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In the following pages, I will make four main points:
* First, the economy still has a large net loss of jobs, millions are out of work, and millions are struggling to put food on the table and have fallen behind on their rent because of the pandemic and its economic fallout. The crisis has taken a disproportionate toll on low-income workers, their families, and people of color, shining a light on and exacerbating the nation's long-standing racial and economic inequities.
* Second, the American Rescue Plan Act, which builds on the CARES Act and Families First Act of last spring and the December relief package, is providing much needed help for tens of millions of people facing difficulties paying their bills, while also providing important aid to states, localities, territories, and tribes that they can use to fill revenue holes, address COVID-related needs, and address "unfinished learning" that students need to master.
* Third, the nation would have needed fewer stopgap measures during this crisis if we had permanent policies in place that provided sufficient supports for households that struggle to afford the basics, that offered adequate jobless benefits particularly to workers in low-paid jobs who often receive no jobless benefits at all, and that ensured that everyone had health coverage.
* And fourth, the President and
Millions Still Facing Hardship
Over the last year, the global pandemic and resulting economic fallout have taken an enormous toll on the economy and households, imposing steep job losses and great hardship that have fallen disproportionately on people in low-wage jobs and households with children, with particularly steep costs imposed on Black, Latino, immigrant, and Indigenous people.
Lost Jobs and Lost Pay
Most of the jobs lost during COVID-19 and the economic crisis have come in industries that pay low average wages, with the lowest-paying industries accounting for 30 percent of all jobs but 55 percent of the jobs lost from
Due to a long history of racism and discrimination and starkly unequal opportunities in education, housing, health care, and employment, Black and Latino workers are disproportionately represented in low-paying industries, a key reason why Black and Latino unemployment is so much higher than white unemployment. Workers in low-paid industries that kept their jobs were also more likely than others to work on-site rather than remotely, raising their risk of COVID-19.
The impact of joblessness goes well beyond the workers themselves who are out of work. Some 27 million people (including 6.6 million children) either were officially "unemployed" (meaning they actively looked for work in the last four weeks or were temporarily laid off) or lived with an unemployed family member in February, according to the basic monthly
All told, we estimate, as many as 38 million people in February, including nearly 10 million children, lived in a family in which at least one adult did not have paid work in the last week due to unemployment or the pandemic.
High Levels of Hardship
While the Rescue Plan will begin to reduce hardship as stimulus payments, rental assistance, the Child Tax Credit, and other forms of aid begin to reach households, as of
Since late August, the
Nearly 81 million adults (35 percent of all adults in America) reported
An estimated 42 percent of children live in households that have trouble covering usual expenses, according to our analysis of the Pulse survey data collected from
* Rent or mortgage. An estimated 13.5 million adults living in rental housing -- nearly 1 in 5 adult renters -- were not caught up on rent, according to data collected from
In addition, 28 percent of renters who are parents or otherwise live with children reported that they were not caught up on rent, compared to 12 percent of adult renters who are not living with anyone under age 18. (See Figure 4.) Children in renter households also face high rates of food hardship: over 1 in 4 children in rental housing live in a household that didn't have enough to eat, according to data for the period
While households that make mortgage payments typically have higher incomes than renters, they, too, face difficulties, especially if they have lost their jobs or seen their incomes fall significantly. An estimated 10.3 million adults are in a household that is not caught up in its mortgage payment.
* Food. Some 22 million adults (11 percent of all adults) reported that their household sometimes or often didn't have enough to eat in the last seven days, according to Pulse data collected from
Adults in households with children were likelier to report that the household didn't get enough to eat: 14 percent, compared to 8 percent for households without children. And 10 to 15 percent of adults with children reported that their children sometimes or often didn't eat enough in the last seven days because they couldn't afford it, well above the pre-pandemic figure. In addition, our analysis of more detailed data from the
Black and Latino adults were more than twice as likely as white adults to report that their household did not get enough to eat: 22 percent and 16 percent, respectively, compared to 7 percent of white adults. (See Figure 5.) Grouped together, American
The American Rescue Plan Act
The American Rescue Plan Act will provide needed help to tens of millions of people, reduce hardship, help school districts address students' "unfinished learning" (the learning they have missed over the last year because of disruptions to education, remote learning, and other pandemic-related issues), and bolster the economy. Along with the provisions described below, it includes a new round of economic impact ("stimulus") payments, public health investments, more child care funding, and aid to businesses.
