battered by the storm: how the safety net is failing americans and how to fix it

7/27/2019 Battered by the Storm: How the Safety Net is Failing Americans and How to Fix It

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How the Safety Net is Failing Americans and How to Fix it

Battered by the Storm

December 2009

A Studyby the Institute for Policy Studies, the Center for

Community Change, Jobs with Justice, and Legal Momentum

Co-Authors: Deepak Bhargava, Timothy Casey, John Cavanagh, Karen Dolan,

Peter Edelman, Barbara Ehrenreich, Sarita Gupta, Dedrick Muhammad, Diana

Pearce, Steve Savner, and Kevin Shih.


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Special Tanks: Tis study was made possible by a generous grant rom Max Palevsky, whose passion or the arts

and social change has supported many endeavors or a better world.

Acknowledgements: Te authors would like to thank Dean Baker or his assistance on the unemployment sections,Chuck Collins or his assistance on Chapter 3, Sarah Anderson and Jen Doak or careul editing assistance, om

Lewandowski or assistance on the boxes, Danilo Pelletiere or his assistance on the housing section, Deborah Wein-

stein o the Coalition on Human Needs or her analysis o the Recovery Act, as well as amar Abrams, Germonique

Ulmer, and Erin Smith or their leadership on communications.

Research Assistance: Ariadne Anisimova

Report Layout: Erik Leaver

Cover Design: Nate Kerksick

For additional copies o this report, see: www.ips-dc.org

2009 Institute or Policy Studies, Center or Community Change, Legal Momentum, and Jobs with Justice


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Table of Contents

Key Findings ................................................................................................................... 1

Introduction ................................................................................................................... 3

Chapter 1: Te Economic Crisis and Expanding Hardship ............................................ 4

Te Unemployment Crisis .......................................................................................4

Rising Poverty ..........................................................................................................5

Rising Foreclosures, Doubling Up, and Homelessness ..............................................7

A Recession or Whites is a Depression or Arican Americans, Latinos, and

Single Mothers and Children ............................................................................. 9

Conclusion .............................................................................................................12

Chapter 2: Te Social Saety Net in the Economic Crisis .............................................. 13

Te Saety Net in America oday ...........................................................................13

Unemployment Insurance ......................................................................................14

emporary Assistance to Needy Families (ANF) .................................................. 17

Food Stamps/Supplemental Nutrition Assistance Program (SNAP) ........................20

Housing Programs, Renters and the Foreclosure Crisis ........................................... 22

Child Care Programs ..............................................................................................23

Conclusion .............................................................................................................24Chapter 3: An Emergency Relie Package ..................................................................... 25

Federal Investments to Spur Job Creation and Ensure Needed Services Are

Available ............................................................................................................ 26

Expansion o programs that provide income or income equivalents to help people

better weather the storm ....................................................................................27

How to Pay or the Emergency Relie Measures .....................................................30

Chapter 4: Principles or a More Eective Approach to End Poverty ............................ 32

Endnotes ....................................................................................................................... 34


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Key Findings

1

Key Findings

1. The Economic Crisis is Still

Spreading for Millions:

Unemployment: Octobers 10.2 percent

ocial unemployment level is expected to

keep rising into 2010, and levels o long-

term unemployment, underemployment,

and discouraged ormer workers are reach-ing historic levels.

Poverty and Hunger: Improved (but still

low) poverty measures reveal that in 2008,

nearly 50 million Americans were poor,

including nearly one in ve children, and

these numbers are expected to rise urther

in 2009 and 2010. Likewise, hunger (peo-

ple with inadequate access to ood) aectsmore than 50 million Americans, including

almost one in our children.

Housing: Te burst housing bubble o

2008 has resulted in a current rate o rough-

ly 150,000 home oreclosures a month, a

trend which is slated to continue into next

year and beyond. Tis will aect 10 percent

o homeowners by 2012.

Race and Gender: Statistics show that what

is an economic recession or Whites is an

economic depression or Arican Americans,

Latinos, single mothers, and children.

2. The Social Safety Net,

Eroded Over the Past 30

Years, has Failed Millions of

Poor People:

Te Recovery Act: Te February 2009

Recovery Act is providing hundreds o bil-lions o dollars to saety net programs and

has helped save lives, but tens o millions o

Americans are still jobless and precariously

housed or homeless.

Unemployment Insurance: Roughly 57

percent o unemployed people are receiving

unemployment compensation; or those re-

ceiving benets, amounts are less than halo wages, and many are losing work-related

health benets.

emporary Assistance or Needy Families

(ANF): Te percentage o poor children

receiving temporary assistance under the

main ederal welare program has allen

rom 62 percent in 1995 to 22 percent in

2008. ANF benets in 2008 averagedonly 29 percent o the money needed to

reach the ocial poverty line.

Food Stamps: Te ederal ood stamp

program is the saety net program that

has responded most to rising needs, with

the number o amilies receiving benets


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2

jumping rom 13 million households in

June 2008 to 16 million households in June

2009. Yet, the average benet is less than

$300 per month per household.

Child Care: Even while labor orce par-

ticipation o mothers has increased, the

supply o aordable child care has lagged

ar behind, creating a signicant barrier

to employment or many, especially single

mothers.

3. Americans Need an

Emergency Relief Package

Immediately

A $400 billion emergency relie package

could create 1 million new jobs, cover the

huge fscal defcits o states and localities,

and cover major shortalls in saety net

programs:

o Jobs: A public jobs program o $40 bil-

lion can create 1 million jobs.

o State and Local Fiscal Decits: Up to

$270 billion will be needed in 2010 to

cover state and local decits, which could

sustain vital unding or critical saety net

programs, and could save the jobs o mil-

lions more workers.

o Saety Net: Just over $100 billion or the

expansion o programs that provide in-

come or income equivalents to help people

better weather the storm: emporary As-

sistance to Needy Families (ANF), Un-

employment Insurance, and Food Stamps;

and new policies to address the housing

oreclosure crisis.

Most economists agree that such job cre-

ation and saety net spending are vital in a

crisis like this, even without new revenues.

One o the reports authors details how the

$400 billion package could be unded by

tax shits to close oshore tax havens, curb-

ing speculative stock trades, and raising the

top marginal rate to the levels that preceded

the most recent Bush tax cuts.

4. Americans Need A Long-

Term Strategy to Create

an Effective Safety Net and

Eliminate Poverty

We need a longer-term strategy to end thescourge o poverty in our nation and to help all people

achieve a living income, without regard to race, reli-

gion, or gender. Such a strategy would include raising

the income o current workers and recipients o public

benets, establishing a robust and eective saety net,

investing in the uture o our children, and creating sae

and healthy communities or all people.


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Introduction

3

Introduction

The Great Recession o 2008-09 has bat-

tered the livelihoods, homes, and security o

American amilies. Just as Hurricane Katrina

exposed the weakness o our nations physical saety in-

rastructure, this economic storm has exposed the weak-

ness o our nations social saety net.

Seventy-ve years ago, New Deal programs cre-

ated in response to the Great Depression laid a broad

oundation or economic protection. Programs such as

Social Security, unemployment insurance, and Aid to

Families with Dependent Children served as a buer

when jobs and income were scarce. In addition, the

Works Progress Administration and Civilian Conserva-

tion Corps provided jobs to millions. Te Great Society

programs o the 1960s expanded this inrastructure with

Medicare and Medicaid. More recent decades saw thecreation o ood stamps, the Earned Income ax Credit,

and the Child ax Credit.

However, over the past 30 years, these pro-

grams have been seriously eroded, in part as the result o

infation, but also by neglect and, some would say, even

by design. As this report documents, the current reces-

sion has only widened the already gaping holes in our

social saety inrastructure. While some have declared

the recession over, pointing to the bull market and

overall economic growth, this report documents how

the economic storm is raging on in homes, tent cities,

and shelters across the country. It then looks at how the

American Recovery and Reinvestment Act (ARRA) o

2009 has perormed thus ar.

In the last two chapters, we oer immediate

policy solutions, ollowed by an outline o long-term

measures based on universal principles o equality and

social justice. We believe these practical and aordable

remedies are necessary to conront the greatest econom-

ic storm in a generation and to build the 21st century

saety net needed to weather uture storms.


