A Platform for Progress
Building a Better Future for Women and Their Families
BUILDING ECONOMIC SECURITY
Ensuring Access to High-Quality, Affordable Child Care
Child care helps children, families and communities prosper. Children in child care learn and develop skills they need to succeed in school and in life. Child care helps families get ahead by giving parents the support and peace of mind they need to be productive at work. And ensuring access to child care helps our nation stay competitive, by producing a stronger workforce now and in the future. When America supports child care, we encourage children, families and our nation to reach their full potential. But for many families – especially, but not only, low-income families – high-quality child care is unaffordable or unavailable. Congress and the Administration must enact, fund, and implement comprehensive reforms to ensure safe, healthy, and affordable child care that promotes early learning, as set forth below.
- Guarantee availability of child care that meets basic health and safety standards. All parents want assurances that their children are in safe and healthy environments. Federal legislation should require states to develop, and ensure that child care centers and family child care homes meet, core health and safety and child development standards in areas such as first-aid, CPR, SIDS prevention, sanitary methods, child abuse identification, developmental screening, emergency procedures, pre-service and continuing training, and comprehensive background checks. Congress should provide federal funding to enable centers and homes to meet these requirements.
- Create rating and improvement system to promote early learning. Research demonstrates that high-quality child care promotes children’s cognitive and social development. Yet many states do not have systems for evaluating and promoting high-quality child care and many children do not have access to the high-quality care they need. Congress should improve the early learning experience in child care by providing federal funding to states to establish and operate a statewide system for rating child care providers based on the quality of care they provide. The system should include grants to help facilities and child care providers achieve and maintain progressively higher standards. Studies of states that have already adopted this approach demonstrate that it is an effective strategy for bolstering the quality of care.
- Make high-quality child care affordable. Paying for child care is one of the top three expenses for families with preschool-age children, along with housing and food, and low-income parents who pay for child care spend an even greater percentage of their budget on care than higher-income families. Over the past seven years, hundreds of thousands of children in low-income families have lost child care assistance because federal funding for child care assistance has been essentially frozen. Today, only one in seven children eligible for federal child care assistance receives it. Congress should help parents afford high-quality care by providing sufficient federal funding to double the number of children currently receiving child care assistance and improving the federal Child and Dependent Care Tax Credit. The Child and Dependent Care Tax Credit should be improved by ensuring there are no cuts in the current amount of tax assistance that families can claim, making it fully refundable so that families with little or no federal income tax liability can benefit, increasing the percentage of expenses lower-income families can receive, and indexing it for inflation.
- Make high-quality child care accessible. Low reimbursement rates discourage child care providers from serving children receiving child care assistance and make it more difficult for child care providers who serve these children to support a high-quality program. This is especially true in the case of infant and toddler care, which is particularly costly to provide and difficult to find in many communities. In 2007, 41 states and the District of Columbia had reimbursement rates based on outdated market rate surveys or below the level recommended in federal regulations. Congress should increase the supply of high-quality care by raising the reimbursement rates paid to child care providers who care for children receiving federal child care assistance – with higher rates for higher-quality care – and by making targeted grants to support high-quality infant and toddler care.
- Strengthen Head Start and Early Head Start. Congress should increase funding for Head Start and Early Head Start to increase participation by low-income three- and four-year-olds, as well as infants and toddlers, and to strengthen and improve the program. Currently, Head Start serves only about half of eligible preschoolers and Early Head Start serves less than 3% of eligible infants and toddlers. In 2007, when Congress renewed the Head Start program, it called for expanding and strengthening the program but then failed to appropriate any additional funds. The 2007 Head Start amendments increased access to Head Start by allowing programs to serve children in families with incomes up to 130% of poverty; expanded Early Head Start; bolstered quality by setting credential and training requirements for Head Start and Early Head Start teachers and reserving funds for quality improvements; and required increased collaboration among early education programs. Congress should ensure that programs have the resources to achieve the goals set out in the 2007 Head Start amendments, including to help them meet increased teacher credential requirements and to engage in greater collaboration with other early childhood programs.
