In response to stagnant wages for low-income workers, policymakers have proposed the expansion of wage subsidy programs.

Question:

In response to stagnant wages for low-income workers, policymakers have proposed the expansion of wage subsidy programs. Under President Barack Obama’s 2014 plan, EITC coverage would be expanded to increase payments to 7.7 million workers and extend coverage to 5.8 million additional workers. Most of the additional workers are young or old (age 21–24 or 65–67), and do not have qualifying children. The expansion of EITC would lift about half a million people above the poverty line and reduce poverty for an additional 10 million workers. In addition, the extension of wage subsidies to more workers is expected to increase labor force participation. In the U.S. Senate, Senator Marco Rubio advocates the replacement of the EITC with a “wage enhancement program,” a system of wage subsidies that shares many features of the President’s proposal.