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4

Chapter 1: The Economic Crisis andExpanding Hardship

Ater the Dow climbed above 10,000 in Octo-

ber, many pundits declared the worst o the

economic crisis over. America is back on its

eet, they crowed.

Tis may be true or some on Wall Street, but

its most certainly not true or tens o millions o Ameri-

cans who have lost their jobs, plunged rom the middle

class into poverty, or been ailed by our rickety social

saety inrastructure. Te crisis endures. It is deep, it is

measurable, and it aects all o us.

In this section, we look at the state o unem-

ployment, poverty, and housing in America, highlight-

ing the eects on already economically vulnerable

populationsArican-Americans, Latinos and emale

heads o households.

The Unemployment Crisis

As the stock market has rebounded, the num-

ber o people without jobs has continued to grow. And

while the unemployment rate typically alls quickly ol-

lowing a recession, this is not likely to be the case with

this downturn.

In October 2009, earlier than predicted, the

unemployment rate went into double digits, hitting

10.2 percent.1 Te Congressional Budget Oce has

projected that this rate will average 10.2 percent in

2010 and decline only slightly to 9.1 percent in 2011.

By 2012, unemployment is expected to still be as high

as 7.2 percent, almost three ull percentage points above

pre-recession levels.2

Not only are more people unemployed, they

are staying unemployed longer than in past recessions.

Te high rate o long-term unemployment (those who

are unemployed or six months or more) reveals the

depths o the crisis. While there has been a 36 percent

increase in jobless workers since December 2008, long-

term unemployment is up 110 percent over the same

time period.3 Tis means that the number o jobless

workers experiencing long-term unemployment has

increased at three times the unemployment rate.4 Alto-

gether, nearly 5.5 million Americans, or 35.6 percent o

all jobless workers, have been out o a job or six months

or more.5

Te crisis has been particularly brutal in the

industrial heartland, once a middle class stronghold.

Te Congressional Budget Oce reported in 2004 that

manuacturing jobs nationwide, at 14 million, were

the lowest in over 50 years.6 In the current recession,

another two million o these relatively high-paying jobs

have been slashed. In one chilling sign o the hollowing

out o U.S. industry, two ormer manuacturing hubs in

Michigan have recently joined the ranks o the top 10

poorest communities in the country.7

Te ocial unemployment numbers do not ac-

curately represent the impact o todays recession, since

they do not include the millions o Americans that are

underemployed or have given up looking or a job.


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Te Economic Crisis

5

Underemployment reers to the ollowing two

kinds o working conditions: 1) when high-skilled

workers are employed in low-wage jobs that do not

require their level o expertise, and 2) when peoplewho would like to work ull-time are orced to work

part-time. As people experience unpaid urloughs and

cutbacks in hours, the number o underemployed has

risen to 11 million.8 Tis makes the combined total o

underemployed and unemployed 27.4 million workers,

or 17.5 percent o the workorce.9 And job cutbacks and

losses are not distributed evenly. As Lawrence Mishel,

president o the Economic Policy Institute, points out,

blue-collar unemployment is rising three times as ast as

white-collar unemployment.10

Latinos and Arican Americans are being hit

harder than the general population. Since the recession

began in December 2007 unemployment among Lati-

nos, who are heavily employed in the housing industry,

has jumped the most, by 6.9 percentage points, to 13.1

percent. Arican-American unemployment has risennearly as much, by 6.8 percentage points to 15.7 per-

cent. Among whites, the same rate has increased by 5.1

percentage points to 9.5 percent.11 While women over-

all have a lower ocial unemployment rate than men,

women who are ull-time caregivers are not counted as

unemployed, even i lack o childcare is the reason they

are not looking or work. ogether with men who have

given up looking or work, there has been a decrease in

the proportion o adults in the workorce o 5.8 percent,

or 13.8 million ewer people in the workorce.

Rising Poverty

An all too common cultural view in the United

States is that the poor are a small, permanent sector

o the population, made up predominantly o Arican

Americans, Latinos and single mothers who are lazy,

promiscuous, or drug-addicted. In reality, poverty is

widespread: It aects all races, two-parent and single-parent amilies, and the employed as well as unem-

ployed. Children are the hardest-hit. According to

Washington University Proessor Mark Rank, rather

than a condition o the undeserving poor, poverty in

America is a state into and out o which a majority o

the population will move [over their lietimes].12

Te current crisis has opened many eyes to this

sad reality. Recent Census Bureau data show that nearly

40 million people, or 13.2 percent o the population,

were living in poverty in 2008, the highest level in over

a decade (the income threshold or a amily o our was

$22,050).13 Real median household income declined

3.6 percent between 2007 and 2008 to $50,303, the

largest single-year decline on record and the lowest

amount in real dollars since 1997.14

In percentage terms, people o color and chil-

dren are suering the most. Te poverty rate was 24.7

percent or Arican Americans and 23.2 percent or La-

tinos.15 As o 2008, 19 percent o all children under 18

lived in poverty. While children only represent a quarter

o the U.S. population, they represent 35 percent o

those living in poverty. Te economic crisis o the past

year has made things much worse. Te overall national

child poverty rate is expected to increase to 25 percent

by the end o 2009, and the rate or Arican-American

children is expected to exceed a shocking 50 percent.16

Te picture will only look gloomier as more

recent data become available. Te Economic Policy

Institute has projected that the overall poverty rate will


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6

Box 1: There are No Jobs

Robin Needham, Kendallville, Indiana: My husband lost his job in March and has been laid off since. Weve

had a hard row weve been hoeing. Jobs are just not out there, and weve got an unemployment system that

seems to be broken.

Were surviving basically on unemployment right now. . Im looking for a job, my husband is looking for a job,

and theres just no jobs out there. Weve both gone to temporary services and signed up, and we havent got-

ten any jobs because we want fulltime work and we want to stay in the general area because gas is so high.

So, my husband signed up for unemployment and it took a long to get it rolling, and thats what we are living

on right now. But its hard.

We were both foundry workers. When I had my children, I quit to stay home and raise my kids. My husband

worked at Dalton for over 18 years until they closed. . My kids are doing okay. . They are both teenagers. They

both couldnt nd jobs this summer, which was kind of discouraging for them. They thought theyd be able to

walk into some kind of part-time job. They are both good kids, they get straight As. And we tell them, this is

just how it is.

They are also active in the Unemployed and Anxiously Employed Workers Initiative, and they campaigned on

the campaign trail for all the politicians that came up. So they are learning at our knee to ght for what rights

they have and keep it going.

Theyve stood in line with us in the unemployment ofces and they see how the system is really broken, and

how long you really have to wait, and if you leave early how youre out of luck.

They saw one lady there with her kids, her little girl had to go to the restroom and there wasnt a restroom she

could use there. So, she left to go next door to use the restroom at the bank. . When she came back they said,

we called your number, were sorry; come back the next day. And this woman, she cant afford child care

right now because she is unemployed. And I remember my kids thinking this is really sad, because the lady

just dissolved into tears. You wait in long lines, they give you an 800 number. . It never gets answered at the

state level and if you email them that doesnt get answered either, so, its hard.

This interview was conducted by The Unemployed and Anxiously Employed Workers Initiative in September 2009.


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Te Economic Crisis

7

likely increase by 1.5 percentage points in 2009 and by

an additional 0.4 percentage points in 2010, or a total

increase o 2.6 percentage points rom 20072010. For

children, the poverty rate will likely increase 8.6 per-centage points rom 2007 to 2010, to 26.6 percent in

2010. For Arican Americans, the poverty rate will likely

increase by 7.3 percentage points rom 20072010. By

2010, EPI projects that nearly one-third o all Arican

Americans living in the United States will be living

in poverty.