Strengthening Income and Work Supports
Poverty is a women’s issue. Over 14 million women – one in eight – live in poverty. Single mothers, women of color, and elderly women are especially vulnerable. More than one in three single mothers, more than one in five African American and Latina women, and one in five elderly women living alone are poor. Several factors contribute to the high rate of poverty among women, including unequal opportunities in education and employment, the high numbers of women who work in jobs that do not provide adequate wages and benefits, the time many women devote to unpaid family caregiving, domestic violence and other barriers to employment, insufficient child support, and the recent erosion of many other supports for poor women and their families.
- Make Work Pay. The Earned Income Tax Credit (EITC) is an important supplement to the earnings of low-income workers, especially those with children. The EITC is fully refundable, so tax filers with little or no federal income tax liability can receive the credit as a refund or as an increase in their paychecks throughout the year. Families with two or more children can receive an EITC of up to $4,824 for tax year 2008. But the EITC generally does not increase for families with more than two children, who have higher rates of poverty than smaller families. And some low-income workers can still face significant “marriage penalties” – reductions in their EITC benefits – if they marry. Congress should improve the EITC for families with children by increasing the credit for families with three or more children and raising the point at which the EITC phases out for married couples.
The EITC also is available for low-income workers between the ages of 25 and 64 with no qualifying children. But for these workers, the benefits are too small to have a significant impact. In tax year 2008, the maximum EITC for childless workers is just $438, and workers earning just $12,880 are ineligible. Congress should improve the EITC for childless workers by doubling the credit rate, applying it to a higher level of earnings, and increasing the point at which the credit phases out. Congress also should make the EITC for childless workers available to workers until they reach the full Social Security retirement age, which is now age 66 and rising. This would assist low-wage workers who have to keep working to make ends meet until they qualify for full Social Security benefits.
- Expand the Child Tax Credit for Low-Income Families. The Child Tax Credit, which can be worth up to $1,000 per qualifying child, is intended to help families meet the costs of raising children. But, it is unavailable to millions of poor and low-income families, disproportionately headed by single mothers, who need help the most. Families must earn at least $12,050 in 2008 to receive any benefit from the credit, and must earn substantially above that amount to receive the full benefit. Congress should make the Child Tax Credit fully refundable.
- Improve Child Support Enforcement. Reforms and investments in the public child support enforcement program have doubled collections in the past ten years, providing much-needed income to single mothers and their children, who need and deserve support from both their parents. But, recently enacted cuts to federal funding for child support enforcement will cost custodial parents and their children $1 billion a year or more in uncollected child support. These cuts will force states to lay off front-line staff, postpone computer upgrades, and abandon promising initiatives to provide employment and case management services to low-income non-custodial parents. In addition, the cuts threaten state plans to distribute more of the child support collected on behalf of children receiving public assistance to the family, rather than to the government to reimburse welfare costs. Congress should help ensure that children receive support from both parents by restoring the funding cut from child support enforcement. It also should provide additional incentives for states to give all of the child support paid by the non-custodial parents of children receiving public assistance, many of whom are low-income themselves, to the family.
- Help Poor Individuals and Families Obtain Economic Security. Increasingly restrictive welfare policies have cut welfare caseloads but have left many parents, overwhelmingly mothers, either in low-wage jobs, which do not provide enough income to support a family, or without any income at all. Currently, welfare rules impose a 60-month lifetime limit on receiving public assistance and strictly limit the number of months parents receiving benefits can spend acquiring basic education or learning English, receiving mental health or substance abuse treatment, or training for a higher-paying job. Parents who leave welfare for work may lose health care coverage and child care assistance long before they earn enough to pay for them. Many poor elderly and disabled individuals fail to get the support they need from the Supplemental Security Income (SSI) program because of restrictive rules that, for example, limit eligibility for lawful immigrants and for individuals with assets of more then $2,000 and couples with assets of more than $3,000. Congress and the Administration should eliminate arbitrary barriers in the Temporary Assistance for Needy Families program that limit the basic services, education and training parents need to find sustainable employment; simplify access to other benefits such as Medicaid, child care, and nutrition programs for poor families; eliminate arbitrary barriers in the SSI program; and provide adequate income for those individuals who cannot work or earn enough to support themselves and their families.
