Providing Earnings Supplements to Encourage and Sustain Employment: Lessons from Research and Practice

Publication Date: May 15, 2012


Three decades of mostly stagnant wages have made it difficult for many low-income parents to support their families — even parents who work full time and receive work supports, such as the Earned Income Tax Credit (EITC), food stamps, and child care and transportation assistance. Because many families struggle financially despite available work supports, almost all states and localities have implemented programs or enacted policies that provide an additional supplement to individuals’ earnings. These provide a monetary payment to working individuals, usually on a monthly basis, to supplement their earnings and raise their income. Typically targeted to low-income parents who are unemployed and provided when they start working, earnings supplements are designed to encourage employment and increase the payoff of low-wage work. They can also provide an important incentive for individuals to stay employed. While the earnings supplement can be a critical component of programs, it is also generally combined with a range of other employment and support services. Many formal evaluations of earnings supplement initiatives, using random assignment designs, have been completed by MDRC — some, quite recently — making this an opportune time to step back and assess what has been learned and how to build on successes and challenges in moving forward.

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