However, given that the Census Bureaus meth-

odology or measuring poverty has not been updated or

40 years, even these numbers seriously underestimate

the number o people lacking adequate income.17 Te

Census Bureau itsel acknowledges as much by report-

ing two numbers, the ocial rate as well as an alterna-

tive measure recommended by the National Academy

o Sciences (NAS) that uses only slightly higher poverty

thresholds. Tis NAS measure estimates that there are

about 51 million Americans in poverty, 11 millionmore than the ocial count.18 I a more realistic, geo-

graphically specic measure o the minimum cost o

living were used, such as the Sel-Suciency Standard

(created by Diana Pearce and calculated at the Center

or Women's Welare at the University o Washington),

then the number o people with inadequate income to

meet basic needs, including work-related costs, health

care and taxes, would substantially increase to two or

more times the ocial count.19 Tere is an urgent need

to develop new ocial ederal poverty measures that are

based on more realistic and adequate thresholds than

the current outdated measure.

Te U.S. Department o Agriculture provides

another important poverty indicator by monitoring

"ood insecurity," meaning that at some time during the

year, a household has had diculty providing enough

ood or all members due to a lack o resources. Te

USDA recently reported that in 2008, nearly 50 millionpeopleincluding almost one in our childrenhad

inadequate access to ood.20 Te number was the highest

since the agency began studying the issue in 1995. Not

only is the number o people struggling to get enough

ood increasing, but according to the group Feeding

America, the number o middle-class working amilies

seeking ood assistance is also rapidly growing.21

Rising Foreclosures, Doubling

Up, and Homelessness

Tis Great Recession is perhaps most associated

with the bursting o the housing bubble.

Unortunately, the crisis is not over. Te current

rate o almost 150,000 oreclosures a month is virtually

certain to continue, driven by the painul mix o alling

house prices and high unemployment. Te Center or

Responsible Lending estimates that 2.4 million homes

will all into oreclosure in 2009 and that by 2012, this

number will have increased to 9 million, over 10 per-

cent o the countrys owner-occupied homes.22When

the pace o oreclosures eventually tapers o, the main

reason will be that many o the currently troubled hom-

eowners will have already lost their homes.

Te impact o oreclosure goes ar beyond

the owners o these homes. Neighboring houses oten

decrease in value, shrinking what is most Americans

main source o wealth. Renters, and particularly rent-

ers who are people o color, are also being caught up

in the crisis. Foreclosed rental units are concentrated in


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8

Box 2: To Get Sick in America Without Insurance is

Suicidal

Vera Jan Sizemore worked as a registered nurse in Cleveland, Ohio until she experienced three severe strokes.

She was not able to receive medical care after her insurance company determined that she had a pre-existing

condition that didnt qualify her for care. Due to the actions taken by the insurance company, Jan depended on

her former husband who was a truck driver and a union member, through which he had health care for himself

and his family. In July 1999, Jan woke up after taking a nap with paralysis on her left side that involved both her

arm and leg. Her husband rushed her to the emergency room, where a battery test diagnosed her with a right

cerebral stroke. . Two years after this, Jan and her husband divorced. Due to the divorce, Jan was dropped

from coverage and told that shed have to pay $700 a month to maintain coverage. This wasnt a feasible option

for Jan and she tried to get medical coverage privately. Her efforts were fruitless, as she was either repeatedly

turned down due to her pre-existing stroke condition or asked to pay enormous premiums. So Jan opted to go

to discounted clinics and satellite hospital programs, paying for her hypertension medication with donations from

family and friends.

On November 19, 2007, Jan began experiencing difculty writing, swallowing, standing and talking. She was

rushed to the emergency room and remained in intensive care for four days, only to leave with a total discharge

bill of $6,000. She was denied Social Security for eight months and only got it after eight months of threats to

the Social Security Administration of a congressional investigation. She was awarded Social Security and could

afford to purchase her medicine, but because she didnt qualify for Medicaid, she spent an average of $900 a

month on medicine. After some time, Jan became violently sick. In the hospital, she was moved from oor to

oor and dismissed by doctors and staff. One day, a resident doctor determined Jan needed a CAT scan, which

determined that she needed emergency surgery. After the surgery Jan was in a coma for two weeks and could

barely see for two and a half months. She left the hospital with a $30,000 bill and living expenses that skyrock-

eted to a level she could no longer manage. She is currently in foreclosure, jobless and uninsured. Jan says that

to get sick in America without insurance is nancially suicidal. After 30 years of working to help care for others,

it is horric to see how Jan was treated by the occupation she once worked for.

This story was written by the staff of Jobs with Justice after interviews with Jan.


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Te Economic Crisis

9

low-income, minority neighborhoods, where predatory

lending, alling home prices, and rising unemployment

are also concentrated. Te National Low Income Hous-

ing Coalition estimates 40 percent o amilies acingeviction because o oreclosure are renters (with some

areas having an even higher percentage o renters).23

President Obama signed legislation in May 2009 that

guarantees 90-day notice beore a amily can be evicted,

and protects leases (with limitations) and Section 8 sub-

sidies. However, many renters ace eviction when their

housing changes ownership. Adding to the problem is

the act that oreclosed properties oten remain empty

or long periods o time, creating housing shortages and

crowding in the rental market.

Te recession is pushing many poor amilies

to move in with relatives or riends.24 Tough this may

be an eective strategy to orestall homelessness, at

least temporarily, it also results in the disappearance

o these poor amilies, or the now larger (and oten

overcrowded) doubled-up households oten technicallyrise above the articially low ederal poverty line, and

thus are not counted as poor. One study ound that

when looked at separately, about one-third o doubled-

up amilies were poor, but when they doubled up, only

one-th were poor.25

Finally, the most invisible o the poor, the

homeless, are also increasing. Ocial poverty counts

exclude the homeless, ironically, because these numbers

are based on household surveys. According to the Na-

tional Law Center on Homelessness and Poverty, as o

2007 approximately 3.5 million people (1.3 million o

them children) were likely to experience homelessness

in a given year.26 Te number is estimated to be higher

today because o the recession. Te National Law Cen-

ter on Homelessness and Poverty reports that state and

local homeless advocacy groups are seeing a 61 percent

rise in homelessness since the oreclosure crisis began

in 2007.27

A Recession for Whites is

a Depression for African

Americans, Latinos, and

Single Mothers and Children

As a general rule, the least advantaged get hithardest in a downturn. Tis pattern is holding in the

current economic crisis. As mentioned above, unem-

ployment rates or Latinos and Arican Americans are

substantially higher and have risen aster than those

or whites. Among younger workers the gaps are even

greater, with 41.3 percent o Arican-American teenag-

ers unemployed, compared to 25.3 percent o whites in

their age group.28

Co-authors Barbara Ehrenreich and Dedrick

Muhammad point out in a recent New York imes

article that: In act, you could say that or Arican

Americans the recession is over. It occurred rom 2000

to 2007, as black employment decreased by 2.4 percent

and incomes declined by 2.9 percent. During those

seven years, one-third o black children lived in poverty

and black unemploymenteven among college gradu-atesconsistently ran at about twice the level o white

unemployment. Tat was the black recession. Whats

happening now is more like a depression.29 Ehrenreich

and Muhammad point out that the most dramatic as-

pect o this crisis is the collapse o the Arican-American

middle class.


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10

Box 3: For Whites, a Recession; for African Americans,

a Depression

[Y]ou could say that for African Americans the recession is over. It occurred from 2000 to 2007, as black employ-

ment decreased by 2.4 percent and incomes declined by 2.9 percent. During those seven years, one-third of

black children lived in poverty, and black unemploymenteven among college graduatesconsistently ran at

about twice the level of white unemployment.

That was the black recession. Whats happening now is more like a depression. Nauvata and James, a middle-

aged African-American couple living in Prince Georges County, Md., who asked that their last name not be

published, had never recovered from the rst recession of the 00s when the second one came along. In 2003,

Nauvata was laid off from a $25-an-hour administrative job at Aetna, and in 2007 she wound up in a $10.50-an-

hour job at a car rental company. James has had a steady union job as a building equipment operator, but the

two couldnt earn enough to save themselves from predatory lending schemes.

They were paying off a $524 dining set bought on credit from the furniture store Levitz when it went out of busi-

ness, and their debt swelled inexplicably as it was sold from one creditor to another. The couple ultimately spent

a total of $3,800 to both pay it off and hire a lawyer to clear their credit rating. But to do this they had to renance

their home not once, but with a series of mortgage lenders. Now they face foreclosure.

