Virginia is well on its way to economic recovery for many families, but working families across the state are telling me and other legislators that they feel like the recession never ended. Even in Northern Virginia, home to some of the wealthiest localities in the country, too many families struggle to earn enough to pay for basic necessities despite having full-time jobs.
At the same time that households are struggling, Virginia’s economy is growing at a snail’s pace, according to studies by the Commonwealth Institute for Fiscal Analysis. Job growth has not kept up with the number of workers who want jobs, and state revenues have fallen as a result. Virginia needs families who earn good wages, who spend their earnings in the local economy to buy fuel, food, clothes, and other necessities, and who in doing so, help jump-start our economy. But when wages stagnate, the economy stalls, and that hurts all of us.
Fortunately, we have proven policy solutions to help strengthen our working families. We can make our state’s Earned Income Credit (EIC) refundable and increase the minimum wage. Unfortunately, many of my colleagues in the General Assembly have chosen to leave these income boosting solutions on the table. That’s unfortunate and short-sighted.
The Earned Income Credit is a targeted tax credit that middle class and low-income families can claim at tax time to reduce what they owe in state income tax. It also promotes work because you have to be working in order to claim it, and the credit is structured to reward working more hours.
As it stands now, if the value of the credit is greater than what you owe in state income tax, you’re not able to get the difference in a refund. But if the EIC were refundable, working families would get back some of their wages that they paid in sales taxes in one lump sum to pay for a car repair or for the child care they need to go to work. Nineteen states provide for some amount of refund.
While the EIC provides a bump in income once a year, raising the state minimum wage will increase earnings for low-wage workers in each paycheck. If Virginia increases the minimum wage to just over $10 by 2017, close to 700,000 workers throughout the state would see an increase in their wages. Out of this group, the vast majority are 20 or older, and close to 300,000 children have at least one parent who will get a raise. Clearly, increasing the minimum wage predominantly helps working adults, not just teenagers, and it will help many parents who rely on these wages to care for children. More money to the working poor generates economic activity for small businesses.
Making Virginia’s Earned Income Credit refundable and increasing the minimum wage should be part of an effective, long-term strategy to strengthen our families and the economy. I have introduced two bills to accomplish this purpose. I hope local business groups will drop their opposition in order for the bills to pass. These bills should not be partisan. They will benefit all Virginians and Virginia businesses.