House Select Committee on Economic Disparity & Fairness in Growth Issues Testimony From Center for Law & Social Policy President Dutta-Gupta

WASHINGTON, Aug. 24 -- The House Select Committee on Economic Disparity and Fairness in Growth issued the following testimony by Indivar Dutta-Gupta, president and executive director of the Center for Law and Social Policy, involving a hearing on July 28, 2022, entitled "Building a Modern Economic Foundation: Economic Security and Income Support for 21st Century America":

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My name is Indivar Dutta-Gupta, and I am the President and Executive Director of the Center for Law and Social Policy, a national, nonpartisan, anti-poverty nonprofit advancing policy solutions to improve the lives of people with low incomes. I am also a former House Ways and Means Committee staffer who worked on Congress's response to the 2007-2009 recession and has worked on economic security and opportunity for my entire professional career. The issues we are discussing are ones I have researched, investigated, and otherwise worked on for much of my career. I am honored to come before this committee to speak to the effects of our system of social protection and how we can bolster it to ensure a basic living standard for all families, in turn strengthening our economy and society as a whole.

Overview

We likely all share a goal of ensuring widespread prosperity, good health, and overall wellbeing for people in the United States. Our country's public benefit, tax, and health coverage programs play a crucial role in achieving these goals. Taken together, this "social protection system" promotes wellbeing, reduces poverty and material hardship, and ensures a foundation for tens of millions of people to thrive. Yet, even as these programs can be highly effective, their constraints limit their benefits for the American people. Shoring up existing programs and expanding public investment to address unmet areas of need would promote economic security, in turn advancing both economic opportunity and racial and gender equity--worthwhile goals on their own terms, but ones that also will strengthen our economy overall.

Promoting labor market income and strengthening public programs that support a basic living standard can and must go hand-in-hand. President Franklin Delano Roosevelt advanced direct and indirect job creation at a grand scale1 and enacted the Social Security Act, observing that a system of protection is necessary to guard against the "hazards and vicissitudes of life." These risks in life--illness (including mental illness), disability (including partial disability), death (especially of a family breadwinner), outliving savings, underemployment (throughout the business cycle), and more2--remain today and affect even those adults who grew up relatively advantaged.3 The United States also suffers from an unusual number of low-paid jobs, with the share of full-time jobs paying less than two-thirds of the median ranking as the 39th worst rate among 42 OECD countries.4 The extraordinary prevalence of low-paid, and often unstable, jobs means that many adult participants in programs supporting a basic living standard are very much working but earning too little to make ends meet without these supports.5 Economic security is the foundation for economic opportunity. Upon signing the Social Security Act in 1935, FDR continued by noting the need for all of us to have a basic foundation upon which we can seek out opportunity and prosper: "If, as our Constitution tells us, our Federal Government was established among other things, 'to promote the general welfare,' it is our plain duty to provide for that security upon which welfare depends." Overwhelming empirical evidence demonstrates that FDR's insight was sound. Today, we know that our system of transfers, supports, and health coverage programs as a whole support work and wellbeing, both for able-to-work adults, including parents and their children as they enter adulthood. This widespread finding that basic support raises employment--especially over two generations--may seem counterintuitive. The metaphor of each of us needing a basic foundation helps illuminate why research findings have been so consistent. A vast array of rigorous empirical studies has demonstrated that individual programs and our social protection system overall help families with low incomes stabilize their lives, maintain employment, advance in the labor market, and help their children thrive.6 Eligibility for these programs is often tied to work, but much research suggests that greater income and stability--rather than greater employment--drives many of the positive outcomes.7 To the extent that some programs appear to result in modest reductions in employment or earnings--sometimes stemming from one of two parents working less than otherwise--we typically see more-than-offsetting health, education, employment, and earnings gains among affected children when they age into college and careers.8 While the mechanisms for these far more important long-term outcomes are often unclear, one plausible explanation is that these programs may reduce parental stress and increase high-quality parent-child interactions and investments that are undermined by the unforgiving demands of low-paid jobs and the stress and struggles of financial insecurity, ill-health, unemployment, disability, and other "hazards and vicissitudes of life."9

In my testimony, I will make three primary arguments:

1. Economic insecurity is common, concentrated, and costly.

2. Our social protection system is highly effective but insufficient.

3. We know how to improve economic security programs and policies.

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1. Economic Insecurity is Common, Concentrated, and Costly

The vast majority of Americans at some point in their lives are likely to have low incomes and experience economic insecurity, though some groups are far likelier than others to experience these hardships. Poverty's prevalence combines with its harm to impose rather substantial costs on the United States government and economy.

Economic Insecurity is Commonly Experienced in the United States

Many will experience very low incomes, and few will experience it persistently. Every year, millions of people experience poverty. In 2020, the last year for which data are available, 9.1 percent of people (29.8 million) lived in households experiencing poverty as defined by the Census Bureau's Supplemental Poverty Measure (SPM).10 Looking over decades rather than at a single year, most of us risk facing serious economic hardship or deprivation. Between the ages of 25 and 60, more than 60 percent of people in the United States will experience at least one year in the lowest 20 percent of the income distribution.11 Two-thirds of people in this country will either experience at least a year of unemployment or have a head-of-household family member experience a year of unemployment during their working years. Despite its prevalence, poverty is less persistently experienced than many assume. For example, just 2.8 percent of people experienced poverty for all 48 months of 2013 through 2016.12 Economic Insecurity is Concentrated and Experienced Disproportionately by Currently and Historically Marginalized Groups

Despite its widespread prevalence, economic insecurity is also heavily concentrated--disproportionately falling on groups that have been marginalized, especially those who have been disenfranchised politically and economically.