Helping Jobless Workers
The Rescue Plan will extend critical unemployment benefits that are helping jobless workers pay their bills and care for their families.
The December relief package reinstated a federal unemployment benefit increase, provided more weeks of benefits so that jobless workers wouldn't lose them while the nation struggled with the current health and economic crisis, and continued the Pandemic Unemployment Assistance (PUA) program, which expands benefit eligibility to more jobless workers. These provisions were slated to expire in mid-March, and the Rescue Plan extends them through
Helping Households Struggling to Make Ends Meet
* Housing. The Rescue Plan includes critical housing assistance for millions who are struggling to pay rent and avoid eviction, and badly needed funds for communities to address homelessness during the pandemic.
The housing and homelessness funding in the Rescue Plan will supplement
The Rescue Plan also includes housing resources for other highly impacted communities, including
Helping those experiencing homelessness secure housing and helping those behind on rent catch up and avert eviction are critical to fighting the pandemic itself (COVID can be more easily transmitted in congregate shelters, on the streets, or in over-crowded housing), stabilizing families, and preventing children from disruptive moves and school changes. Providing rental assistance to families to prevent evictions and homelessness -- which are associated with increased likelihood for children with cognitive and mental health problems, physical health problems such as asthma, physical assaults, and poor school performance -- can also have far-reaching implications for children's lives. In addition, rental assistance reduces families' chances of having a child placed into foster care and the frequency with which their children must change schools, and may improve test scores for some categories of children.
* Tax credits. The Rescue Plan temporarily makes the full Child Tax Credit available to all poor and low-income children, increases the size of the Child Tax Credit, and provides an expanded Earned Income Tax Credit (EITC) for far more low-paid adults without minor children at home -- driving a historic reduction in child poverty and providing timely income support for millions of people. The expansions apply to tax year 2021, with part of the Child Tax Credit being delivered in advance later this year (rather than being delivered next year after households file a tax return).
Prior to the expansion in the Rescue Plan, some 27 million children received a partial Child Tax Credit or no credit at all because their families' incomes were too low. The Rescue Plan makes the full Child Tax Credit available to children in families with low or no earnings, raises the maximum credit from
The Rescue Plan also raises the EITC for adults in low-paid jobs who are not raising children at home and now get only a tiny credit or no credit at all. It raises the maximum EITC for these "childless workers" from about
These expansions will help push against racial disparities. Before the Rescue Plan, about half of all Black and Latino children were getting only a partial Child Tax Credit or no credit at all because their families' incomes were too low to qualify for the full credit. That design flaw in the Child Tax Credit came on top of long-standing employment discrimination, unequal opportunity in education and housing, and other factors that leave more Black and Latino households struggling to make ends meet. Similarly, the 5.8 million childless adults in low-paid jobs who are taxed into, or deeper into, poverty are disproportionately people of color: about 26 percent are Latino and 18 percent are Black, compared to 19 percent and 12 percent of the population, respectively.
In two historic firsts, the Rescue Plan also extends a federal supplement to help
* Food assistance. The Rescue Plan extends and expands nutrition assistance to help address today's extraordinarily high levels of hunger and hardship.
The Rescue Plan extends, through September, a 15 percent increase in SNAP benefits from December's relief package that was slated to expire in June. It lets states continue, through the summer and through the end of the COVID-19 public health emergency, the Pandemic EBT (P-EBT) program, which provides grocery benefits to replace meals that children miss 10
when they do not attend school or child care in person. Extending this benefit through the summer is important, providing a bridge to help families until school reopens, hopefully fully in-person, for the next school year. Food insecurity among children often rises in the summer when they aren't able to access school meals; these benefits will help families afford food over the summer.
