Welfare Reform and Income Alternatives for Low-Income Workers

With minimum wage hikes under debate around the country, New York has become the first state to approve a $15 minimum wage for fast-food workers, the highest in country. As The Wall Street Journal reports, New York Governor Andrew Cuomo announced the move at a labor rally with Vice President Joe Biden while proposing to work for legislation that will make $15 a minimum wage across all industries. Analysts expect the New York state legislature to resist Cuomo’s proposal, with critics arguing that the move would ultimately backfire by forcing businesses to lay off workers and encourage companies to replace human employees with cheaper automated solutions.

Meanwhile The Wall Street Journal also recently published Jeb Bush’s proposal to alleviate the tax burden on 15 million lower-income workers by expanding the Earned Income Tax Credit (EITC). Bush’s proposed series of measures also would include eliminating the alternative minimum tax, which is a revival of the Taxpayer Choice Act introduced by Paul Ryan during the 2008 election cycle. Together with the Affordable Care Act, lowering taxes for low-income households would be a step toward what experts regard as two major pillars of welfare reform. However, critics from The Washington Post claim the details of Bush’s proposal would ultimately end up costing the federal government and taxpayers $3.4 trillion over the next decade.

As the debate over these proposed reforms moves forward in New York and around the country, many underemployed workers trying to survive under current wages and tax conditions are turning toward other solutions to economic challenges, such as the following:

Working From Home

Empty Wallet: Bills and Debts

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In 2014, nearly one quarter of employed U.S. laborers worked from home some or all of the time, according to Bureau of Labor Statistics data. The cloud, mobile technology and employer bring-your-own-device (BYOD) policies are making telecommuting and remote work more accessible for an increasing number of workers. For demographics such as single mothers and fathers, older workers, those with limited transportation and residents of rural areas, working from home represents a viable alternative to traditional employment. In addition to providing jobs that might not otherwise be accessible, working from home has the advantage of saving on transportation costs. Employers also benefit from the flexibility of being able to employ workers in remote locations and on alternative schedules.

Independent Contractor Entrepreneurship

The segment of the population working from home includes an increasing number of independent contractors. Many contractors have turned to working for themselves in response to unemployment, while others are seeking higher wages or a second income. Some contractor jobs are conventional, including fields such as carpentry, electrical repair, plumbing, freelance writing, graphic design and photography. Other contracting jobs are facilitated by developments in mobile technology. For instance, Uber has grown from a startup to a $50 billion company since 2009 by using mobile technology to enable car owners to operate as unlicensed chauffeurs.

Other companies have applied an Uber-style business model to other applications. For example, Handy assists people who want to book home cleaners and handymen, Wag! helps pet owners  find dog walkers and TaskRabbit enables users to contract out various tasks around the home. Many of these apps depend on smartphone GPS capability, making a good mobile device and a reliable network such as T-Mobile indispensable for today’s entrepreneur.

Being an entrepreneur requires self-motivation, discipline and sometimes starting capital, so it isn’t for everyone. But for a person with the right personality and skill set, it can be a way to get out of the office rut while boosting your income.

Advancement Through Education

Education represents another option for workers seeking higher income. Experts project that jobs requiring at least an associate’s degree will grow twice as fast as jobs requiring no college experience in coming years, according to the White House. In light of this, the federal government is promoting community colleges with the Health Care and Education Reconciliation Act, which is allocating $2 billion over a four-year period to community college and career training. The initiative includes the expansion of online educational opportunities as well as partnerships between schools and employers to help prepare students for jobs. For workers seeking jobs in in-demand fields, such as healthcare, business administration and IT, going back to school may be the surest path toward earning a higher income.