People of Color Face Higher Poverty Rates

African Americans, Latinx people, and American Indians and Alaskan Natives faced higher poverty rates as measured by the Supplemental Poverty Measure than any other groups in 2020 (14.7 percent, 14.0 percent, and 13.7 percent, respectively).13 For example, 27 percent of Burmese Asian Americans and 24 percent of Mongolian Asian Americans live below the federal poverty line.14 Policies--oftentimes demonstrably racially motivated--in spheres of life ranging from health care and housing to education and employment to immigration and incarceration have systematically undermined the life prospects of communities of color for generations. To take one example, even today, white workers are paid more than Black workers at every education level.15 Women Face Higher Poverty Rates

Additional groups also face persistently higher rates of poverty. Women are 11 percent more likely to face poverty than men (according to the Supplemental Poverty Measure), and poverty rates are even higher for women of color.16 Structural factors such as unequal pay, disproportionate unpaid caregiving responsibilities, gender discrimination, and occupational segregation help explain why women consistently face higher rates of poverty than their male counterparts, across nearly all races and ethnicities.17 Children Face Higher Poverty Rates

In 2020, the last year for which data are available, 9.7 percent of children ages 0-17 (7 million children) and 13.5 percent of young adults ages 18-24 (3.9 million people)18--likely the highest rate among any adult age group19--lived in households experiencing poverty as defined by the Census Bureau's Supplemental Poverty Measure. Children who experience poverty are far more likely than their peers to fail to finish high school, become parents as teens, and experience poverty as adults.20 The time around the birth of a child is frequently the point at which parental income is at a nadir.21 This pattern is likely to intensify in the wake of the Supreme Court's Dobbs v. Jackson Women's Health, in turn undermining the life chances of a greater share of children born in the United States. Evidence suggests children born to women who are denied abortions are more likely to live in poor households and to be at risk for poor developmental outcomes.22 As it is, nearly half of all births are to mothers who are not married,23 and the United States has one of the highest rates of poverty among single mothers in any rich democracy--a result that is almost entirely a policy choice, not an inevitability.24 Our country's decisions in recent decades to punish and penalize these mothers have promoted poverty, while other peer nations have taken a different path that has promoted prosperity.25

Young Adults Face Higher Poverty Rates

Young adults--particularly those from communities of color--face disproportionately higher rates of poverty, unemployment, and unmet health and mental health needs,26 among other measures of wellbeing.27 No other adult age group faces poverty rates so high.28 Some also face crushing student loan debt and few job prospects. Prior to the coronavirus, the economy was already leaving out young adults. Young people accounted for approximately 25 percent of jobs paying low wages and experienced unemployment rates double the national unemployment rate.29 In June 2022, young Black workers face higher rates of unemployment at 14.6 percent compared to their white counterparts at 7.2 percent.30 Young people of color are overwhelmed by structural and systemic factors that create barriers to decent jobs. These factors include mass incarceration and the implicit biases in the criminal justice system; racism and discrimination; segregation and isolation; policy and investment failures in the K-12 and postsecondary systems; and major gaps in access to and investment in crucial supports for work, such as child care and health care, including behavioral health. Poor early experiences when young adults are just beginning their careers can have lifelong implications.31 Additional Groups Face Higher Poverty Rates

Many other groups face significantly elevated poverty rates compared to the overall population:

* Despite higher labor force participation, immigrants overall are more likely to experience poverty than U.S.-born people, though the poverty rate of naturalized citizens was lower than for non-citizens and U.S.-born citizens, and more than 45 percent of children live in immigrant families with low incomes.32

* Poverty has continued to be geographically concentrated in the United States, with the lasting effects of 1930s redlining persisting until today. In 2018, 24 million people lived in neighborhoods with a poverty rate over 30 percent, twice as many as in 1980. The share of Hispanic and non-Hispanic whites living in such neighborhoods has grown, but even with this growth, someone who is Black and poor is more than three times as likely to live in a high-poverty neighborhood as someone who is white and poor. More than 300 counties have been identified as experiencing persistent poverty - poverty rates over 20 percent for 30 years or more. These counties are overwhelmingly in the South, especially the "Black Belt".33

* The poverty rate for people with disabilities is twice the overall poverty rate.34 Programs designed to provide economic security for people with disabilities have strict and cumbersome eligibility rules.35

* One in five LBGTQ+ people live in poverty, and poverty rates are particularly pronounced among transgender people and cisgender bisexual women.36

