Some Missouri workers are refusing raises because they will lose money if they accept them. They’re caught in a dilemma that originated several years ago when the state approved a child care program to move people off welfare by subsidizing their child care, allowing them to take jobs. But the program has created something St. Joseph senator Rob Schaaf calls “the wage trap.”
They won’t take a raise or work an extra shift that means extra income because the money would exceed the income that allows them to get child care payments. And the amount they then would have to pay for child care would exceed the amount of the raise or the extra shifts, meaning a net loss.
The legislature has approved Shaaf’s plan to set up two pilot programs, one in a city, one in a rural area, that lets people take their raises. They could keep half the raise. The other half would offset part of the state subsidy.
Kansas City Senator Jolie Justus calls the plan an effort to make it easier for people to get off welfare.
If the program works, Schaaf says, people could work their way off of welfare and the state will save milions in child care payments. He says the idea might work in other welfare programs, too.