Discrepancies Between Forgotten Half and CEA [Council of Economic Advisors] EITC [Earned Income Tax Credit] Report
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OCR Page 1 of 8MEMORANDUM FOR HILLARY RODHAM CLINTON
FROM:
Shirley Sagwa and Nicole Rabner
RE:
Discrepancies between The Forgotten Half and the Council of Economic Adviors
EITC and Minimum Wage Report
DATE:
January 27, 1999
You asked us to analyze why The Forgotten Half Revisited (TFH) and the CEA Reports paint
such different pictures of the economic status of low income Americans. The short answer is
that the two used different time frames and different segments of the populations for their
analysis.
TFH looks at the circumstances of less-educated young people (18 to 24), comparing 1996 data
with 1988 or, in some cases, 1973 data. The CEA looks at the effect of minimum wage and
EITC on low-wage workers of all ages and levels of education, with an emphasis on families
(note, for example, that many 18 to 24 year olds do not have children and therefore do not
qualify for EITC). CEA uses as its baseline 1993, with particular emphasis on the dramatic
improvements-that occurred between 1996 and 1998 -- a period in large part not examined by
TFH.
One other distinction worth noting: TFH looks more broadly at the quality of jobs young people
have (health insurance availability, opportunity for advancement, etc.), while CEA looks only at
labor force participation and family income.
The attached memo by MaryEllen McGuire provides more detail on the differences between the
two reports.
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