Nauvata, who is 47, has since seen her blood pressure soar, and James, 56, has developed heart palpitations.

There is no middle class anymore, he told us, just a top and a bottom.

Excerpted from Barbara Ehrenreich and Dedrick Muhammad, The Destruction of the Black Middle Class, New York Times,

August 4, 2009.


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Te Economic Crisis

11

About one in three live in neighborhoods

which are acing a major problem with ore-

closures; and

One-third o older Arican Americans and

nearly 40 percent o older Latinos are post-

poning or orgoing needed medical and

dental care;.

With the higher overall level o emale labor

orce participation, women o all types o background

(but particularly single mothers) are increasingly vulner-

able to economic downturns. Women who are heads o

households have an unemployment rate o 12.9 percent,

compared to 5.9 percent or married women.31 Among

amilies headed by single mothers, 37 percent were poor

in 2008, and the Economic Policy Institute estimates

A recent study by the AARP reports that al-

though older Americans (those aged 45 and over) as a

whole have suered economically during this recession,

the eects have been even more devastating or olderArican Americans and Latinos.30 What the study calls

ethnic boomers and elders have a job loss rate that

is 50 percent higher, and more than twice as many are

nding it harder to pay or ood, heating and other es-

sential human needs in this recession compared to older

Whites. Te ndings also showed that in this demo-

graphic o older Arican Americans and Latinos:

More than one in our are having trouble

paying medical bills;

More than one-quarter are having trouble

paying their rent or mortgage;

Chart 1: Underemployment by Race

5

10

15

20

25

30

Dec2007

March2008

June2008

Sept2008

Dec2008

March2009

June2009

Sept2009

Hispanic: 25.9%

Black: 24.0%

White: 15.0%

Source: EPI analysis o Current Population Survey, data are seasonally adjusted.


16/44


12

that because o rising unemployment, this gure could

climb to 45 percent or 2009.32

Te Joint Economic Committee o the U.S.Congress reports that as o May 2009, the reces-

sion had cost nearly one million single mothers their

jobs. Te report urther explained that among single

mothers, Arican Americans and Latinas are most ad-

versely aected. Job loss undercuts single mothers' abil-

ity to aord health insurance or themselves and their

children. As o last spring, at least 121,000 children

had lost health insurance as a result o rising

unemployment in woman-maintained households over

the previous year.33

Conclusion

What do these alarming trends mean in real

terms or American amilies? Tey mean that more and

more Americans are orced to choose between ood and

rent, between medicine and shelter, between stayingtogether and being orced to live separately in shelters

or doubled-up living situations. Te already-poor, the

near-poor and the middle class are now increasingly

unable to achieve adequate nutrition, maintain good

health, receive a good education, and keep a roo over

their heads. For a growing number o us, the idea o be-

ing able to care or ones amily, raise happy and healthy

children, and contribute productively to society is ast

becoming an unattainable dream.


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Te Social Saety Net

13

Chapter 2: The Social Safety Net in theEconomic Crisis

What is the saety net that Americans

all back on when they ace their own

personal or amily crisis, and how is

it serving those Americans most in need during this

economic crisis?

The Safety Net in America

Today

An imperect but relatively broad oundation

or a saety net was laid 75 years ago, in the midst o this

worst economic crisis o the past century: the Great De-

pression. A strong labor movement, alongside thousands

o citizen organizations that came together to ght or

basic rights and standards, pressed the administration o

Franklin Delano Roosevelt or a broad new set o gov-

ernment programs. Ater widespread social upheaval,

the Roosevelt administration passed through Congress

a set o New Deal programs that included Social Se-

curity, Unemployment Insurance, and AFDC (Aid to

Families with Dependent Children).34 Tree decades

later, in the midst o the civil rights movement and

movements to combat poverty, subsequent programs

such as Medicare,35 Medicaid,36 and ood stamps were

added, substantially strengthening the net.

Despite several decades o legislative rollbacks

and neglect, a variety o ederal and state administered

social saety net programs are still available to millions

o needy amilies in the United States. Some saety net

programs such as Medicare, Social Security, and Un-

employment Insurance are social insurance programs

rather than anti-poverty programs per se. Tese are also

entitlement programs; all who apply and are eligible

are entitled to receive these benets. Te anti-hunger

ood stamp program now known as Supplemental

Nutrition Assistance Program (SNAP) is also an en-

titlement program, but because it is means-tested, it is

limited to those whose income (and assets) all below

program eligibility income limits. Other programs are

means-tested, but not entitlements, being subject to

budget allocations at the ederal and/or state level, such

as emporary Assistance to Needy Families (ANF)

and housing vouchers. In these programs, even i people

qualiy, the number receiving benets is limited by gen-

eral budget allocations. Tis is especially an issue when

government budgets, particularly state budgets, are

strained by alling revenues. Finally, there are tax credits

which, i reundable, go to people at all income levels,but are generally targeted to low income earners and

their amilies, such as the Earned Income ax Credit.

Even beore this recession, our saety net pro-

grams provided uneven protections against poverty. A

recent study by the Center on Budget and Policy Pri-

orities ound that in 2005 (the latest year or which this

data is available), the aggregate o saety net programs

cut the number o Americans living in poverty by 44

percent rom what it would have been had the programs

not existed.37 However, the same report also ound that

these programs eectiveness had eroded over the previ-

ous decade, so that a smaller percentage o children (76

percent in 2005 as compared to 88 percent in 1995) and

jobless workers (60 percent as compared to 70 percent


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14

in 1995) were protected rom alling into deep poverty,

dened as hal or less o the household poverty line.38

In the current crisis, some programs have beenmore responsive than others, and eligibility, benets,

and anti-poverty eects vary enormously rom state to

state, and even within states. One step in the right direc-

tion or meeting some o the challenges came in Febru-

ary 2009, when the U.S. Congress passed the American

Recovery and Reinvestment Act. Roughly a third o this

$787 billion bill went into tax cuts and roughly a third

is going toward job creation. Te remaining third is

going toward saety net programs.39

In the paragraphs that ollow, we examine ve

major saety net programs: Unemployment Insurance

(UI), emporary Assistance to Needy Families (ANF),

Supplemental Nutrition Assistance Program (SNAP)

(ormerly known as Food Stamps), housing and child

care. In each case, we look at both the state and ederal

programs, as these two are inevitably intertwined. Andin each case, we nd variations on three main themes:

Te ability o these programs to respond1.

to rapidly expanding need has been inad-

equate, some much more so than others,

refecting a combination o built-in struc-

tural faws at the ederal level and local

variation in policies and implementation.

Te states came into this recession with2.

widely varying fexibility, scally and

programmatically, to meet the crisis, but

overall it was inadequate and uneven even

beore the economic downturn began.

State budget crises have led to plummeting3.

revenues and rising costs in most states,

straining the already weak saety net,

particularly in states hardest hit by therecession.

Chapter Tree o this study proposes ederal re-

orms that can be enacted quickly and cost-eciently to

provide immediate-term xes or some o the problems

we raise here. Some challenges are longer-term and are

addressed in Chapter Four, which spells out our prin-

ciples or a real saety net and or signicantly reversing

the negative trends we examine here in Chapter wo.

Unemployment Insurance

Te unemployment insurance (UI) program

was established in 1935 to serve two primary objectives:

to temporarily replace a portion o earnings or workers

who become unemployed through no ault o their own,

and to help stabilize the economy during recessionsby providing an inusion o consumer dollars into the

economy. States design their own programs, within the

guidelines o ederal law, and determine who is eligible

to receive state UI benets and how much they receive.

UI benets typically can be received or a maximum

o 26 weeks. On average, UI benets or those who do

qualiy replace about 47 percent o wages.40

In order to tackle the current economic crisis,

the Recovery Act included nancial incentives or states

to broaden eligibility to include more o the unem-

ployed. Forty billion dollars was allocated or the next

two years rom the ederal government to increase ben-

ets provided by unemployment insurance programs.


