ACNJ Issue Brief

Support New Jersey’s Working Families

Think about people you might meet on any given day – the retail store clerk, the fast food server, the bank teller. They labor in low-paying jobs, often without health insurance or other benefits. By federal standards these families aren’t “poor.” But, in high-cost New Jersey, chances are they earn too little to feed their children, pay the rent and afford quality child care.

And their numbers are growing. In 2002, 192,000 New Jersey working families with children met the federal classification of low-income, earning less than $36,200 for a family of four, according to a new ACNJ report, The Ends Don’t Meet. That means roughly 20 percent of all New Jersey children, numbering 407,000, were growing up in families unable to meet their basic needs, even though their parents work.

And even this number is probably low. In high-cost New Jersey, a family of two adults, an infant and a preschooler needs an annual income of almost $53,500 just to meet basic needs without government assistance, according to ACNJ calculations based on The Real Cost of Living 2005, a report by Legal Services of New Jersey.

Even more alarming, the number of children growing up in families living in abject poverty is also on the rise. From 2000 to 2003, the number of children living below the federal poverty level ($19,350 for a family of four) increased 20 percent – almost four times the national average of 4.6 percent, according to U.S. Census data.

New Jersey has taken some positive steps to help families boost income and provide for their children. But far too many families still struggle in high-cost New Jersey – the wealthiest state in the nation.

Consider this:

• Seventy-one percent of low-income New Jersey households spend more than the recommended 30 percent of their income on housing, compared to 52 percent nationally. This percentage is higher in only two other states – Connecticut and Nevada. [i]
• And costs continue to rise. In just one year, from September 2003 to September 2004, housing costs increased 18.5 percent in New Jersey.
• New Jersey is the 9th worst state in the nation for its state and local tax burden on the lowest 20 percent of income earners. Households in this low bracket pay an average of 12.4 percent of their income for state and local taxes.

New Jersey’s families work, but they often lack the education and skills needed to land a good job with benefits. Some interesting facts….

• Desire to Work. Contrary to popular perception, 88 percent of New Jersey’s low-income families had at least one parent (under 65 and not reporting a disability) in the workforce in 2002.
• Health Insurance. Nearly 36 percent of low-income working parents lacked health insurance, ranking New Jersey 32^nd among the states, according to Working Hard, Falling Short, a national report produced by the Working Poor Families Project. (Current Population Survey, 2001-2003).
• Education. In 27.3 percent of low-income working families, at least one parent lacked a high school degree, ranking New Jersey 23^rd among all states, according to the report. (Based on U.S Census American Community Survey, 2002).
• Ethnicity. Almost three times as many minority working families were low-income in 2002. (U.S. Census data)
• Immigrants. In 2000, 14.9 percent of immigrant children had no parent with a high school diploma, more than two times the U.S.-born rate of 6.8 percent. (U.S. Census data)

What New Jersey Should Do to Help Working Families?

New Jersey’s next governor and the state Legislature should ensure all families have health insurance and improve tax policies to benefit New Jersey’s working families.

Provide state funds to support providing health insurance for low-income parents. In July 2005, Governor Richard Cody signed a bill that restores parental enrollment in FamilyCare, a free or low-cost health insurance program. Lawmakers promise to insure an additional 200,000 parents and 100,000 children, but have only identified $12 million in annual funding, far short of the roughly $170 million in state dollars needed to sustain the promised expansion.

Boost the Earned  Income Tax Credit. The EITC concept is universally accepted and supported, as it is only available to families who work. New Jersey should follow the example of 16 other states with EITC programs and allow families with incomes up to $35,458 to quality for this valuable state tax credit. Current state law prevents families who earn more than $20,000 from claiming the credit. The refundable amount should also be raised from 20 to at least 25 percent of the federal refund.

Expand New Jersey Individual Development Accounts (IDAs) to permit depositing and matching of EITC refunds.  A revolving fund or similar mechanism needs to be implemented to assure funds will be available to match IDAs for all low-income working families who open accounts. New Jersey also needs to remove barriers to saving, such as the prohibition of depositing EITC refunds.

Establish a New Jersey Child Care Credit. Despite high child care costs and lack of available subsidies, our state has no tax credit or deduction for child care costs. New Jersey should join the majority of states that recognize child care expenses are a necessity and should be allowed some credit on state income taxes.

For more information, contact Sheldon Presser, 973-643-3876 or spresser@acnj.org.

Join ACNJ’s Make Kids Count campaign at www.makekidscountnj.org and help build a better future for all New Jersey children.

The Association for Children of New Jersey seeks to inform and educate voters and candidates. ACNJ does not endorse specific candidates. For more information, call (973) 643-3876 or email nparello@acnj.org or go to www.makekidscountnj.org