* Upon return to their communities, individuals leaving prison face nearly insurmountable barriers to economic opportunity, which perpetuates a cycle of poverty and incarceration. Many returning community members face challenges finding stable housing and are locked out of employment and career advancement opportunities due to a lack of work experience, discrimination in job and postsecondary applications, and professional licensing bans.37 One recent study found that in 2008 (the latest year for which there is data), 27.3 percent of people with convictions were unemployed, nearly five times the national unemployment rate at the time.38 When formerly incarcerated individuals do find work, their median earnings hover around $10,000 a year (nearly 20 percent below the Federal Poverty Level, FPL, for a single individual) and only 20 percent earn more than $15,000 (124 percent of the FPL).39 Unsurprisingly, a stunning 91 percent of people released from prison reported experiencing food insecurity.40 These barriers may contribute to two-thirds of returning community members being rearrested within three years of being released.41

Economic Insecurity is Costly to Us All

The high prevalence of people with very low incomes in the United States is not solely harmful to people who experience such economic security--it harms us all. The consequences of poverty as experienced in this country imposes significant costs on society as a whole in terms of lost productivity and earnings, greater morbidity and mortality (which can be especially costly in a country with extraordinary health prices and spending), and increased law enforcement and carceral costs (due to policymakers' decisions to pursue a path of mass criminalization and mass incarceration). The evidence is particularly strong for child poverty, which lowers tax revenues and increases public spending unnecessarily, in turn hindering our nation's economic progress.42 One estimate finds societal costs of child poverty to be more than $1 trillion, or approximately 5.4 percent of GDP in 2018.43 Due in part to its substantial cost to the nation, reducing poverty, especially among children and young adults, holds the promise of improving social and economic outcomes for the entire country. Because high poverty is driven in part by significant disparities by group-based identity, shrinking and eliminating those disparities is core to eliminating poverty.

2. Our Social Protection System is Highly Effective but Insufficient

Our social protection system--the policies and programs intended to reduce social and economic risk and the consequences of deprivation and exclusion--is highly effective...so far as it goes. It dramatically reduces poverty and hardship and in doing so reduces racial disparities and improves long-term outcomes with benefits for us all. Unfortunately, the system is also rife with gaps that counterproductively limit its reach and effectiveness.

Our Social Protection System Has Immediate, Long-Term, and Widespread Benefits

Public programs to promote economic security are highly effective in boosting incomes, addressing basic needs, and strengthening local economies. They also have longer-term, and even intergenerational, impacts for families with low incomes and their children.

Our Social Protection System Has Immediate Positive Effects

Individually, and as a whole, programs intended to ensure a basic foundation for people are highly effective. For example, health coverage and tax credits have clearly accomplished their proximate aims:

* Medicaid--the largest health insurer in the United States--along with CHIP (Children's Health Insurance Program) provide health coverage to nearly 88 million people.44 Among its many immediate benefits, Medicaid protects families against financial insecurity, reducing outstanding debt owed and bankruptcies among participating families.45 The program also offers services that let millions of seniors and people with disabilities remain in their homes and communities.

* The Affordable Care Act's (ACA) premium subsidies expansion supported the ability of people to seek jobs and remain employed. A recent study estimates that the subsidies raised single mothers' employment and hours worked, making them better off financially.46

* The Earned Income Tax Credit (EITC) is one of the United States' most important anti-poverty programs because it gives low- to moderate-income workers relief, often matching 40 percent or more of their annual earnings. In 2021, the EITC benefitted over 25 million working families and individuals, with an average household receiving $2,411./47 [Impact from SPM].

* The Child Tax Credit (CTC), especially when enhanced in 2021, has also contributed dramatically to poverty reduction, keeping 1.8 million children out of poverty last year alone.48 Likely no single policy has done more to immediately reduce child poverty than the advance payments of the Child Tax Credit in 2021.

Parents reported in a national survey that the monthly Child Tax Credit (CTC) advance payments have reduced financial stress, helped them to afford necessities, and--for about one-quarter of respondents receiving monthly payments--work more hours outside of the home:

* Nearly 70 percent of respondents who reported getting the monthly payments said the payments made them a lot or a little less stressed about money. Among those with incomes between $10,000 and $24,999, three quarters (76 percent) reported less financial stress as a result of the payments.

* Respondents reported that the additional money from the CTC allowed them to pay for toys, gifts, or activities for their children, and to buy more or higher-quality food. Some respondents reported that the additional money from the CTC has improved their relationships with their spouse, friends, or family.

* Respondents were asked whether the CTC monthly payments have made it easier for them to engage in paid work or to work more hours. About one quarter of all respondents who received monthly payments agreed. Black respondents were twice as likely to say the monthly payments have made it easier for them to engage in work or work more, compared to white respondents (42 percent vs. 20 percent.)49 In the devastating context of the COVID-19 pandemic, government action confirmed that anti-poverty programs as a whole work. Even though household earnings and full-time, full-year employment were sharply down--particularly for women, people of color, and people in jobs paying low wages--the Census Bureau found that the number of people in poverty (measured by the Supplemental Poverty Measure, which incorporates income from key public programs as well as earnings) was down 2.6 percentage points from 2019 to 9.1 percent.50 This was the lowest rate since the SPM was created in 2009 and was the direct result of expanded income support in the form of stimulus payments, pandemic unemployment assistance, refundable tax credits, and expanded nutrition benefits.51 Congress also provided emergency paid sick, family, and medical leave benefits and maintained government-sponsored health coverage for individuals who might have otherwise lost coverage. Emergency provisions were responsible for COVID-19 case reductions of 400 or more cases per day per state, reducing the spread of illness and death.52 This finding adds to prior research on the crucial role of paid sick days and paid leave in addressing public health concerns and economic security for people with low incomes.53

