Economic Stress of Milwaukee’s Working Poor Exacerbated by EITC Cut

Thursday, December 27, 2012 at 5:52 PM by

UWM Study Examines Income Challenges for Single-parent Families in Milwaukee County and Inner City

 Shortly before Christmas, researchers at the UW-Milwaukee Employment and Training Institute (ETI) released a very interesting and sobering analysis of income trends and challenges for Milwaukee’s low-income families, particularly single mothers raising children.  Their report includes an analysis of the income tax records of Milwaukee County family tax filers (with dependents) from 2007 through 2011.  

One of the key findings of the report by Lois Quinn and John Pawasarat is that the cut to the Wisconsin earned income tax credit (EITC) in the 2011-13 budget bill cost Milwaukee County families $7.7 million when they filed their 2011 tax returns.  Some of the other findings relating to the EITC include the following:

  • Inner city Milwaukee “working poor” families were hit the hardest, losing $4.3 million, which was a drop of 25% relative to their 2010 credits (compared to 22% for EITC recipients in the county as a whole).
  • Single filers in the inner-city neighborhoods lost 26% of their credits, compared to 20% for their married counterparts, and 16% for married filers in all of Milwaukee County.

The ETI report includes a number of other very interesting and troublesome findings about the income of single parent working families in Milwaukee.  I’ve taken the liberty of copying and pasting a number of them verbatim, or nearly so, from the report:  

  • Almost three-fifths  (59%) of working age state income tax single filers with dependents in 9 central city zip codes had less than $20,000 annual income in 2011 – suggesting low wages, part-time jobs, high job turnover, and less than year-round employment. 
  • For the county as a whole, 42% of all working age single income tax filers (with dependents) had income below poverty in 2011, and three-fourths (76% or more) had income below 185% of poverty.
  • The number of inner city single parents filing state tax returns declined by only 5% during the economic recession, with many parents remaining in the workforce despite low wages and often intermittent employment.
  • According to Census data (ACS 2010), single mothers in Milwaukee County with preschool children and incomes below 200% of poverty worked mostly in child care centers, hospitals, department and discount stores, restaurant and food service establishments, and nursing homes – which the  authors note are sectors with “variable or irregular hours and seasonal swings in employment.”  
  • In zip code 53206, “arguably Milwaukee’s poorest neighborhood,” the average income for single filers with dependents was $17,600 in 2011 – in marked contrast to $110,000 for single filers with dependents in zip code 53202 (downtown Milwaukee).
  • In zip code 53206 only 8% of state income tax filers with dependents were married, compared to 81% of filers with dependents in 53217 on the “North Shore.”

The authors note that “the cost of housing limits lower-income families to areas of the city where rents are lower or where they can double up with relatives,” and they add that “extremely high incarceration rates in central city Milwaukee also contribute to the high number of families headed by single mothers.”

Georgia Pabst of the Journal Sentinel wrote a good article about the findings relating to the EITC cut.  Another round of EITC cuts will occur in tax year 2013 if a deal isn’t reached to extend federal EITC enhancements that were initiated in 2009. 

Jon Peacock

Categories: 2011-13 biennial budget, Blog, ECONOMIC SECURITY, EITC, jobs, poverty, STATE TAXES | Comments Off on Economic Stress of Milwaukee’s Working Poor Exacerbated by EITC Cut

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