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Te Social Saety Net

15

Te additional unding increased the unemployment

benets (regular and extended) by $25 per week.41

Also, the Recovery Act extended the deadlineor eligibility or the ederal emporary Emergency Un-

employment Compensation to December 31, 2009.42 It

provides incentive payments to states that include more

people to their unemployment insurance programs,

such as those seeking part-time work and those who

leave work or compelling amily reasons.43 As o June

2009, 25 states had enacted unemployment insurance

reorms that qualiy or incentive unding, while a doz-en states are still actively debating measures to enact the

required reorms to qualiy or Recovery Act unding.44

Four states (Virginia, exas, Alabama, and Florida) have

declined to take advantage o these resources because

Box 4: Catch 22

Kristen and Joe Parente [are] Delaware residents who had always imagined that people turned to the govern-

ment for help only if they didnt want to work. Their troubles began well before the recession, when Joe, a

fourth-generation pipe-tter, sustained a back injury that left him unt for even light lifting. He fell into depression

for several months, then rallied to ace a state-sponsored retraining course in computer repairs only to nd

those skills no longer in demand. The obvious fallback was disability benets, but it became a Catch-22 when

Joe applied, because he was told he could not qualify without presenting a recent MRI scan. This would cost

$800$900, which the Parentes do not have, nor has Joe, unlike the rest of the family, been able to qualify for

Medicaid.

When Joe and Kristen married as teenagers, the plan had been for Kristen to stay home with the children. But

with Joe out of action and three children to support by the middle of this decade, Kristen went to work as a

waitress, ending up, in 2008, in a pretty fancy place on the water. Then the recession struck and in January

she was laid off.

Like most laid-off people, she failed to meet the endishly complex and sometimes arbitrary eligibility require -

ments for unemployment benets. Their car started falling apart.

So in early February, the Parentes turned to the desperate citizens last resortTemporary Assistance for Needy

Families. Still often called welfare, the program does not offer cash support to stay-at-home parents, unlike

its predecessor, Aid to Families with Dependent Children. Rather, it provides supplemental income for working

parents, based on the sunny assumption that there would always be plenty of jobs for those enterprising enough

to get them.


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16

unemployment rates above 8.5 percent. However, due

apparently to a glitch in the law, Congress still must

renew the existing ederally paid extensions beore they

run out on December 31, 2009 or the new extensionscannot go into eect.46 Te National Employment Law

Project warns that unless this action is taken, almost

hal a million people will not receive extensions in Janu-

After Kristen applied, nothing happened for six weeksno money, no phone calls returned. Not until March did

the Parentes begin to receive food stamps and some cash assistance. Meanwhile they were nding out why some

recipients have taken to calling the assistance program Torture and Abuse of Needy Families. From the start,

the experience has been humiliating, Kristen said. The caseworkers treat you like a bum. [T]hey act like every

dollar you get is coming out of their own paychecks.

[The] Parentes discovered that they were each expected to apply for 40 jobs a week, even though no money

was offered for gas, tolls, or babysitting. In addition, Kristen had to drive 35 miles a day to attend job readiness

classes, which she said were a joke.

With no jobs to be found, Kristen was required to work as a volunteer at a community agency. In exchange for

$475 a month plus food stamps, the family submits to various forms of monitoring to keep them on the straight

and narrow. One result is that Kristen lives in constant terror of doing something that would cause the program

to report her to Child Protective Services. She worries that the state will remove her children automatically if

program workers discover that her 5-year-old son shares a bedroom with his sisters. No one, of course, is offering

to subsidize a larger apartment in the name of child protection.

[The] Parentes landlord has just informed them that theyll have to go, because hes decided to sell the building,

and they dont have money for a security deposit on a new apartment. I thought we were good for six months

here, Kristen told me, but every time I let down my guard I just get slammed again.

Excerpted from Barbara Ehrenreich, A Homespun Safety Net, New York Times, July 11, 2009.

o the required policy expansions tied to the ederal

dollars.45

In November 2009, Congress approved a ur-ther extension o up to 14 additional weeks to Americans

in every state, with an extra six weeks o jobless benets

or those workers in states with average, three-month


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Te Social Saety Net

17

ederal guidelines, each state sets its own ANF eligibil-

ity and benet amount rules.

ANF is supposed to be the nation's last line odeense against amily poverty. Yet the program alls ar

short o achieving any such antipoverty goal because it

provides inadequate levels o assistance and reaches only

a minority o eligible amilies. Tese problems have sig-

nicantly worsened since ANF replaced AFDC.

By 2008, the number o children receiving

ANF had allen to only 22 percent o the number o

poor children, down rom 62 percent under AFDC in

1995.51 Eligibility criteria in some states is set at sub-

poverty levels, making many poor children ineligible,

and barriers to access have blocked many poor children

who are eligible rom actually getting assistance.52 Te

percentage o eligible amilies receiving benets has de-

clined precipitously under ANF, alling rom 84 per-

cent in AFDC's last ull year in 1995 to 40 percent in

2005, the most recent year or which the ederal govern-ment has provided estimates o the number o amilies

eligible or but not receiving ANF.53

ANF benet levels are grossly inadequate or

the amilies the program does reach, and have been

eroded by infation or only minimally increased in most

states since 1996. In July 2008, ANF benet amounts

were ar below the ocial poverty guideline in every

state. Te median was 29 percent o the ocial poverty

rate, while the lowest was 12 percent and the highest

was 50 percent.54

Further, ANF, as part o the sweeping welare

reorm bill called the Personal Responsibility and Work

Opportunity Act o 1996, increased the demonization

ary 2010. An additional 581,000 workers will see their

ederal jobless benets end in that same month.47

With most states being severely hit by the crisis,the money allocated in the Recovery Act is not enough.

Seven states have borrowed more than $2 billion rom

the U.S. reasury Department to cover their UI systems,

and experts project that up to 20 states might need

ederal loans by the end o 2009 to cover trust-und

losses.48 However, even with the additional unds, there

are undamental problems with UI that have inhibited

it rom serving those in need.

Beore the crisis, only 37 percent o unem-

ployed persons were receiving UI benets in 2007,

down rom the peak o 75 percent in 1975.49 During

periods o high unemployment, the maximum period

o receipt has oten been extended or an additional 13

or more weeks. During the current recession, the ederal

government has passed legislation extending eligibility

between 20 and 53 weeks, depending on state circum-stances. However, even with the extensions, more than a

hal million unemployed have exhausted their eligibility

period without nding work. Still, as o October 2009,

roughly 57 percent o unemployed people are receiving

unemployment compensation.50

Temporary Assistance to

Needy Families (TANF)

Te national social assistance program or

amilies with children, emporary Assistance to Needy

Families (ANF) was created in 1996 to replace Aid to

Families with Dependent Children (AFDC) and to end

welare as we know it. Federal and state governments

jointly und the program. Subject only to very broad


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18

and criminalization o low-income people. It made

benets temporary, created dicult work requirements,

and promoted marriage as a solution to poverty. Unlike

its predecessor AFDC, ANF denied benets to legalimmigrants until they had been living in the U.S. or

at least ve years (except reugees and certain other very

small categories).55 Welare reorm also ended the ederal

entitlement to welare benets and allowed the states to

design their own programs. Some states adopted dra-

conian approaches, imposing even shorter time limits

than the ederal guidelines or restricting access by im-

posing other barriers, such as barring aid to those with

drug-related convictions.56 Some went even urther by

requiring drug-testing and ngerprinting, sanctioning

recipients or ailure to comply with strict work require-

ments, and reusing to provide aid to children born into

amilies already receiving welare benets.57

As poverty experts Frances Fox Piven and Bar-

bara Ehrenreich explain, in their zeal to save the poor

rom their supposed sins o laziness, irresponsibility,

and promiscuity, the reormers entirely overlooked therole o welare as a saety net or working mothers

ANFhas just one aim: to push the poor into the

job market to become sel-sucient. Whatever sense

this made in the boom years when welare reorm was

devised, it makes none now.58

Even given these serious faws, ANF could be

an important piece o the saety net or emale-headed

households, since single mothers experience an excep-

tionally high poverty rate o over 35 percent.59 About 90

percent o parents receiving ANF are single mothers.60

However, eligibility and benets vary widely rom state

to state, regardless o need. So women and children are

Chart 2: Percentage of Eligibile Families Participating in AFDC/TANF

Source: U.S. Department o Health and Human Services, Indicators o Welare Dependence, 2008; and, Center on Budget and Policy Priori-ties, Welare Reorm/ANF: By the Numbers. See: http://www.cbpp.org/research/index.cm?a=topic&id=42