Our Social Protection System Has Long-Term Benefits

Many foundational programs, i.e., those intended to provide people with a basic foundation in life, have measurable and significant long-term benefits, especially when those programs target children and young adults:

* Studies of Head Start, the federal early education and family support program for children in families with very low incomes, have found improved economic outcomes in adulthood for children who participated in Head Start.54

* Research also shows two-generational benefits of health care coverage for parents and children.55 Medicaid is linked to numerous benefits to enrollees including greater likelihood of completing school, higher wages, better health outcomes, and less medical debt compared to those who are uninsured.56 Medicaid also appears to increase health-promoting behaviors that could result in long-term benefits to program participants.57

* A comprehensive analysis comparing later-in-life outcomes for children born in counties that had the Food Stamp program (now the Supplemental Nutrition Assistance Program or SNAP) with their peers living in counties that did not yet have the program from 1961 to 1974 found that children with access to food stamps before the age of five were better educated, more economically stable, and live longer and healthier lives as adults.

* Tax credits targeting families with low and medium incomes have significant, diffuse, and long-lasting benefits for children in those families, beginning before birth. Receiving $1,000 in EITC is associated with a 2-3 percent decline in low birth weight.58 Educationally, each $1,000 in combined EITC and CTC federal tax credits increases a child's test scores by 6-9 percent of a standard deviation, with higher effects seen in math scores.59 Receiving $1,000 EITC between the ages of 13-18 is associated with a 1.3 percent increase in completing high school by age 20 and a 4.2 percent increase in completing college by age 26./60

* Spending on young adults can also offer sizeable payoffs. For example, policies offering financial and other aid to students from families with low incomes frequently produce durable gains for those students and beyond.61

Our Social Protection System Has Widespread Benefits

The benefits of foundational programs extend beyond direct participants, bolstering local businesses and economies:

* An additional $1 billion in SNAP payouts during a recession stimulates $1.5 billion in gross domestic product and supports 13,560 new jobs, including in retail, agriculture, and beyond, according to a USDA analysis.62 Though SNAP benefits are paid to participating households, businesses and their employees and suppliers see their incomes rise as a direct result of families using their monthly benefits.

* During an economic downturn, Medicaid, too, can act as a highly effective automatic stabilizer. Estimates from the American Recovery and Reinvestment Act of 2009, which responded to the Great Recession, indicate that each additional $100,000 states receive in federal Medicaid funding adds 3.8 jobs with 3.2 in the private sector.63

* Even outside periods of too little economic demand, foundational programs can offer economic benefits to communities. For example, a Federal Reserve study estimates that Pell Grants for college students have fiscal multipliers of 1.4 to 1.7 during economic expansions, and 2.9 to 3.2 during economic contractions--larger local economic multipliers than military spending--with the largest stimulative effects for grant dollars flowing to students in nonprofit rather than for-profit institutions, who capture much-increased Pell Grant spending with higher tuition.64 The researchers estimate that an increase in Pell Grants equivalent to 1 percent of the city's income raises local income by 2.4 percent over the subsequent two years.

Our Social Protection System is Far Too Limited

Our social protection system does not address the full range of needs experienced by people with low incomes and fails to effectively reach many populations. Many programs have limited eligibility. Some programs are limited to families with children or are more generous to parents than adults without dependents.

Our Social Protection System Excludes People who are Already Marginalized

The programs comprising our social protection system explicitly and implicitly exclude large numbers of people, often precisely people who would most benefit from the program.

Systemic Racism Amplifies and Drives Exclusions in Our Social Protection System

Systemic and persistent racism in the United States has created inequities in access to education, health care, job opportunities, housing, and transportation. As a result, Black, Latinx, and other communities of color, especially women, are more likely to experience unemployment and more likely to work in jobs with low pay, irregular hours, and minimal (if any) benefits. This leaves communities of color both more likely to need public supports to afford a basic standard of living and more likely to be denied benefits due to work requirements or time limits.

Policies such as work-reporting requirements, drug testing, and time limits are rooted in historic racism and act as real barriers to access.65 Health care, nutritious food, secure housing, and a livable income are basic human needs. Seeking the help that you need to succeed is a statement of human dignity and justice. However, coded language, dog-whistling, and racist stereotypes have undermined the reality that program participants are very much in need of support and are seeking out that support in good faith. People experiencing poverty, particularly people of color, have routinely been profiled and policed, leading to higher rates of arrests and fines due to minor offenses. Over-policing and criminalization of people experiencing poverty and hunger also shows up in public benefit programs, including the Supplemental Nutrition Assistance Program (SNAP).66 False race-based narratives have long surrounded people experiencing poverty, with direct harms to people of color. For decades these narratives have played a role in discussions around public assistance benefits:

* When the "Mother's Pension" program was first implemented in the early 1900s, it primarily served white women and allowed mothers to meet their basic needs without working outside of the home. Only when more African American women began to participate were work reporting requirements implemented.67