- Modernize Unemployment Insurance. Unemployment insurance was created to offer temporary income support to workers who are laid off or must leave their jobs through no fault of their own. However, its rules have not kept pace with changes in the workforce. Today, many women in low-wage, high-turnover jobs fail to qualify for unemployment benefits because their most recent earnings do not count toward eligibility. Many women who work part-time or have to leave their jobs for family-related reasons also are ineligible for unemployment benefits. Congress and the Administration should modernize the unemployment insurance program to consider workers’ most recent work history when determining eligibility; provide benefits to those available only for part-time work and those who must leave work for compelling family reasons; and increase benefits for jobless workers with dependents.
Providing a Secure Retirement
Women have greatly increased their participation in the paid labor force in recent decades, and retired women of the future will have earned higher retirement income on their own work records than current retired women. But, women still have substantially lower lifetime earnings than men: the annual wage gap between women and men is persistent, and the gap in lifetime earnings is even larger, because women are more likely to take time out of the labor force for family caregiving. Lower lifetime earnings mean lower retirement income and smaller savings. At the same time, women live longer than men, face higher health care costs, and spend more years alone in retirement, posing additional financial challenges. In addition, divorce can have especially negative effects on women’s economic well-being, leaving divorced women financially worse off in retirement than married couples or divorced men.
- Protect and Strengthen Social Security. Social Security is the mainstay of women’s retirement income, providing secure lifetime benefits that keep pace with inflation to retired workers, spouses, surviving spouses, and former spouses. For many single women 65 and older, Social Security is virtually their only source of income. Currently, Social Security provides 90% or more of the retirement income for nearly half of all single women 65 and older. Fortunately, Social Security can continue to play a vital role in the economic security of future generations. It faces a manageable long-term shortfall, not a crisis. The reserves in the Social Security Trust Fund can pay 100% of promised benefits for the next three to four decades, and 75 to 79% of promised benefits after that. Congress should protect and strengthen Social Security and its finances by rejecting proposals to divert Social Security revenues into private accounts and raising additional revenues, for example, by applying the Social Security tax to higher wages or dedicating revenues from a progressive tax to Social Security.
- Improve Social Security benefits. Even with Social Security, about one in five single elderly women is poor. Two adjustments to Social Security benefits could significantly reduce poverty among elderly women. For workers with low lifetime earnings, including those who have reduced time in the paid labor force because of family caregiving, Congress should increase the benefits available under the “alternative minimum benefit formula.” To reduce poverty among widows, the largest group of the elderly poor, Congress also should improve benefits for widowed spouses. Under current law, a surviving spouse is eligible for a Social Security benefit equal to 50 to 67% of the combined benefits received by the couple; the proportion depends on the relative earnings of the spouses. But, according to the Census Bureau’s poverty thresholds, a single elderly person needs 79% of the income of a two-person household to maintain the same standard of living. Congress should raise the survivor benefit to 75% of the couple’s combined benefits, and target increases to those with lower earnings by capping the amount a person could receive under this alternative formula (for example, at the benefit level of a Social Security maximum earner). This approach also would increase equity between one- and two-earner couples.
- Expand Access to Employer-Based Retirement Plans. Women are less likely than men to have an employer-based retirement plan, and when they do, their pension benefits and account balances are smaller. Congress should improve access to employment-based retirement plans by requiring employers to allow more part-time workers to participate and reducing vesting requirements for employer-provided pensions.
- Extend Protections of Traditional Defined-Benefit Plans to Defined-Contribution Plans. The replacement of traditional defined-benefit pension plans by defined-contribution plans, such as 401(k)s, poses particular challenges for women. The 1984 Retirement Equity Act, which applies to traditional defined-benefit pensions, gives a spouse the right to a survivor annuity from the other spouse’s pension unless the spouse waives the right. This has improved retirement security for many women; in the decade after the REA was enacted, the number of married men who selected a survivor annuity for their spouses increased by 18%. But, the shift from defined-benefit to defined-contribution plans means that guaranteed pension benefits for surviving spouses are disappearing because this right does not apply to defined-contribution plans or Individual Retirement Accounts. Congress should extend the current spousal pension right for defined-benefit plans to defined-contribution plans and require spousal consent before individuals can withdraw, borrow against, or roll over into an IRA the accumulation in a defined-contribution plan.