The Rescue Plan also provides funds to modernize the WIC nutrition program for low-income women, infants, and children, support innovative service delivery, conduct robust outreach, and temporarily raise the amount of fruit and vegetables that participants can get. These steps will improve a critical program that boosts health and cognitive outcomes for children but that served fewer individuals in fiscal 2020 than the prior year despite a surge in food hardship during the pandemic. And it adds
* Help for families with the lowest incomes. The Rescue Plan includes
States, territories, and tribes can use the new fund to provide households with non-recurrent, short-term benefits -- that is, benefits that: (1) address a specific crisis or episode of need; (2) don't meet recurring or ongoing needs; and (3) don't extend beyond four months. States could direct funds to the families that most need them, and states need not limit payments to families receiving Temporary Assistance for Needy Families (TANF) cash assistance. States can use the funds, for instance, to help families that don't get emergency housing assistance pay their back rent and avoid eviction, or help families fleeing domestic violence cover their moving costs and initial rental payments.
Expanding Health Care
The Rescue Plan will make comprehensive health coverage more affordable and accessible for millions of people during the current crisis.
Comprehensive health coverage is important under any circumstance because it improves people's access to care, financial security, and health outcomes. But preserving and extending coverage is even more important now, during COVID-19 and its economic fallout, because it will shield families from financial hardship and support public health efforts, easing people's access to testing, treatment, and vaccines. Prior to the Rescue Plan, the relief measures that policymakers enacted in 2020 did not extend health coverage or make it more affordable.
To make marketplace coverage more affordable, the Rescue Plan eliminates or vastly reduces premiums for many people of low or moderate income who enroll in plans through the Affordable Care Act (ACA) marketplaces, and it provides new help to people with somewhat higher incomes who face high premiums. These provisions lower premiums for most current marketplace enrollees and expand coverage to 1.3 million people who would otherwise be uninsured, according to the
The Rescue Plan also increases financial incentives for the 14 states that have not implemented the ACA's Medicaid expansion to do so, which would provide critical coverage to nearly 4 million uninsured people (if all states adopted the expansion). And it will strengthen Medicaid coverage in other ways -- for instance, with higher federal matching funds to help more seniors and people with disabilities get services in the community instead of nursing homes, a new state option to extend Medicaid or
Boosting States, Strengthening Education
The Rescue Plan provides
The pandemic has imposed significant costs on state and local governments to fight the virus, deliver services despite public-health-related restrictions, and help struggling people and businesses. These costs will continue in the months ahead even if the pandemic is ultimately contained. Many millions of people, particularly low-income people and people of color, are struggling with hunger, have large unpaid rent bills, face mental health challenges as a result of the pandemic, or are enduring other forms of hardship. Millions of children effectively have a year of learning they need to regain that will require time and resources -- such as investments in longer school days, extended school years, and intensive tutoring for multiple years -- to address. Households, as well as millions of struggling small businesses, will require support to make it through the pandemic and recover from its harm. While federal support provides important direct assistance, state and local governments will need to deliver a wide range of localized supports and services and sustain them over a long period of time.
While the pandemic's hit on state revenues has been less than feared, revenues in most states remain below pre-pandemic projections, and some states have experienced severe revenue losses. Most cities and counties received no direct federal aid prior to the Rescue Plan, and revenue sources they depend upon -- including hotel and restaurant charges, parking fees, and business license fees -- have been hit particularly hard. Many tribal governments are dependent on casinos and other forms of revenue that have been hit especially hard.