* Between 1915 and 1970, over 6 million African American people fled the South in the hope of a better life. As more African Americans flowed north, northern states began to adopt some of the work reporting requirements already prevalent in assistance programs in the South.68

* As civil rights struggles intensified, the media's portrayal of poverty became increasingly racialized. In 1964, only 27 percent of the photos accompanying stories about poverty in three of the country's top weekly news magazines featured Black subjects; by 1967, 72 percent of photos accompanying stories about poverty featured Black Americans.69

* Many of Ronald Reagan's presidential campaign speech anecdotes centered around a Black woman from Chicago who had defrauded the government. These speeches further embedded the idea of the Black "welfare queen" as a staple of dog whistle politics, suggesting that people of color are unwilling to work.70

* In 2018, prominent sociologists released a study looking at racial attitudes on welfare. They noted that white opposition to public assistance programs has increased since 2008 -- the year that Barack Obama was elected. The researchers also found that showing white Americans data suggesting that white privilege is diminishing led them to express more opposition to spending on programs like SNAP. They concluded that the "relationship between racial resentment and welfare opposition remains robust." 71 In addition, the great variation across states in adequacy and accessibility of benefits has deep racial equity implications. A person's receipt of public benefits and their experience with the benefit system is often dependent on where they live, and experiences vary greatly between states. TANF and CCDBG are both block grants, with vast discretion left to the states.72 Unemployment Insurance has extremely minimal national standards, a situation that has undermined its usefulness and effectiveness without massive emergency federal support during the past two recessions. The continued failure of 12 states to provide health insurance to their residents by adopting the expansion of Medicaid under the Affordable Care Act is among the most obvious example of the dangers of unfettered federalism, but states also vary greatly in the administrative burdens that they impose on applicants and the health care treatments and services that are covered.73 The choices that states make are deeply shaped by racism--both historic and current--with the result that Black workers and families have the greatest likelihood of living in states with deeply inadequate safety nets.74 Whatever their motivations, these exclusions, variations, impediments, and limitations substantially undercut the overall impacts and gains from these programs.

Restrictions Facing Immigrants Weaken the Impact of our Social Protection System

Immigrants make up about 14 percent of the U.S. population, and about a quarter of all children in this country have at least one parent who is an immigrant. However, federal restrictions require legal permanent residents to wait five years before accessing key federal public benefits for which they would otherwise be eligible.75 Undocumented immigrants are ineligible to receive most benefits. At a time when a growing share of America's immigrants were coming from Mexico and Central America relative to Europe, 1990s immigrant restrictions for benefits were fueled by racist anti-immigrant narratives such as "immigrants are coming here to get welfare" and "we shouldn't spend U.S. citizen taxpayer dollars."76 The majority of children in immigrant families are U.S. citizens and therefore eligible for benefits even if their parents are not. Yet, immigrant families are often deterred from applying for programs due to the "chilling effect" caused by anti-immigrant rhetoric and policies. In 2019, one in five adults in immigrant families with children reported avoiding SNAP, Medicaid, or housing benefits due to fear of immigration-related consequences. Another study found that immigrant parents also avoided enrolling their children in early education programs such as Head Start. 77 Immigrant families are more likely to be food insecure and to lack health care coverage and are disproportionately low income. 78 For example, nationally, children in immigrant families, including citizen children, are twice as likely to lack health coverage compared to children whose parents were born in this country.79

Mixed-status immigrant families, including those who pay taxes, also face limited access to tax credits that have proven to help lift families out of poverty. Millions of children, including citizen children with Social Security numbers (SSNs) are not eligible to be claimed for the EITC if their parents do not have work-authorized SSNs. This harmful exclusion has been in place since the passage of PRWORA in 1996, which required all members of a household to have an SSN to qualify for the credit. Historically, the Child Tax Credit has been available to all eligible children in tax-paying families, including immigrant children who file with an Individual Taxpayer Identification Number (ITIN). Unfortunately, the Tax Cut and Jobs Act of 2017 required that children have an SSN to qualify for the credit, denying this critical support to up to 1 million children.80 The pandemic only exacerbated these issues. Immigrant workers were overrepresented as essential workers, making them particularly vulnerable to illness.81 Yet, for the duration of the pandemic, the federal government has done little to nothing to include immigrants in COVID-19 relief efforts. Millions of immigrants and their families were excluded from receiving federal stimulus payments simply because one parent filed taxes with an ITIN. Not until the passage of the American Rescue Plan Act were these important payments made available for the first time to 2.2 million U.S. citizen children in households where parents only file with an ITIN.82

Our Social Protection System Frequently Excludes Young Adults and Adults Not Raising Children at Home

Young adults and adults not raising children at home--many of whom may be co-parenting and contributing substantially to the wellbeing of their children--are often left out of programs supporting a basic living standard:

