Why Four Policy Pillars? Ensuring economic security draws on four ‘pillars’ of policy: Labor, Benefit, Protection, and Equity. In the context of a changing economy and population, the Academy’s Economic Security Study Panel has developed a menu of options to assure income for people in every stage of life, tailored to the four policy pillars. All aim to fulfill the mission of social insurance to reduce and prevent economic insecurity caused by common life struggles like poverty, sickness, injury, and old age.
The taxing and spending by the federal government that results in money or resources to households through explicit transfer programs, social insurance systems, or tax expenditures.
Challenges to Economic Security and Potential Solutions
Low incomes: Many households experience hardships that warrant support at some point in their members’ lives. This is particularly true among low-income households. Benefit policy alleviates these hardships by providing people with cash or equivalent benefits through social insurance, social assistance, and tax programs. Access to adequate income for all is a critical piece of any economic security plan.
Negative financial shocks: Social insurance programs like Social Security collect contributions from workers, employers, or both to ‘insure’ workers against negative financial shocks. Job loss, injury, and retirement, for example, all cause income losses that hinder workers’ abilities to meet costs of living. More generous, stable social insurance benefits may better protect working families against financial disaster during an income loss or high-cost event.
Households in poverty often rely on social assistance programs like Supplemental Security Income (SSI) or Supplemental Nutrition Assistance (SNAP) to help cover basic needs. Specific circumstances, such as whether one has a qualifying disability and household size, affect benefit eligibility. Relatively low benefits, steep benefit losses when one earns more income, and difficult application processes currently limit the positive impacts of social assistance programs. Program changes and new policies might aim to offer broader access to a stable income, with less burdensome applications and less severe benefit losses when earning income.
Tax credits support working households by reducing owed taxes. Tax-filers may even receive payment if a credit is ‘refundable’ and worth more than they owe. The most common tax credits, such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), go to workers with children, but new options may extend to all low-income tax-filers.
Low-income communities, however, do not file taxes at high rates, and some credits are not refundable.Prior to COVID-era expansions to make the CTCfully refundable, which have now expired, more than one in three children lived in households with incomes too low to receive the full $2,000 credit.Greater outreach and increased refundability will help maximize the impact of tax credits for those most in need of financial support in the U.S.