New York, September 9, 2021 – Nearly 1.5 million low-income older workers would benefit significantly by an expansion of the popular Earned Income Tax Credit (EITC) program, which currently excludes them, finds a new report released today by the New School's Retirement Equity Lab (ReLab).
Without that expansion, the report shows, the EITC actually lowers wages among non-educated workers, especially those over 55.
"Our research confirms what we feared and suspected," said Teresa Ghilarducci, Professor of Economics and director of SCEPA's Retirement Equity Lab. "While the EITC provides vital support for low income families, it also has an unintended wage depressing effect. Millions of elderly low-income workers pay the price, experiencing all the wage-cutting effects of EITC without the benefits."
Here’s how and why: While eligible workers receive EITC cash benefits that offset these wage losses, the program fails to do the same for older workers (aged 65, who—despite their low wages—are ineligible for the credit because they do not have young children.
The ReLab report recommends policies to permanently expand the EITC to include workers without qualifying children; abolishing the upper age limit; and increasing refunds that would enable 1.5 million older workers (aged 55+) to benefit from the EITC.
ReLab's research on EITC and older workers finds:
- Permanently expanding the EITC will help offset earning losses for approximately 1.5 million low-income older workers.
- The EITC helps millions of low-income Americans survive, but also subsidizes low-wage work and dampens wage growth for non-college educated workers, especially workers over 55.
- Over the next decade, the share of older workers over age 65 will increase by 50%, translating to an additional quarter million workers becoming eligible for the expanded EITC.
Read the report here.
ReLab's Report on Older Workers
ReLab’s research series on older workers takes readers beyond headline unemployment rates by providing a broad view of the labor market conditions for older workers.
The most recent report finds at least 1.7 million more older workers than expected retired due to the pandemic, with Black older workers and those without college degrees hit hardest.
Since 2020, ReLab’s data remains often the first to measure the pandemic’s effects on older workers’ employment, savings, and retirement trends. The data has been included in The New York Times, NPR, The Wall Street Journal, and many more.
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