Freedom’s Unfinished Work: This Independence Day, Let’s Commit To Ending Working Poverty

Every Fourth of July, we celebrate the American experiment — our audacious declaration that all people possess “unalienable Rights” to life, liberty, and the pursuit of happiness. Yet 249 years later, those promises remain out of reach for millions whose daily lives are defined by poverty and economic insecurity. As Amartya Sen reminds us, poverty is best understood as a cluster of unfreedoms — barriers that limit choice, invite coercion, and leave people without real control over their futures. Any legislation worthy of Independence Day must confront those unfreedoms, not deepen them. Unfortunately, the so‑called “One Big Beautiful Bill” now before Congress travels the opposite path.

Medicaid work requirements work against the freedom of working people. Work requirements are touted as necessary to counteract the laziness of people who just choose to live off the government. But just scratch at the surface of that argument and the logic falls apart. People can’t eat their Medicaid benefits. Nor can they use them to pay the rent or meet any of their other basic needs. And we already have work requirements on cash assistance and food assistance programs, so preventing nondisabled working adults from living off of benefits in lieu of working is already baked into other parts of our safety net. Adding work requirements to Medicaid just adds a paperwork burden that wastes money on administrative processes and denies services to people who desperately need them. The Medicaid work requirements are in truth just a mechanism to cut billions of dollars from the Medicaid budget, even as the public prefers the government sustain or even expand Medicaid funding.

Another way the bill reduces the freedom of working people is the tax provisions that are ostensibly to benefit working people: the elimination of taxes on overtime and tips. There are a number of issues related to how the provisions are structured that will affect how many people actually see a tax reduction from the policy and the size of that reduction. Regardless of how those details shake out, the choice to remove taxes on these two forms of pay encourages this method of compensation, but these forms of compensation cut against the notion of expanding working people’s freedom.

Mandatory overtime is common in industries such as manufacturing, retail, health care, and emergency services. Mandatory overtime is as it sounds — not something that workers freely choose, but a requirement imposed by employers. In her book, Brigid Schulte explores in detail the harms of overwork, including elevated rates of worker stress, burnout, and workplace injuries and accidents. In addition, overwork takes people away from their families and can put stress on healthy family life. And further, overwork can reduce worker productivity and increase the likelihood of mistakes, creating costs for business. Eliminating taxes on overtime encourages businesses to demand overtime of their workers. In other words, it normalizes overwork. And while reducing taxes on overtime may sound like money in workers’ pockets, employers will keep this tax benefit in mind as they set wages and adjust accordingly. Recognizing the harms of overwork to health and family life, labor unions fought decades ago to establish a 40-hour workweek so workers would have the freedom to enjoy their families and life beyond work. By encouraging overwork, the policy to eliminate tax on overtime pay reduces workers’ freedom.

Similarly encouraging tips as a form of payment reduces worker freedom, as the method leaves workers reliant on the whims of customers. Tipping took root in the US in the wake of slavery, and may have originated as a practice in the feudal caste system of the Middle Ages. It is a practice that explicitly puts the worker in a subservient position to the customer, dependent on their largesse. In addition, a tipped income is often irregular as it is dependent on the amount of business there is in addition to the choices people make about whether and how much they would like to tip. Balancing irregular income against regular monthly bills creates many hardships for workers with low earnings. The growth in reliance on tips by low-paid workers also fatigues consumers who question why they need to tip so much and so often. The unequal relationship between a tipped worker and a customer often results in the workers experiencing harassment or demeaning treatment at work. Indeed the restaurant industry is rife with harassment in part due to the vulnerability of workers who rely on tips. For businesses, however, expanding worker reliance on tips means reducing their labor expense, so again, we have a tax policy masquerading as being good for workers that perpetuates worker unfreedom and offers more benefit to employers.

If Congress truly wants to reduce dependence on public benefits, it should make work pay. Last year over 23 million workers claimed the Earned Income Tax Credit because wages alone could not meet their household’s basic needs. Only 24% of adults in households below twice the poverty line have employer‑provided health insurance. A quarter of workers aged 25‑54 earn low wages, and the country is growing comfortable with the idea of the “working poor” — even the “working homeless.”

How did we allow this in the land of the free? When millions of working people cannot count on a roof overhead or care in times of need, they are not truly free. If the president and Congress care about freedom, they must craft a very different Fourth of July bill — one that confronts economic unfreedoms and completes the work of independence.