* Young workers under the age of 25 without children in the household are generally not eligible to receive the EITC. The American Rescue Plan Act, enacted in March 2021, temporarily expanded the EITC eligibility during the 2021 tax year to young workers (19-24) who do not have dependent children and increased the maximum amount of the credit. This expansion provided income support to over 17 million people who work for low pay.83 However, this expansion was just for one year, and the 2022 tax rules revert to the previous rules. Even when young people are not explicitly excluded from benefits access, programs that don't explicitly target young people often do not reach them. For example, in July 2020, 90 percent of young people ages 18-25 reported that they were not able to access any pandemic relief.84

* SNAP limits so called "able bodied adults without dependents" ages 18-49 who are unemployed to receiving SNAP for 3 months in a 36-month period. In addition, students attending postsecondary education are denied SNAP unless they are caring for a dependent, working at least 20 hours per week, or meeting another exemption. (Note that both these restrictions are currently limited due to the pandemic.)85

* In 11 of the 12 states that have refused to expand Medicaid under the ACA, people without dependent children are categorically ineligible for Medicaid. These states also cut off eligibility for parents at extremely low income levels, typically less than half of the federal poverty level. People with these low incomes fall into the "coverage gap" and are also not eligible for subsidies under the ACA. Failure to expand Medicaid disproportionately affects people in the South, people of color, and young adults.86 These exclusions are especially troubling in light of the large number of young people (ages 16 to 24)-4.5 million--who are not connected to school or work, also known as "Opportunity Youth" because they are seeking opportunity and they offer the nation a chance to invest in them. They are eager to work and continue their education but struggle to find jobs and programs that help them build better lives for themselves and their families. Youth disconnection impacts all regions of the country--urban, suburban, and rural. Native American and Black American teens and young adults have the highest rates of youth disconnection. Yet, many Latinx, white, and Asian youth also find themselves out of school and work and seeking pathways to opportunity.

Young people face barriers to employment that are structural and arise from systems and policies--like discrimination, segregation, unstable and low-quality jobs--not individual choices. Discriminatory hiring practices against people of color and young people can make finding work an uphill battle. That's because your race and ethnicity greatly influence your chances of gaining employment.

Our Social Protection System Lacks Key Programs and Policies

The United States continues to lack key foundational programs ranging from a national paid leave program and robust access to child and home-based long-term care to a cash assistance floor and adequate housing assistance. Despite the accomplishments of the Affordable Care Act, the United States stands alone among wealthy countries by lacking a universal health insurance system.87

Care Programs Supporting Families are Lacking

A key omission of today's social protection system are programs to support individuals in their roles as caregivers and earners. Child care costs consume significant portions of household budgets. In 2020, the cost of annual center-based care for an infant ranged from $5,933 to $24,378. In most regions of the country, infant child care costs exceeded the cost of housing and was more expensive than in-state college tuition.88 For families in households with incomes below the federal poverty level who pay for child care, child care costs average 30 percent of their income, compared to 18 percent for families with incomes between 100 and 200 percent of poverty and 7 percent for families making over 200 percent of poverty.89 One analysis found that a third of families under the poverty level who pay for child care were driven into poverty as a result of child care costs.90 The Child Care and Development Block Grant (CCDBG) is a federal-state partnership intended to help low-income families with the high costs of child care. Child care assistance makes quality child care more affordable and supports parental employment and increased earnings.91 When children receive access to high-quality child care it has immediate and long-term positive effects for their educational and employment outcomes as well as employment outcomes for their parents.92 Yet, due to insufficient funding, CCDBG reaches fewer than 1 in 6 children eligible for child care assistance.93 Furthermore, CLASP analysis has found access to child care subsidies is inequitable along racial and ethnic lines: Asian American and Latinx children had less access than children of different races.94 The share of eligible children served also varies by state. Insufficient and stagnant funding over decades has impeded states' abilities to reach eligible children and led to trade-offs in access and quality. Moreover, the child care workforce has long been undervalued and underpaid. This is a direct result of sexism, racism, and the larger devaluation of care work.95 Over 90 percent of child care providers are women, and the workforce is disproportionately Black and Latinx.96 Investments in child care can make care more affordable for families with low incomes and support increased wages for care workers, raising incomes for families and providers.97 Even as the economy recovers, lack of access to affordable child care continues to be an obstacle to employment for many families, particularly for women and families of color, making expansions in child care assistance of crucial importance.

Almost all working people will experience a caregiving need at some point in their lives, whether to welcome a new child, care for a seriously ill loved one, or to treat their own serious illness. However, only 20 percent of private-industry employees have access to paid family leave through their employers, and the numbers are worse for workers in jobs paying low wages. Approximately 95 percent of private industry workers in the lowest wage quartile have zero access to paid family leave through their employers, and most of these workers are women, people of color, and immigrant workers.98 Most of these workers cannot afford to take unpaid time off to heal, bond with a new child, or care for a loved one.99 Despite 11 states, and the District of Columbia, establishing paid leave programs, most people in the United States live in states without a paid family and medical leave program. A comprehensive paid family and medical leave program is critical to reducing and preventing poverty among those who experience illness or caregiving responsibilities by keeping individuals employed and reducing loss of income.100 Paid family and medical leave contributes to the improved health of working people, their children, and families.101

Additional Programs Would Help Ensure a Basic Foundation for All People Living in the United States

Additional programs, like housing and cash assistance to help families afford the often-prohibitive cost of living near employment and education opportunities, could stabilize lives while providing significant returns on investment. The nation's federal-state unemployment insurance partnership has failed to reach large swaths of unemployed workers throughout the business cycle. The Medicaid gap, created by a dozen states refusing the unusually generous federal subsidy for expanding Medicaid eligibility, has exposed many people with low incomes to dangerous health and financial risks. The United States also has unusually stringent disability benefit program eligibility, effectively limiting access to many who struggle to engage in daily life activities and maintain sufficient employment.