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Te Social Saety Net

19

helped more or less simply because o where they live

rather than because o level o need. For instance, in

2008, monthly benets are as low as $170 in Missis-

sippi and as high as $723 in Caliornia.61

ANF participation has continued to decline

during the recession relative to the number o poor

and potentially eligible amilies. Overall, in 2008 the

number o poor children was more than our times the

number o children receiving ANF, and the number o

extremely poor children (amily income less than hal

the poverty line) was almost twice the number o chil-

dren receiving ANF. Tough ood stamp participation

increased 16 percent rom December 2007 to December

2008,62 ANF participation increased only 3.8 percent,

rising rom 4,014,265 recipients in December 2007 to

4,168,746 in December 2008.63

Under the Recovery Act, the ederal govern-

ment allocated $5 billion over the next two years or a

new und (the Emergency Contingency Fund) to help

states meet the rising need or ANF benets.64

Accord-ing to the Center on Budget and Policy Priorities, these

unds have permitted some states to expand their casel-

oads by over a third, while others have done much less.

And in a ew states, caseloads are still decreasing.65

With the undamental problems in the ANF

program, there are millions o amilies with children

living in extreme poverty in the United States. Many

are experiencing hunger, eviction, utility disconnection,

homelessness and other deprivations. ANFs punitive

rules tying benets to strict work and other requirements

during this period o high unemployment contribute to

its shockingly inadequate response to the recession.

Box 5: Lillian

Lillian is the single mother of a nine-year-old boy and had been employed as a domestic worker in New York

City. When her employer laid her off in December 2008, Lillian tried in vain to access Unemployment Insurance,

discovering the devastating reality that domestic workers here on B1 and B2 visas arent eligible either for labor

protections or social safety net programs. Lillian consequently lost her apartment and had to live in a difcult

situation with relatives who could not house her young son. Their collective economic situation is such that Lillian

has gone days without food and she has little access to transportation. Her young sons father, though a less-

than-desirable custodian, has temporarily taken in the child. Her son calls her every day in tears begging for her

to nd a home so that the two of them can be together again.

This story was collected by Domestic Workers United in New York. . See: www.domesticworkersunited.org.


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20

Food Stamps/Supplemental

Nutrition Assistance Program

(SNAP)

Participation rates o individuals and amilies

in the Supplemental Nutrition Assistance Program

(SNAP), ormerly known as the Federal Food Stamp

Program, are a sensitive and direct measure o increas-

ing economic stress. In this recession, there has been

a sharp increase in SNAP participation rates, a trend

that will likely continue as the jobless rate goes up and

income levels go down.66

SNAP is a ederal program administered by

the states that covers almost all people who satisy its

nancial eligibility requirements. Unlike ANF and

UI, eligibility rules and benet levels are generally uni-orm across the nation. Financial eligibility is generally

limited to households whose net income is less than the

ocial poverty line, currently at $1,526 monthly or a

amily o three. For a amily o our, the gross monthly

income must be $2,389 or less, and their ood stamp

allotment can be as much as $668 per month.67 Te

current average SNAP benet per household is about

$294 per month.

Chart 3: TANF Recipients Fall as Poverty Rises

* Te 2008 poverty guideline or a amily o our is $21,200. For more ino on the Federal Poverty Line available at: http://aspe.hhs.gov/poverty/gures-ed-reg.shtml

Source: Housing and Household Economic Statistics Division, U.S. Census Bureau, able 2. Poverty Status o People by Family Relation-ship, Race, and Hispanic Origin: 1959 to 2008. See http://www.census.gov/hhes/www/poverty/histpov/perindex.html; Administration orChildren and Families, US. Department o Health and Human Services, Data and Reports: ANF Caseload Data. See: http://www.ac.hhs.gov/programs/oa/data-reports/index.htm

NumberofIndividuals

(inMillions)


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Te Social Saety Net

21

is a needs-based saety-net program in which participa-

tion should rise when unemployment and poverty rise.

In act, SNAP participation has increasedsubstantially since the recession began, rising 16 per-

cent rom 12,313,466 recipients in December 2007

to 14,284,017 in December 2008.69 Te 16 percent

SNAP participation increase was more than our times

the 3.8 percent ANF participation increase, with the

number o ANF recipients (both children and adults)

increasing rom 4,014,265 in December 2007 to only

4,168,746 in December 2008.70

Food stamps participation has generally re-

sponded well to the increased need arising rom in-

creased unemployment.

In August 2009, 36.5 million Americans (16.5

million households) received SNAP benets, a one-

third increase in participation since the recession began

in December 2007.68 One in eight Americans is now

receiving ood stamps, an all-time high.

Compare SNAPs perormance with ANFs

non-responsiveness to the recession. SNAP, like ANF,

Box 6: Unemployment Insurance for the Few

My name is Susan Aarup. I am 40 years old, have a disability, and reside in Chicago, Illinois. I have been

unemployed for seven months and Im currently looking for work. Prior to becoming unemployed I worked at the

Mayor's Ofce for People with Disabilities. I have three masters degrees and was working for the city of Chicago

for 11 years. I was laid off by the city in March of 2009 because the position I held lost federal dollars at the time

of the federal bailout. My coworker was able to keep her position because she had six more months of seniority

and did not have a disability. My income was cut in half as result of city layoffs.

I am constantly looking for work while I am receiving unemployment benets. I check in with the unemployment

ofce on a weekly basis in order to keep receiving checks. The unemployment ofce that I deal with had never

dealt with anyone who had a disability. Consequently, I had to educate them about why it is important for people

with disabilities to work and why they want to work. The rst week I applied, a staff person at the unemployment

ofce told me I should collect my social security check and go home. This person did not mean to demean me;

she said this due to ignorance and misperceptions about disability and my ability to work. I believe this is the

dominant myth about employment for people with disabilities. I believe employment is a human right and every-

one should have a right to sustainable, gainful employment regardless of disability or any other reason.

Susans story was collected by staff of the South Austin Coalition and Chicago Jobs with Justice.


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22

Housing Programs, Renters

and the Foreclosure Crisis

Unlike SNAP, housing assistance programs are

not entitlements. Te benets are dependent on avail-

able unding, and only one in our eligible households

receive any kind o housing assistance.75 For almost

three decades, there has been an erosion o housing

assistance programs, even as housing costs have risen

much aster than income. Compounding this problem

is the increased risk to renters rom rising rents and

homelessness risk due to oreclosures.

At the beginning o 2009, Te Center on Bud-

get and Policy Priorities reported that more amilies

with children were homeless due to the recession. Tey

urther reported that the housing market crisis was add-

ing to the risk o increased homelessness. Foreclosures

have created more renting amilies and have driven up

rents in many areas, making housing less aordable.76

At least 32 percent o American households

were renting in 2008, and these numbers are rising.

Te National Low Income Housing Coalition estimates

that 40 percent o the amilies that ace eviction due

to oreclosure are renters.77 Nationally, the number o

renters is expected to increase, as will demand or lower

home-rental rates.78 Meeting the needs o renters and

protecting their housing is critical to a well-unctioningsaety net.

In order to curb the blow caused by the cur-

rent economic crisis, President Obama has allocated

$1.5 billion in ARRA to the Homelessness Prevention

and Rapid Re-Housing Program (HPRP) within the

Housing and Urban Development agency (HUD).79

SNAP has responded quickly in all states to the

rising need. ANF has been responsive or somewhat

responsive in less than hal o the states.71

Congress allocated $54 billion or the program

in 2009, $15 billion more than in 2008, because o

the growing number o people meeting the eligibility

requirements or the program. Te recent increase in

SNAP participation is a direct indication o the rising

poverty during this recession. Te ocial poverty rate is

calculated only once a year, and by itsel is a lagging in-

dication o economic distress. But the increase in SNAP

participation means that more amilies are meeting the

eligibility standard o alling below 130 percent o the

poverty line.72

Te Recovery Act temporarily increased the

maximum ood stamp benet, reerred to as the "allot-

ment," by about 13 percent. However, even with this

increase, the ood stamp allotment, currently $526

a month or a amily o three, is less than what mostAmericans spend to achieve a nutritious diet. And be-

cause the maximum benet is reduced by 30 cents or

each dollar o income net o deductions, generally only

households who are very poor or who have very high

shelter expenses receive the ull allotment.