- End Gender Discrimination in the Pricing of Annuities. Women who want to convert their savings into a stream of income for life to ensure they don’t outlive their savings face a private marketplace in which annuities are priced on the basis of gender. Congress should prohibit gender discrimination in the pricing of annuities and expand access to low-cost, comprehensive, and secure annuity products.
- Make the Saver’s Credit Refundable. The tax system generously subsidizes retirement savings by the wealthy, who do not need tax subsidies to save for retirement, but provides few tax benefits to those who struggle to save. The Saver’s Credit provides some tax assistance to low- and moderate-income individuals; it can be worth up to 50% of a maximum $2,000 contribution to a 401(k), IRA, or similar retirement plan. However, the credit is not refundable, so it is not available to tax filers with no federal income tax liability. Congress should make the Saver’s Credit refundable.
Creating a Fair Tax System that Raises Adequate Revenues
The investments proposed in this Platform for Progress will expand opportunity and improve economic security for women and their families, helping to reverse years of growing poverty, declining health care coverage, and stagnant wages. The nation can afford to make these critical investments in the common good by reforming the tax system to ensure that everyone pays his or her fair share of taxes and by curbing special-interest spending.
- End Tax Breaks Skewed to the Wealthiest Americans. At the end of 2010, most of the tax cuts enacted since 2001 will expire. Renewing them would cost $4.4 trillion and the benefits would go overwhelmingly to the wealthiest Americans. The top 1% of households - currently those with incomes over $450,000 - would get nearly one-third of the tax benefits, more than $1.2 trillion in tax breaks over the next ten years. The bottom 80% would get just one-quarter of the tax benefits and would bear most of the pain from the cuts in services imposed to help pay for tax breaks for higher-income households. Congress should end the provisions of the tax cuts that primarily benefit higher-income households, including the capital gains and dividends tax cuts, rate cuts for individuals in upper-income tax brackets, repeal of the limits on personal exemptions and deductions for very high-income taxpayers, and repeal of the estate tax.
- End the Preferential Treatment for Income from Investments over Income from Work. Under the current tax system, income from work is taxed at far higher rates than income from investments. Earnings are subject to federal income tax at rates of up to 35%, compared to a maximum 15% rate for income from capital gains and dividends. And, wage income – but not investment income – is subject to payroll taxes. The current system provides perverse incentives to create schemes designed to convert ordinary income into capital gains. For example, billionaire hedge fund managers take compensation for the financial services they provide in the form of a share of the profits – and end up paying lower tax rates on their multi-million dollar compensation packages than middle-class workers. In addition, because income from investments is a far larger share of the income of the wealthiest Americans than of average Americans, the favored tax treatment of investment income means that the very richest households can pay lower tax rates than average Americans. Congress should reform the tax system and tax income from investments at the same higher rates as income from work.
- Collect Taxes Owed by Businesses and Investors. While wage earners, whose income is regularly reported to the Internal Revenue Service and whose taxes are withheld, pay 99% of the taxes they owe, hundreds of billions of dollars in taxes, mostly owed by business owners and investors who fail to fully report their income, goes uncollected. Congress and the Administration should improve collection of taxes owed by business owners and investors by requiring information reporting on capital gains and miscellaneous income and payments and providing the Internal Revenue Service with the resources it needs to enforce compliance.
- End Tax Breaks for Special Interests. In addition to enjoying most of the benefits of the tax cuts since 2001, there are other ways the powerful few avoid paying their fair share of taxes. Powerful industries continue to enjoy special-interest tax breaks even as they earn record profits. The very wealthy and corporations exploit tax loopholes to shelter much or all of their income from taxation. Congress should close tax loopholes that provide unnecessary subsidies to powerful industries, such as oil and gas, and that allow corporations and wealthy individuals to shelter their income from taxation.
- End Unnecessary Corporate Subsidies. Subsidies to the wealthy and powerful do not come only through the tax system. Insurance companies, drug companies, wealthy agribusiness, well-connected contractors and others get billions in corporate welfare payments, even as funding for supports for the poor and middle class are cut. Congress should end special-interest subsidies on the spending side of the budget.
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