Study: Government Aid Keeping Some Low-Income Workers Out of Workforce

In its examination of why the workforce participation rate has not recovered to pre-pandemic levels, the Federal Reserve Bank of Cleveland recently published this report based on its review of Census Bureau survey data. The study reports that the fastest growing reason prime-age workers were not re-entering the workforce was due to “unspecified” or “other reasons” — as opposed to lack of childcare or lack of employer demand.

Low-income households, as well as less-educated individuals, were far more likely to select “other reasons,” the study found. Moreover, Medicaid recipients significantly boosted the survey’s reporting of “other reasons” — highlighting the effect of the so-called “benefits cliffs,” in which individuals may lose government benefits when taking a job. 2/21/2022

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