Under the Recovery Act, $20 billion is allocated

or the next our years to increase SNAP benets by 13.6

percent.73 An additional $295 million in administration

unds is also provided to states to handle rising casel-

oads, and $5 million in administrative unding or the

Food Distribution Program on Indian Reservations.74


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Te Social Saety Net

23

voucher holders. However, these protections expire in

2012.80

Child Care Programs

As demand has increased, ueled by ANF roll

declines, increased workorce participation by mothers

o young children, and alling real wages, the child care

assistance system has allen urther and urther behind

in meeting the need.

With welare reorm mandating recipients en-

ter the workorce, child care unding was expanded two

ways, through an increase in the Child Care Develop-

Tis program is designed to provide nancial assistance

and services to prevent individuals and amilies rom

becoming homeless. However, this is a short-term pro-

gram, and there are major concerns about what willhappen to the housing saety net when unding runs

out in three years.

Also, in May 2009, Congress passed the Help-

ing Families Save Teir Homes Act, which provides

renters whose landlords have lost their properties to

oreclosure the right to stay in the home or 90 days

ater the oreclosure or through the term o their lease

unless the property is sold to someone who will occupy

the home. Similar protections are provided to housing

Box 7: Additional Safety Net Programs

Other safety net components are not fully examined in this report. For instance, Social Security, a New Deal

program established in 1935, has proven effective at lifting millions of people out of poverty, primarily the elderly.

Health insurance programs such as Medicare, Medicaid and the State Childrens Health Program (SCHIP) have

also been invaluable for poor Americans. Since the benets of Social Security have been widely noted, it will not

be discussed in this study. Likewise, health care reform is in the midst of a major congressional overhaul at the

time of publication of this report, and will not be examined here.

Two more programs worth mentioning are the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

The EITC helps low-wage workers by reducing the taxes they must pay on their earnings. Data shows that in

2005, the EITC lifted ve million people out of poverty, 2.6 million of them children.84

The CTC offers low-income working families a partially refundable federal income tax credit of up to $1,000

per child under the age of 17. The Recovery Act expanded this program temporarily to cover 2.9 million more

children (for a total of about 13 million) in 2009 and 2010. 85 The Recovery Act also added the Working Families

Tax Credit, which is a refundable credit of $400 for single and $800 for married couple families.


28/44


24

Conclusion

Te holes in the saety net are numerous and

wide. Te Recovery Act is helping some, but it is inad-equate and temporary. At a time o skyrocketing job-

lessness, millions o unemployed workers are not receiv-

ing Unemployment Insurance because o overly strict

eligibility criteria and inadequate coverage periods. At

best, these workers may be able turn to ood stamps and

ANF or assistance. However, ood stamps are limited

to those who meet articially low poverty thresholds

and helps recipients pay or ood, not or rent, utilities,

clothing or other basic needs. While ANF in theory

provides aid or all basic needs, it covers only unem-

ployed parentsbut only i they are extremely poor, and

only or a minority o the extremely poor amilies who

are theoretically eligible. Housing assistance reaches a

raction o those in need, and lack o access to aordable

child care is another obstacle to employment.

ment Block Grant (CCDBG), and through allowing

ANF monies to be spent on child care, either directly

or through transer to CCDBG. Nevertheless, only

about one in seven eligible amilies received childcareassistance in 2000, and less today.81

At the same time, even as need is rising, ederal

dollars have been decreasing. CCDBG unding peaked

in 2002 at $5.8 billion (in 2009 dollars), alling to just

over $5 billion in FY 2009. By 2009, only nine states

had reimbursement rates or childcare providers at the

ederally recommended level, less than hal the number

in 2001.82 In short, as ANF rolls have continued to

all, and more amilies have their one parent or both

parents in the workorce, the childcare assistance or

low-wage amilies has eroded rather than increased to

meet the need.

With the passage o the Recovery Act in Febru-

ary 2009, based on early reports through August 2009,

the Recovery Acts childcare monies are being usedmainly to maintain the current system (e.g., avoid cuts,

reduce waiting lists), as well as make improvements in

the quality o care. At the same time, alling state rev-

enues have led states to reduce income eligibility limits

(e.g., in Ohio, rom 200 percent to 150 percent o

FPL), increase copayment requirements, reduce reim-

bursement rates to providers, and/or institute/expand

waiting lists.83 In addition, in states that have reversed

the trend and begun expanding ANF rolls to meet

rising need levels, childcare subsidies unded by ANF

are being reduced, refecting the infexibility o rozen

ANF grant amounts.


29/44

An Emergency Relie Package

25

Chapter 3: An Emergency Relief PackageRebuilding the American Economy from the Bottom Up

This chapter looks at both the urgency o the

crisis and the ailings o the saety net that we

have laid out in the rst two chapters, and it

oers an emergency relie package to oer short-term

remedies to the tens o millions o Americans who are

suering. It recommends a job creation package and

other specic proposals to shore up the various parts

o the saety net, which would cost just over $400 bil-

lion in 2010. It then lays out a plan to pay or these

expenditures.

Te breakdown o the Emergency Relie Pack-

age that we propose is seen in Chart 4:

share o the benets o economic expansion. In addi-

tion to stagnating or declining wages, we now ace high

levels o unemployment or years to come, along with a

signicant decline in Americans number one source o

wealthhomeownership. Both the long-term growth

o inequality and the devastation resulting rom the

Great Recession demand action.

In the short run, extended periods o unem-

ployment exact a heavy price that goes ar beyond the

loss o income. Te price involves psychological harm,

health impacts, amily disruption, and much longer-

term impacts on job prospects, particularly or younger

workers. Ultimately, job growth in the private sector

is needed or most jobless workers. But absent current

demand, the public sector must pick up the slack in

three ways:

Direct public investment in job creation1.

that preserves and expands the range o

goods and services that are appropri-

ately the unction o public agencies at all

levels.

Fiscal relie or state and local governments2.

to combat public sector job losses and pre-

serve vital public services.

Income support, not only to help people3.

better weather the storm, but also to in-

crease demand and help uel needed job

growth in the private sector.

Chart 4: Proposed EmergencyRelief Package

Public jobs program $40 billion

State fiscal relief $170 billion

Local government fiscalrelief

$100 billion

Unemployment Insurance $60 billion

COBRA $20 billion

TANF $16.5 billion

Food Stamps $0.5 billion

Total $407 billion

An emergency relie package must address the

trend that or decades, middle-class and poor Ameri-

cans have seen their share o income decrease while

the rich have gotten richer. Since the 1970s, the link

between wages and productivity has also been severed,

with American workers no longer receiving their air


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26

Federal Investments to

Spur Job Creation and

Ensure Needed Services Are

Available

Public Jobs Program

Price tag: $40 billion

We need a new program to create at least one

million jobs at the municipal and neighborhood level,

and put both recently- and long-term unemployed work-ers back to work in jobs that pay living wages, provide

benets, and create stronger, more vibrant communities

across the United States. A jobs program would provide

resources to local governments to quickly create jobs

with the government, nonprots, and potentially small

businesses that provide public services, and should be

authorized or several years. I one million workers were

paid $35,000 per year, this program would cost $35 bil-

lion; two million jobs could be created or $70 billion.

Public works projects would create immediate

employment opportunities or employment or com-

munity residents, the unemployed, and the underem-

ployed. Tese jobs would oer prevailing wages consis-

tent with what workers regularly receive or the same

work, benets, and support services. Rapidly reducing

unemployment will help stabilize amilies and commu-nities immediately. However, the program would also

be designed to have a lasting impact on both the com-

munity and the individual. Jobs would be designed to

develop participants skills and open pathways to uture

employment. Jobs must also be inclusive o people with

varying skill levels and work histories, opening up op-

portunities in the labor market to workers who have

been denied past opportunities or good jobs.

