MAKING AMERICA WORK
II. Recent Policy Trends Encouraging Work
First, we have changed the focus of welfare programs to encourage work. For example, the earned-income tax credit subsidizes the earnings of low- income workers, and the Welfare Reform Act of 199615 included many pro- work provisions.
Second, we have significantly reduced the income tax rates imposed on earned income. The maximum statutory rate is now just 35%, down from more than 70% in the 1950s, back when Ronald Reagan was just another movie actor.
Third, we have outlawed employment discrimination because of an individual’s race, color, religion, sex, national origin, age, or disability. The result has been a remarkable increase in the labor force participation of workers in the affected groups and increases in their relative earnings. For example, 59% of women are working today, up from just 43% in 1971, and women workers now earn 81% as much as men, up from just 63% in 1979.
Fourth, we have changed Social Security, pension, and labor market policies to encourage elderly workers to remain in the workforce. For example, we have banned employment discrimination against older workers, and we have outlawed mandatory retirement.
III. The Need for Further Reform But, there is still more for us to do. A. Increase the Economic Rewards for Low-Skilled Workers
First, government policies should increase the economic rewards for low- skilled workers. That will make work more attractive than welfare, and it will make honest work more attractive than the wages of crime. Pertinent here, the United States has the highest incarceration rate in the world — 486 adults per 100,000 in 2004 — and the U.S. incarceration rate has increased dramatically in the past couple of decades. Indeed, Figure 7 shows that the number of people in prison or jail increased from 500,000 in 1980 to more than 2.1 million in 2004. Almost 90% of those incarcerated are men, and almost 56% of those men are under the age of thirty-five.
15. Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193, 110 Stat. 2105 (codified as amended in scattered sections of 42 U.S.C.).