3. We Know How to Improve Economic Security Programs

Our social protection system is needlessly challenging for potential participants to navigate, misusing participants' time and public resources alike. In addition to expanding the social protection system to incorporate new national policies that ensure care needs are met (through paid family and medical leave, expanded child care, and affordable home- and-community-based car), establish a jobseeker's allowance, guarantee health coverage, provide sufficient funding for housing assistance, and more, policymakers should immediately shore up existing programs. Policymakers can reduce administrative burdens and improve coordination across levels and agencies of government. To achieve these aims, policymakers should set national floors by strengthening federal access, eligibility, benefit, and information standards; eliminate counterproductive requirements and conditions for program participants; and maximize the reach of our current social protection system. Such changes would expand access to supports; simplify participants' experiences with programs; and further promote education and savings.

Policymakers Should Reform Requirements that Undermine Education and Savings

Today's economy demands postsecondary credentials for all but the lowest-paying jobs. A synthesis of the literature on employment and training is unequivocal: "A postsecondary education, particularly a degree or industry-recognized credential related to jobs in demand, is the most important determinant of differences in workers' lifetime earnings and incomes."102 Workers with less education are also far more likely to experience unemployment at every point in the economic cycle. But our foundational income support programs too often restrict access to education and training or force recipients to jump through unnecessary hoops:

* As mentioned above, SNAP rules limit college students' access to food assistance unless they work at least 20 hours per week, are caring for dependent children, or meet other exemptions.103 These rules are based on outdated stereotypes of college students as nutritionally secure and able to depend on their parents for any needed support. In reality, the GAO found that nearly a third of undergraduate students are from households with incomes under 130 percent of poverty and have at least one other risk factor for food insecurity.104 Even among those who meet the exemption criteria, many are unaware of their possible eligibility and do not receive needed assistance. These counterproductive restrictions on college student access to SNAP should be lifted; at a minimum, the expansions that were included as part of COVID relief should be made permanent.105

* The work participation rate (WPR) is the only federal accountability measure collected for the Temporary Assistance for Needy Families (TANF) program.

This measure discourages states from engaging recipients in education and training activities. Specifically, vocational training can only be counted as a full-time activity for one year, after which it must be combined with at least 20 hours per week of employment or community service. Many states simply categorically deny recipients the opportunity to meet any of their participation requirements through education, even when the states are at no risk of being penalized for failure to meet their targets under the WPR. A few states have made efforts to expand access to education and training for TANF recipients; among other badly needed reforms to TANF, Congress should allow states to replace the WPR with outcome-based performance measures that look at recipients' trajectory toward economic security, rather than attendance in mandated programs.106 Benefit and health coverage programs also undermine economic stability and mobility by placing harsh limits on savings, especially liquid savings. A prime example of a harmful savings restriction is found in SSI, or Supplemental Security Income, a program for people who have disabilities and low incomes. Once applicants begin receiving SSI benefits, the monthly payment is small compared to rising costs of living. This year, the maximum monthly SSI benefit is107 only $841. And the program has outdated asset limits that prevent SSI recipients from having more than $2,000 ($3,000 if they are married) in total savings. If SSI recipients go above this asset limit, they will be kicked off the program.

This prevents disabled people from building up substantial savings, which is essential for achieving economic security. SSI recipients can also lose their benefits if they get married to someone who is working. And SSDI recipients are required to arbitrarily wait five months before receiving benefits after being accepted and to wait two years before receiving Medicare coverage, leaving many disabled people without critical health care coverage.108 The bipartisan Savings Penalty Elimination Act would begin to address these issues by updating the SSI asset limits, which have not been changed since 1984, to $10,000 for singles and $20,000 for married couples--and indexing these caps to inflation going forward.109 SNAP and TANF similarly have restrictive asset limits. At the federal level, the SNAP asset limit is just $2,500 ($3,750 for households that contain a member who is disabled or aged 60 or older), although many states have used broad-based categorical eligibility to raise this limit. States are left to their own discretion for asset limits for TANF, and eight states deny assistance to families applying for assistance who have more than $1,000 in countable assets. Many states also continue to count at least some of the value of cars owned by the household, making it hard for families to own reliable vehicles.110

Policymakers Should Shrink Administrative Burdens for Participants

Few people receive all the benefits they are eligible for due to complex eligibility rules, lack of information, or capped funding. One way to expand access to benefits and ensure that those who are eligible for programs are able to participate, is to reduce and remove overly complex bureaucratic processes that burden both individuals attempting to access programs and state governments administering programs. Administrative burdens--time spent waiting to speak to an eligibility worker, navigating complicated eligibility rules, and tracking down necessary documentation to prove eligibility--are rooted in racism that underlies our public benefit programs and puts a burden on individuals to prove their "worthiness" for benefits. Last year, in response to an Executive Order on advancing racial equity, the Office of Management and Budget released a report finding that administrative burdens create barriers to access that are greatest for those who most need support, lead to underutilization of benefits, and exacerbate inequity.111