Along with the other costs cited above, states and the other jurisdictions also can use the additional federal funding to help pay for long overdue investments in broadband (a need that COVID-19 particularly exposed) and for clean water and sewer infrastructure projects, as well as to provide "premium pay" to essential public workers. In addition, the Rescue Plan provides a separate
With states and localities facing so many other demands on their resources, the Rescue Plan also provides
Historically, K-12 schooling has been funded overwhelmingly by states and localities; they currently provide 92 percent of funding, with the federal government providing the rest. COVID-19, however, forced states to cut funding and created enormous financial and educational challenges that states and localities will be hard pressed to meet over the next several years without federal assistance. K-12 funding comprises about 26 percent of state budgets and, in the absence of the general fiscal aid and the education-specific funding, many states would have found it challenging to shield school funding from cuts. Even before COVID-19, schools endured years of inadequate and inequitable funding. Some 15 to 20 states were still providing less funding for K-12 schools when the pandemic hit than before the Great Recession of a decade ago in per-pupil, inflation-adjusted terms. When COVID-19 hit, schools were employing about 77,000 fewer teachers and other workers while educating about 1.5 million more children.
The CARES Act provided
But beyond addressing the costs of operating remotely and in person, the Rescue Plan's funds will enable school districts to make critical investments to address widespread unfinished learning that the pandemic and remote learning have caused. Students on average will likely lose nine months of learning by the end of the 2020-21 school year,
The Rescue Plan provides
Transit agencies are facing severe financial stress, as ridership of buses and rail has declined during the pandemic, reducing revenues. Yet public transportation is a lifeline for those without access to cars who need to get to work, including essential workers and others who are not able to work from home or who need to travel to fulfill basic needs, like seeing the doctor or going to the grocery store. Scaling back mass transit services and laying off transit workers not only risks leaving millions of riders stranded, but also would leave transit agencies poorly positioned to support a robust recovery as the pandemic recedes.
The assistance provided by the Rescue Plan should prevent damaging cuts, allow public transit to continue needed services, and respond quickly as ridership increases with a stronger economy. Public transportation is particularly important to low-income communities and communities of color, even as decades of policy choices have left many of these communities under-resourced and with poorer access to public transit. While it is crucial that these communities be protected from cuts in services, policymakers should also focus on designing further investments in public transit so that they have the potential to increase access to jobs and extend economic opportunity to underserved communities./1
Our Underlying Policy Gaps Necessitated Large, Stopgap Measures
While the American Rescue Plan Act, along with the relief measures of 2020, will provide substantial help to tens of millions of people who are struggling to make ends meet and access health care during this crisis, we should ask why such large-scale stopgap measures were needed in the first place.
The reason is clear: COVID-19 and its economic fallout have exposed glaring weaknesses in our economy and our public policies that leave too many people unprotected in bad times and too many unable to fully benefit in good times. Before the crisis began, our unemployment insurance system was very weak; we were providing inadequate support for the millions of Americans who struggle every day to pay rent, buy food, and afford other basics; and 29 million people lacked health coverage. We tolerate very high levels of poverty and hardship when households fall on hard times, whether because of a recession or another national crisis, or because, as often occurs, an employer goes out of business or a family member is ill and can't work. The nation would need fewer stopgap measures during hard times if we had stronger permanent policies in place to help households and workers when they need it.
Other wealthy nations do far more to invest in children, to support workers and their households both when they are working for low pay and when they are out of work, to assure more adequate minimum wages, and to ensure that everyone can access health care.
The Rescue Plan addresses many of these key policy gaps but only temporarily, so much of our progress will reverse once its provisions begin to expire -- unless policymakers take steps to extend key provisions and make longer-term investments in key areas. The Rescue Plan also makes crystal clear that we can address the challenges of poverty and hardship if we have the will do so.
Building a More Equitable Economy
The President and
This spring and summer, policymakers will work on another substantial legislative package, this one framed around the nation's recovery. As we invest in infrastructure and take steps to address climate change, we also must invest in an equitable recovery that enables everyone to share in its benefits.
If policymakers don't take this opportunity to create a more equitable recovery, and instead craft a legislative package focused only on physical infrastructure and climate technology, future economic growth may be somewhat higher than if no package were enacted at all, but millions of households will see little benefit from that growth. Most people working in low-paid jobs will continue to struggle to make ends meet, those who lose their jobs will not have help to tide them over, tens of millions of people will still lack health coverage, and child poverty and its attendant hardships will remain high, robbing children of the future they deserve.
