• In spite of their parents' work efforts, at least 59,100 Milwaukee County children are in employed families with earnings below poverty, according to state tax returns. Without additional public or private support, these families do not earn enough to adequately support their children. Another 53,800 children are in "near poverty" employed families -- with income earnings at 101-185% of the poverty level.

• Among employed families, the number of children in extreme poverty appears to be declining while the number of children living in "near poverty" is increasing. The estimated number of children in employed families with income earnings below the poverty level declined by 3% (1,760 children) from 1997 to 1998, while the number of children living in "near poverty" increased by 6% (3,248 children). The "near poverty" families are less likely to obtain public child care, food stamps and medical insurance benefits for which they are eligible.

• Federal and state earned income tax credits helped 52,081 families and raised about 16,800 Milwaukee County children out of poverty in 1998. Claim rates for the credit have dropped, however, and many families eligible for up to $5,371 in credits did not claim these monies owed them. About 84% of eligible families claimed the credits, bringing $128.9 million to employed families in the county. At least $27 million in federal and state tax credits was unclaimed in 1998.

• The number of children receiving state child care support increased to over 15,000 by December 1999. It is estimated that this program is still reaching less than a fourth of eligible children. If fully utilized, the program could provide more than $240 million a year in aid to Milwaukee County employed families.

• Efforts to increase the number of children receiving food stamp benefits raised monthly usage by about 1,000 (1.7%) in 1999. The number of children served is still 28,000 lower than in 1993 even though the number of "working poor" employed families has increased.

• Outreach programs in 1999 helped raise the number of children with state medical insurance coverage (including Medicaid, Healthy Start and BadgerCare) by 1,400 (2%) over last year. Unlike plans in other states, Wisconsin's complicated multi-package approach appears to unnecessarily limit families' access to medical assistance and makes outreach more difficult.

• 70,300 fewer Milwaukee County children received public income support in December 1999 than in December 1993. Monthly income payments to families (including payments for "W-2," kinship care and caretaker supplements) totaled $5.4 million in December 1999, down from $17.4 million in December 1993.

• According to state tax returns, 38% more Milwaukee County single parents are "working poor" than six years ago. One out of every three employed single parents had income earnings below the poverty level in 1998, and two out of every three had income earnings below 185% of poverty.

To assess the economic security of employed Milwaukee County families, the Employment and Training Institute examined data on tax returns filed with the Wisconsin Department of Revenue by families with children. Income earnings include "adjusted gross income" but not government payments to families. Federal poverty guidelines were used to estimate numbers of "working poor" families.

• In 1998 almost half (49%) of employed families with children in Milwaukee County were headed by single parents.

• Most two parent families had earnings sufficient to support their children above poverty. However, one out of every three employed single parents had income earnings below the poverty level and two out of every three had income earnings below 185% of poverty.

• The number of "working poor" single parent families (with income earnings below poverty) increased by 38% from 1993 to 1998 and showed a modest decrease (3%) from 1997 to 1998.

  Graph 1:
  
  

State Department of Revenue data showed that many employed families did not earn enough to adequately support their children.

• In spite of their parents' work efforts, at least 59,100 Milwaukee County children were in employed families with income below the poverty level in 1998.

• At least 92,400 children were in employed families with income below 150% of the poverty level.

• More than 113,300 Milwaukee County children were in employed families with income earnings below 185% of the poverty level.

Table 1:

Fewer Families Claiming Tax Credits for Working Families

The State of Wisconsin and the federal government offer refundable Earned Income Tax Credits to supplement the earnings of low-income employed families with children.

• The EIC helped 52,081 employed families with children in 1998, down from the 53,513 families receiving the credit in 1997. Federal and state EIC payments to Milwaukee County families rose from $49.5 million in 1993 to $127.8 million in 1997 and $128.9 million in 1998.

• The EIC raised family earnings above the poverty level for about 16,800 Milwaukee County children, while over 42,000 children had family earnings remaining below poverty.

• A large number of Milwaukee County families eligible for the Earned Income Tax Credit are not claiming the credit. Claim rates for families earning between $5,000 and $15,000 a year, for example, have dropped from 89% of estimated eligible tax filers with children in 1997 to 84% this year.

  Graph 2:
  
  

Estimated claim rates for Milwaukee County income tax filers with dependents and adjusted gross income
between $5,000 and $14,999. In 1998 most of these families were eligible for $1,777 to $5,371
in total state and federal tax credits.

Families can request help filing EIC claims from the Internal Revenue Service (1-800-829-1040) and the Wisconsin Department of Revenue (414-227-4000) and may file back claims for credits unclaimed in prior years. Employers can help publicize the EIC at their workplace using kits available free from the Center on Budget and Policy Priorities (202-408-1080).

