Making the Vision a Reality: Raising the Minimum Wage and Enacting a Kentucky EIC

icon_economicIn his 2014 State of the Commonwealth address, Governor Beshear described a “collective vision of a stronger Kentucky” as a place “where every family enjoys financial security and a high quality of life.” This is undoubtedly a worthy vision, yet given the current picture of our state, it will take a number of important steps to make that happen:

  • Kentucky’s poverty rate has risen to 19.4 percent (One of the five highest poverty rates in the United States).
  • More than one in four Kentucky children now lives in poverty with more than one in ten living in extreme poverty.
  • Income inequality in the Commonwealth continues to grow with the richest five percent of households making an average income twelve times as large as the poorest twenty percent.
  • More than a quarter of all jobs in Kentucky are low wage.

Working families are struggling just to stay afloat, never mind get ahead. We live in an era when even full-time employment is no guarantee of economic stability—a single parent of two children working forty hours a week at $9 an hour would still fall below the federal poverty line.

Kentucky’s economic climate may seem bleak at times, but there is hope. Indeed, 2014 could be the year that Kentucky lawmakers prioritize hardworking families by providing the support that they so desperately need by raising the minimum wage and implementing a refundable Kentucky Earned Income Credit (EIC). Individually, both of these measures would provide substantial financial support to Kentucky’s families (see KYA’s EIC brief and the Kentucky Center for Economic Policy’s minimum wage brief for detailed information). Together, a higher minimum wage and a state EIC could do more to support work and reduce poverty than either policy could alone.

Each of these policies—the minimum wage and the EIC—is targeted at a specific population. A minimum wage increase would benefit all workers earning the lowest hourly wages regardless of family size, marital status, or total household income levels. On the other hand, the EIC primarily targets working families with children and is not limited to only those workers earning minimum wage. While there is undoubtedly considerable overlap between these two groups, many individuals may benefit from one and not the other. Both policies would play a distinct yet complementary role in supporting Kentucky’s low- and moderate-income working families.

A minimum wage increase coupled with a state EIC would help working families that qualify for both pay for different types of expenses at different times. The higher minimum wage would be reflected in every paycheck boosting a family’s ability to cover regular expenses like rent or childcare. A Kentucky EIC would be paid annually to boost a working family’s tax refund. Families could use this money for larger expenses like repairing a vehicle or paying for dental care. This two-pronged strategy of income support would provide a much-needed helping hand for Kentucky’s working families as they struggle to become financially secure without government support.

If this collective vision of a stronger Kentucky is to become a reality, now is the time for action.  Call upon your legislators to support the minimum wage increase and implement a Kentucky EIC.

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