Federal CTC and EITC
The EITC and Minimum Wage Work Together to Reduce Poverty and Raise Incomes
01. 22. 2020
The EITC is a strong policy for boosting low-wage workers’ economic security. Moreover, the minimum wage is an effective complement.
![](https://economicsecurityproject.org/wp-content/uploads/2022/10/figure_a-800x450.png)
The article originally appeared in the Economic Policy Institute
“After decades of rising income inequality and wage stagnation, the problem of inadequate wages for middle- and lower-income workers has only increased in urgency. Discussions of possible remedies have centered on expanding two existing policies: the Earned Income Tax Credit (EITC) and the minimum wage. Both the EITC and the minimum wage have been found to be quite successful at improving the lives of low-income families. The EITC—a refundable tax credit available to low-income families who have income from work—dramatically reduces child poverty, encourages single mothers to participate in the formal economy, and has important positive effects on a range of health, educational, and child developmental outcomes (Nichols and Rothstein 2016; Hoynes and Patel 2018). The minimum wage is more controversial, but the best evidence indicates that it, too, raises incomes and reduces poverty, including child poverty; improves health and public safety; and has little or no negative effect on employment (Dube 2019; Dow et al. 2019; Ruffini 2020; Cengiz et al. 2019).”