 54 increased by 1.1 percentage points to 82.9 percent, the highest rate since the end of the Great Recession. Even more impressive, the labor force participation rate among prime-age women increased by nearly twice as much as the overall rate, skyrocketing by 2.0 percentage points between December 2017 and December 2019—the largest two-year rise in thirty years—and reaching its highest point since 2001. The post-TCJA and pre-pandemic era ushered in a period of growth that resulted in more Americans—and especially women—working, while also allowing these Americans to keep more of their hard-earned income.

Alongside the expansion of the CTC, the Trump administration ushered in a number of policies designed to lift labor force participation by increasing access to and reducing costs for child care. The research demonstrates that child care subsidies linked to work can lift female participation in the workforce and increase fertility rates, whereas subsidies without work requirements can have the opposite effect on labor force participation. The pre-pandemic economic success following the Trump Administration’s pro-family, pro-work policies of nearly doubling funding for early child care and implementing the first-ever Paid Family Leave Tax Credit are in line with what the research suggested would occur. In the initial post-TCJA period after implementation of some of these policies, labor force participation among women age 25 to 34 increased three times over that of similarly-aged men and by nearly twice that of women overall. Pro-work, pro-family policies help families thrive.

The economy today is in a much different position than it was prior to the pandemic. Following the path of destruction created by the pandemic, the prime-age labor force participation rate has dropped to a rate not experienced since the early 1980s. Since the early days of the pandemic, labor force participation has only partially recovered. As of August 2021, the labor participation rate matched the final pre-TCJA rate set in December 2017, nearly three and a half years prior. Rather than building on the Trump Administration’s successful TCJA policies that helped working families with measurable outcomes, the Biden administration is doing the opposite, destroying the incentive to work rather than rewarding work.

The expansion of the CTC under the Trump administration served as a direct incentive to help working families. By contrast, under the American Rescue Plan Act (ARPA), the Biden administration untethered benefit eligibility from earnings, allowing families to receive several thousands of dollars of additional government benefits each year without any requirement to work. Now the Biden administration is seeking to extend the pandemic-related CTC aid and permanently remove the work requirement as part of its multi-trillion-dollar budget. Alongside its transformation of the CTC into a policy that reduces the economic value of work, the Biden administration has moved to untether eligibility for a number of other government programs from work requirements. These policies implicitly tax work by increasing the amount of government assistance to jobless Americans while not requiring the beneficiaries to work or look for work.

These efforts have ruptured the bipartisan social contract established in 1996 between President Clinton and House Speaker Gingrich to tie receipt of government benefits to the requirement to work. Indeed, this principle is broadly in line with the expectations of the American public. Recent polling shows that a strong majority—78 percent—of Americans strongly or somewhat favor requiring work for those receiving financial support from the government. Just 13 percent of those surveyed were somewhat or strongly opposed to work requirements.

Pro-work, pro-family policies are inextricably intertwined and mutually reinforcing. These policies have proven their ability to deliver prosperity for all Americans as seen in the pre-pandemic years of 2017-19. As the pandemic has forced millions out of work and out of the labor force, with the recovery far from over, expanding and building upon those successful pro-work, pro-family policies are key to the American workforce’s full recovery. Instead, the Biden administration has enacted and proposed anti-work—and thus by extension, anti-family—policies.

Cale Clingenpeel serves as Chief Economist and Dr. Laurie Todd-Smith serves as a Senior Fellow for the Center for Education Opportunity and Center for the American Worker for the America First Policy Institute (AFPI).