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Council Budget Office releases Economic and Policy Impact Statement: Approaches and Strategies for Providing a Minimum Income in the District of Columbia

On Tuesday February 27, 2018, the Council of the District of Columbia's Office of the Budget Director released a report on the feasibility of a public program which would guarantee that every resident has enough resources to meet their basic needs entitled Economic and Policy Impact Statement: Approaches and Strategies for Providing a Minimum Income in the District of Columbia.  This report was prepared at the request of Councilmember David Grosso and Chairman Phil Mendelson and is the second report that the Budget Office has prepared under D.C. Council Rule 308. The first such report was on the Universal Paid Leave Amendment Act, which is now law.

Four documents are linked below and can be found on the Council’s website:

From the Council's Budget Office:

This report offers the Council an evidence-based resource for weighing this proposal’s policy implications and economic costs and benefits.   The study is divided into three sections:

  1. An analysis of D.C.’s cost of living versus the social safety net benefits available to low-income households.
  2. A discussion of three methods for providing a minimum income: a negative income tax, a guaranteed minimum income, or a universal basic income.
  3. An economic analysis of a minimum income program’s impact on the D.C. economy using REMI, a widely used economic forecasting model.

The report confirms that it is very difficult for low-income households living in the District to make ends meet. The public social safety net provides enough resources for some, but not most, low-income households to meet their basic needs. 

  • The estimated level of income that three, typical households in the District would need to pay for their basic necessities absent government benefit programs is higher than the current minimum hourly wage of $12.50.   The income levels are as follows:
    • Single adult:  Annual income of approximately $36,988 or an hourly wage of $17.78. 
    • Single parent with one child: Annual income of about $66,113 or an hourly wage of $31.79.
    • Single parent with two children: Annual income of roughly $96,885 or an hourly wage of $46.58.
  • A prototypical single, working age adult without a disability whose earned income falls below the Federal Poverty Level would not be able to meet their basic needs even if they received all the public social safety net supports to which they are eligible.
  • The existing social safety net is robust enough to allow a prototypical extremely low-income single parent with one or two children to meet their families’ needs, assuming they can access all the public benefit programs to which they are eligible (including a housing voucher). It is important to note that eligibility for a safety net program does not guarantee receipt of the benefit.  

The study forecasts economic conditions under four possible minimum income scenarios relative to a projection of the conditions if there was no change in policy. The study predicts that a minimum income program would negatively impact economic growth, although the magnitude varies greatly depending upon the program’s design.

  • Raising households’ income to 100% of the Federal Poverty Level is likely to have a relatively small negative impact on the District’s economy and labor force. It would cause the D.C. economy to add 1,600 to 3,000 fewer jobs and increase GDP by $99 million to $185 million less over the next ten years than otherwise projected.
  • Raising households’ income to 450% of the Federal Poverty Level—roughly D.C.’s cost of living—could have major implications for the District’s economy and tax base. It would reduce the number of jobs in D.C. held by residents by 101,000 to 138,000 over ten years. The District would likely forgo about $2.6 billion each year in federal payments and grants. Such a program could increase local expenditures by $7 billion to $9 billion per year, essentially doubling the District’s current local funds budget.

 

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A Good Day for D.C.

I just came from a mark-up of education bills that increased our investment per student in areas of the city that need it the most. Now I am gladly supporting an increase in the minimum wage and sick leave for restaurant workers. These two items are not unrelated – and in fact, I am very pleased to support our students and increase wages for entry level positions. This is a two-front battle against generational poverty.

Increasing the minimum wage is a victory for workers. It is long overdue and I am very happy to see that we won’t have to have a jump like this again now that we have indexed the wage including cost-of-living increases. Businesses in the region can now have the certainty they are seeking and workers in the area have come close to realizing the entry level living wage that they deserve.

I introduced an amendment to the bill that will hopefully make the minimum wage reporting provision less burdensome on restaurants by requiring all minimum wage certifications to be available online. I will follow up with the appropriate agency to ensure this is a simple one-click certification if no wages had to be supplemented and a two-click process when wages do have to be supplemented. All enforcement and certification should fall on the agency, not on the business. Businesses just need to keep good records in case of an audit, as they should anyway. The desired outcome of this provision, and this amendment to it, is an increase of prosecution of bad actors and less burden on responsible business owners.

Voting today to support a focused effort to improve education where it is most needed and higher wages for those who most need it is why I ran for office. This is a good day for D.C. 

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