During the 1990s Wisconsin changed its AFDC (Aid to Families with Dependent Children) program into W-2 (Wisconsin Works), which requires all parents of children over twelve weeks of age to find employment or participate in work activities. Income support, when provided, is subject to time limits. After that time all parents (except those caring for relatives or with SSI disabilities) are expected to support their families without income supplements. As fewer families receive income payments, access to other economic "safety nets" (including the state and federal earned income tax credits, CARES child care support payments, food stamps, medical assistance/BadgerCare) becomes increasingly important. Analysis of public assistance trends is based on data from the Wisconsin Department of Workforce Development and Department of Health and Family Services.

• The number of Milwaukee County children receiving income assistance dropped by 70,300 from December 1993 to December 1999.

• A total of 23,420 children received income support in December 1999. This included 12,701 children in W-2 cases with payments, 5,036 children in kinship care cases, and 5,683 children in Caretaker Supplement cases headed by a parent on SSI. This total is 5,255 fewer than in December 1998.

• Monthly income payments to Milwaukee County families dropped from $17.4 million in December 1993 AFDC payments to $5.4 million in December 1999. The December 1999 total included $3,061,854 in W-2 payments, $1,221,845 for kinship care, and $1,128,750 for Caretaker Supplement payments.

  Graph 3:
  
  

• Since July 1998, the Ad Hoc Women's Committee on W-2 and Start Smart Milwaukee have requested quarterly reports of state data on earnings of families who leave AFDC and W-2, but those reports have not been provided.

The State of Wisconsin and Milwaukee County have worked together to increase the number of families receiving support for child care. Employed parents with earnings less than 165% of poverty and meeting the "W-2" asset standard are eligible for support, which can continue until the family reaches 200% of poverty. Parent options for care include licensed day care centers, licensed family day care homes, and certified family care.

• The number of children receiving child care support increased from 6,489 in September 1997 to 15,079 in December 1999. (These totals, from the state Office of Child Care, include children served by the CARES Child Care Payment System and do not include child care paid under contract or for foster and kinship care cases.)

• Monthly CARES Child Care payments increased from $2.7 million in September 1997 to $6.5 million in December 1999.

• Annual CARES Child Care payments to Milwaukee County families totaled $79.8 million in 1999, up 32% from the 1998 total of $60.3 million.

• While 7,971 families received CARES child care support in December 1999, many more families may be eligible for assistance. For example, a total of 52,088 families claimed the Earned Income Tax Credit last year, another worker support program for employed families with children.

• It is estimated that the child care support program is currently reaching less than a fourth of eligible children. If used by all eligible Milwaukee County families, this program would provide twice as much income support to employed families as the federal and state earned income tax credits combined.

  Graph 4:
  
  

After several years of large declines in the numbers of children served, in 1999 the State increased its outreach programs to inform Milwaukee County families of the availability of food stamps benefits. The number of children helped still remains lower than in the period before the "Pay for Performance" welfare policies were initiated.

• Outreach efforts during 1999 helped increase the number of children receiving monthly food stamp benefits by almost 1,000 (1.7%), from 58,010 in December 1998 to 59,009 in December 1999.

• The number of children receiving monthly food stamp benefits in December 1999 was 28,849 lower than in December 1993, in spite of substantial increases in the number of "working poor" employed families.

  Graph 5:
  
  

Wisconsin has three medical insurance programs available to children in low-income households. Medicaid (MA) is available for families who meet the eligibility qualifications which were in place for AFDC in July 1996. Healthy Start includes coverage for pregnant women and children under age 6 in families with income up to 185% of the federal poverty level and for children ages 6 through 14 in households with income up to 100% of the poverty level, and has no asset limit. The state's new BadgerCare program is designed to provide health care coverage for uninsured children and parents who do not qualify for MA or Healthy Start but who have income below 185% of the poverty level. (Once enrolled, families can maintain coverage with income up to 200% of poverty with monthly premium requirements increasing with the family's income.)

• Outreach efforts in 1999 helped raise the number of children with state medical coverage by 1,439 (2%) over last year. In December 1999 a total of 74,471 Milwaukee County children had medical coverage, including 21,552 children enrolled in Healthy Start, 3,274 children in BadgerCare, and 49,645 children covered under the state's medical assistance program.

• The total number of Milwaukee County children with state medical coverage (including Healthy Start and BadgerCare) is 15,715 lower than the number served in October 1995.

• Wisconsin's complicated multi-package approach requires many families to enroll in a combination of Healthy Start, Medicaid and BadgerCare. Unlike plans in other states like Minnesota, it appears to introduce unnecessary confusion and administrative requirements which limit families' access to medical assistance. Outreach to employed families not previously on welfare has been limited.

  Graph 6:
  
  

This report was prepared with funding assistance from the Helen Bader Foundation and Start Smart Milwaukee. For further information, contact the Employment and Training Institute, University of Wisconsin-Milwaukee, 161 W. Wisconsin Avenue, Suite 6000, Milwaukee, WI 53203. Phone (414) 227-3388. Worker benefit studies are available on usage of food stamps and medical assistance and access to child care subsidies for low-income families. The neighborhood indicators reports include analysis of families in poverty and worker benefit usage in each of nine central city zipcode areas.