Housing investments should be a key component of a recovery package. First, housing vouchers should be expanded toward the goal of ensuring that all households that need rental assistance can receive it. Housing vouchers lower the likelihood that a low-income family lives in crowded housing (by 52 percent) or is homeless (by 74 percent) and reduce their frequency of moving (by 35 percent)/2 -- important steps for reducing school disruption and other harmful outcomes for children. (See Figure 6.) But just 1 in 4 eligible households receive any federal rental assistance due to limited funding. Providing vouchers to all eligible households would lift 9.3 million people above the poverty line and cut the child poverty rate by one-third, according to a recent
It also would narrow the gap in poverty rates between white and Black households by over a third and the gap between white and Latino households by nearly half.
As the economy recovers, high housing costs will continue to create economic instability and hardship for millions of low-income renters, increasing their risks of housing instability and homelessness and undercutting their children's chances of succeeding over the long term. Housing vouchers make rent affordable for people in low-paying jobs and are highly effective at reducing homelessness. They also serve as an important hedge against housing instability and financial hardship during recessions because the voucher subsidy rises when a household's income falls due to a lost job or work hours.
Investments in renovating and building affordable housing also have an important role to play, particularly in tight housing markets. Carefully designed investments of this type can make rents more affordable for low-income households, reduce homelessness, improve residents' living conditions and health outcomes, and reduce racial inequities in housing opportunities and housing quality. They also generate jobs and construction activity and can lower greenhouse-gas emissions by making developments more energy efficient. In making such investments, policymakers should place a high priority on renovating the existing public housing stock, creating housing options for people experiencing homelessness, and providing substantial additional resources for affordable housing development through the
However, supply interventions alone will not address the affordable housing crisis. Many communities have ample supply of housing but housing remains unaffordable for people with modest incomes. Additionally, supply interventions often do not produce housing with rents that are low enough to be affordable for households with incomes near or below the poverty line -- the group that makes up most of the renters confronting severe housing affordability challenges4 -- unless those households also receive a voucher or similar rental assistance. Voucher expansion is therefore crucial to ensuring that a recovery package reaches those who most need help to afford stable housing.
Beyond housing, there are other key investments the nation needs to make to build toward an equitable recovery. These include:
* Help for people in low-paid jobs and people out of work. Workers in low-paid jobs struggle to make ends meet, face high child care costs, and often receive no help from unemployment insurance when they lose a job. The recovery package can take important steps to help these workers, including by shoring up our unemployment insurance system so more jobless workers are covered and benefits are more adequate; expanding access to high-quality, affordable child care; making the Rescue Plan's EITC expansion for low-paid workers without children permanent; creating a paid leave program so workers can afford to take time off for health issues or caregiving responsibilities; and investing in job training and subsidized jobs to help people succeed in the labor market and have opportunities to work.
* Key investments for children. There is strong evidence that poverty, and the hardships that come with it, shortchange children's long-term health and education outcomes, and that investments in children can improve their trajectories markedly. These include investments such as making the Rescue Plan's Child Tax Credit expansion permanent, strengthening nutrition programs, and investing in high quality child care and early education.
* Expanded access to health coverage.
Seventy-four percent of renter households that paid more than half their income for housing in 2018 had "extremely low-incomes," defined as incomes below the higher of the federal poverty line or 30 percent of the local median income. (CBPP analysis of 2018
Over the last year, the President and
But, like the CARES Act and Families First Act of last spring and the relief package of December, the Rescue Plan Act provides only temporary relief. The progress we will make under it in helping workers and their families, in reducing poverty and hardship, in narrowing economic and racial inequities, and in expanding access to health care will largely unravel as its provisions expire.
As the President and
The figures can be viewed at: https://www.banking.senate.gov/imo/media/doc/Parrott%20Testimony%203-25-21.pdf
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1 Chye-Ching and