Projects would address the deterioration inpublic services and inrastructure that resulted rom

long-term neglect in neighborhoods across the country,

and change the trajectory o the economyvisibly and

tangibly, locally and nationally. For example, jobs would

be created to: improve the environment, promote public

health services, upgrade roads and other construction

projects, provide education and child care, and engage

out-o-school youth. All jobs should be subject to strict

rules and aggressive enorcement to guard against the

displacement o currently employed workers.

state and local Fiscal

relieF

Price tag: or states$170 billion

or local governmentsat least $100 billion

We need additional scal relie or state and lo-cal government. At the state level alone, budget decits

on the order o $170 billion are projected or 2010. No

precise estimates are yet available or the projected level

o local government budget decits, but the total is ex-

pected to be at least $100 billion in 2010. Further relie

is needed immediately, and will be needed or several

years. Fiscal relie will help to stabilize and restore cur-

rent job losses and urloughs, while at the same time

maintaining vital public services and programs, such as

child care, many o which are needed now more than

ever.

Te Recovery Act principally relied upon two

strategies to accomplish this goal: increased ederal sup-


31/44


27

port or the Medicaid program and the State Fiscal Sta-

bilization Fund (which provides support or state and

local government spending on education) and a small

portion o more fexible unds or states. Both o theseshould be extended beyond their current expiration in

2010 and 2011.

But in addition to these extensions, we need

a new state-based revenue-sharing program that em-

phasizes local governments. It should be enacted and

implemented immediately and authorized or scal year

2011 at a minimum. Tese unds should be fexible and

designed to allow state and local ocials to stabilize

their budgets, their services, and their workorces.

Expansion of programs that

provide income or income

equivalents to help people

better weather the stormunemPloyment insurance

and cobra beneFits

Price tag: Unemployment Insurance$60

billion

COBRA$20 billion

As the number o chronically unemployed

workers grows, ederal support or UI benets or theselong-term unemployed workers is critically important.

In early 2009, as part o the Recovery Act, Congress

modied the Emergency Unemployment Compensa-

tion program to provide ederal unding or the entire

cost o 33 weeks o additional benets (beyond the stan-

dard 26 weeks available in every state) or unemployed

workers. In addition, the Recovery Act provided ed-

eral unding or an additional $25 per week or every

worker receiving unemployment benets. Both o these

initiatives will expire at the end o 2009. It is critically

important that both o these initiatives be extended orat least another one or two years.

COBRA health insurance is a program that

allows workers who have been laid o to continue to

receive, at their own expense, health insurance coverage

they had while employed. Te COBRA premiums are

102 percent o the group health rate that is charged to the

employer. COBRA insurance is available or 18 months

(and longer or disabled individuals). In recognition o

the act that COBRA premiums are not aordable or

many workers, Congress included in the Recovery Act

a provision which provides a subsidy o 65 percent o

COBRA premium costs or up to nine months. Tis

COBRA subsidy provision expires at the end o 2009.

Congress should extend this subsidy program until at

least another 1-2 years.

tanF and Food stamPs (snaP)

Price tag: $17 billion

For ANF: $16.5 billion (this would double

the current basic bloc grant.)

For ood stamps: $0.5 billion (Resources are

needed to help with outreach and admin-

istration costs so that millions o eligible

but unenrolled people can be enrolled in

SNAP.)

Millions o unemployed workers do not qualiy

or unemployment insurance and, or these workers,

the need or income support is critical. Te two main

programs that provide help to those with little or no in-

come are ANF, which provides cash assistance, and the


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28

Supplemental Nutrition Assistance Program (SNAP),

which provides ood stamps.

Te Recovery Act made several key improve-ments in SNAP. First, and most importantly, benets

were increased by 13.6 percent or all eligible house-

holds. In addition, the Act suspended the three-month

time limit on benets aced by many unemployed work-

ers without children. It also provided additional unding

or Indian reservation ood assistance and or increased

administrative costs associated with these programs.

As the projected period o high unemployment

has grown, and the limits o other income support pro-

grams have become more obvious, additional increases

in benets should be made available immediately.

Additional administrative unds also should be made

available so that eligible amilies can access the program

more easily.

ANF unds can be used or a range o pur-poses, including cash assistance and subsidized employ-

ment. Te Recovery Act made an additional $5 billion

available or states to receive up to 80 percent ederal

unding or cash assistance, subsidized employment op-

portunities, or payments to amilies to help them meet

one-time emergency needs. However, even with the

availability o these added resources, too ew amilies

are being helped by their states ANF program.

Te ANF program is scheduled or reauthori-

zation in 2010, and one o the lessons o the recession is

that the program is not structured to meet the needs o

amilies who lose all or a substantial part o their income

due to unemployment. ime limits, unduly restrictive

work requirements, disincentives that exist or states to

provide cash assistance, and the limited availability o

additional ederal unding during periods o high un-

employment are all issues that need to be addressed tomake the program more eective in helping amilies,

particularly during periods o high unemployment.

However, it's uncertain whether Congress will

actually act in 2010 (it is possible that reauthorization

may not occur until 2011 or later). But since so many

amilies are desperately in need, Congress should act

immediately to allocate substantial additional unds

available or state ANF programs. Tese unds would

not require urther state spending, provided they are

used or the limited purposes o cash assistance, creat-

ing subsidized jobs, sustaining current ANF-unded

child care, or emergency payments. In addition, Con-

gress should act immediately to temporarily suspend

ederal work requirements that unduly restrict state

discretion and time limits. o the extent that states have

resources or education and training activities and orchild care so that parents receiving benets can improve

their skills, those services should be made available. But

overly restrictive mandates in this area, and time limits

on the receipt o cash assistance, simply do not make

sense given the high levels o unemployment, and the

need or unds to be ocused on cash assistance to help

amilies weather the current crisis.

Foreclosure relieF

Price tag: No new money

A new loan program could use ARP unds

already allocated or oreclosure prevention. (Te Phila-

delphia Unemployment Project suggests designating


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29

$10 billion or loans to unemployed homeowners to

allow them to pay mortgages, rom the ARP unds

already allocated or oreclosure prevention.)

Tis report has also oered analysis o the

housing crisis or both homeowners and renters. A seri-

ous emergency reorm package should include action to

address the housing crisis. Tis is a large eld, and we

oer only two ideas, one on oreclosure relie and one

on renters' relie.

A series o programs put orward over the past

two years, designed to oster loan modications, have

made little impact on the oreclosure problem. When

mortgage servicers handle the somewhat complicated

job o redoing mortgages, homeowners and housing

counselors oten ace horrendous delays, exasperating

phone systems, lost paperwork, and rustration, while

resolving ar ewer mortgage deaults than originally

anticipated. Large-scale loan modications was not the

job servicers signed on or, and they are not doing itvery well. While they are getting up to speed, tens o

thousands will lose their homes. Moreover, modiying

mortgages or the unemployed can be ineective i their

income is insucient to pay even reduced modied

loans. Many servicers wont oer loan modications to

the jobless.

Te Philadelphia Unemployment Project and

the Save Our Homes Coalition have developed a pro-

posal or a new loan program that would use ARP

unds already allocated or oreclosure prevention to

directly cure mortgage deaults or the unemployed.

As the economy recovers, most jobless workers will get

back to work and will be able to resume their mortgage

payments. Te loans would cure arrears and provide

continuing assistance until the homeowners gets back

to work, or or 2436 months.

Such a program could be run much more e-ciently than the time-consuming loan modication

program. I a homeowner indicated that he or she were

unemployed, they would provide verication o their

unemployment compensation to the servicer and au-

tomatically be approved or a loan that would pay any

mortgage above 31 percent o their amily income (the

target amount in Making Home Aordable modica-

tions). Loans would be repayable with interest but in-

terest would not accrue, nor would repayments begin

until the homeowners income was sucient to allow

payment based on a ormula to be developed. Such a

loan plan would cut through much o the disarray o

the current loan modication program, thus streamlin-

ing appro

battered by the storm: how the safety net is failing americans and how to fix it

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