Administering agencies must reduce the amount of labor asked of applicants and assume more responsibility for getting new people enrolled and keeping existing participants covered. States and localities administering benefit programs can reduce burden through data sharing, cross-program enrollment and eligibility deeming, accessible online services and simplification, or elimination of unnecessarily duplicative or overly burdensome eligibility policies. Because programs typically require recipients to redetermine eligibility periodically, many programs have significant levels of "churn" in which individuals or families lose their benefits episodically. Administrative burdens not only keep people from the benefits they need, but also add operational inefficiency and costs to the implementation of programs.

It is also important to reverse harmful and misguided eligibility rules that exclude marginalized groups, such as the provisions implemented under PRWORA that created restrictions for immigrants. These restrictions include the five-year waiting period to access federal means-tested programs as well as the SSN requirement for all members of a household to access the EITC. One example of legislation that would remove this waiting period is the Lifting Immigrant Families Through Benefits Access Restoration Act of 2021 (LIFT the BAR Act, H.R. 5227/S. 4311), which not only removes this waiting period for lawfully permanent residents, but also restores eligibility for populations such as those with Deferred Action for Childhood Arrivals (DACA) and Temporary Protected Status. The LIFT the BAR Act also makes it easier for states to further expand immigrants' access to health care and other basic needs programs using their own resources and prevents states from creating additional immigrant-specific barriers.112 Another opportunity to address harmful exclusions would be remove the SSN requirement for the EITC as well as the SSN requirement for immigrant children to access the EITC. Other strategies for alleviating the barriers for immigrants include simplifying the process for obtaining an ITIN and ensuring that program administrators are clearly communicating (in a language they can understand) information about eligibility rules and privacy protections, as well as clarifying confusion about policies like public charge in their outreach with immigrant communities.

Policymakers Should Set Federal Access, Eligibility, and Benefit Standards and Hold States and Local Authorities Accountable

As discussed previously, significant variation across states in benefit levels, eligibility rules, and accessibility of benefits undermines our social protection system's effectiveness. Although many benefits are largely federally funded, states or counties are responsible for many aspects of program design and implementation. Some federal-state partnerships like TANF offer states unjustified flexibility with virtually no accountability, a recipe for providing people little of the support they need.113 Though ostensibly primarily state-funded, unemployment Insurance--a state-federal partnership with virtually no federal access, eligibility, and benefit standards--has found itself in need of greater and greater federal life support as each new recession hits; the system is in desperate need of federal reforms.114 SNAP is supposed to be a national program, with 100 percent federal funding of benefits, national benefit levels, and limitations on states' ability to add additional eligibility restrictions. Yet even in SNAP, states have a great deal of power to either ease or barricade the process for eligible people to enroll in benefits. The Food and Nutrition Service at the U.S. Department of Agriculture estimates that in some states, close to 100 percent of those eligible for SNAP receive it, while in 21 states, less than 80 percent of those eligible actually receive it, ranging down to barely more than half of those eligible in Wyoming.115

We applaud the Administration's attention to reducing administrative burden across programs and improving the customer experience, and we urge Congress to build on it. Federal policymakers should establish strong floors on benefit levels and hold states accountable for access. Measures of program integrity should take people improperly denied benefits as seriously as those granted benefits in error. The federal government should require states to make disaggregated data on programs available to identify populations who are being underserved. Policymakers should also create national supports that do not depend on inevitably inequitable state implementation, such as the fully refundable monthly payments of the Child Tax Credit that were so effective in 2021 and phasing in a federal alternative to state implementation of expanded Medicaid when states are unwilling to meet their responsibilities to their residents.

Conclusion

In a country of great wealth and knowledge, high rates of economic insecurity should be unacceptable. Poverty and economic hardship are not limited to discrete, small portions of the population--most of us, at some point in our lives, are likely to struggle to make ends meet. Evidence of the profound consequences of economic insecurity, especially for children, is well documented. A large and growing body of research demonstrates that our social protection system--as far as it goes--results in substantial reductions in poverty and hardship and lifelong enhancements in educational, health, and financial outcomes. The research also makes clear that policymakers have numerous options before them to strengthen that system and help this country move toward poverty elimination.

A strong and equitable society and economy requires investments in a quality education and good jobs for all, a care economy that values all families and forms of work, income supports that promote human dignity, and health and mental health coverage and care that meet people's needs. Reducing our overreliance on criminalization and incarceration while offering more immigrants a pathway to citizenship would empower millions more to earn a decent living and access opportunity. And insofar as social and economic policy, including our social protection system, closes racial, gender, and other longstanding disparities in lives and livelihoods, it will improve life for all of us--Black, white, working class, middle class, and everyone else--in the United States.

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Original text here: https://fairgrowth.house.gov/sites/democrats.fairgrowth.house.gov/files/documents/Dutta-Gupta%20v2%20HHRG-117-EF00-Wstate-Dutta-GuptaI-20220728.pdf