A new policy brief from Ball State University’s Center for Business and Economic Research (CBER) examines why moving from part-time to full-time work may yield little net improvement for some households already living in poverty—even though full-time employment is associated with significantly stronger economic wellbeing for most working households.
The brief—"Work Disincentives: Policy Responses to Low Returns of Full-Time Work for Poor Households”—is based on research published in the Journal of Poverty (2023) by Dr. Emily Wornell, associate director of research for CBER, and her coauthors Monica Fisher, Jeffrey J. Reimer, Paul A. Lewin, and Bruce A. Weber. Drawing on national household data from 2010–19, the research evaluates changes in economic wellbeing using measures that account for both income and necessary expenses.
Across two analytical approaches, the study finds that full-time work is associated with sizable gains in wellbeing for working households overall, but almost no measurable improvement for households already living in poverty.
“This research is about what families experience in real life: earning more hours doesn’t automatically mean having more left at the end of the month,” said Dr. Wornell said. “When increased earnings are offset by higher out-of-pocket costs or changes in public benefits, households can end up with little net gain—even after moving into full-time work.”
The brief points to two major forces that can blunt the return to full-time employment for households in poverty. First, some costs rise alongside work hours—particularly expenses tied to health care, transportation, and childcare. Second, income gains can coincide with reductions in assistance as eligibility changes and benefits phase down, creating complex tradeoffs that vary by household and circumstances.
“The takeaway is not that work doesn’t matter—it does,” Dr. Wornell said. “It’s that policy design matters, too. The goal should be to ensure that taking more hours reliably translates into greater stability and upward mobility.”
The brief doesn’t point to a one-size-fits-all solution. Instead, it lays out several policy approaches that research suggests can help ensure work leads to higher net resources. These include smoothing benefit phase-outs, reducing key household costs, and improving coordination across public supports.
Since its inception in 1970, Ball State’s Center for Business and Economic Research has been a trusted source for high-quality, nonpartisan, data-focused research, analysis, and visualization. For more information, visit the CBER website, call 765-285-5926, or email cber@bsu.edu.