Cutting critical family support won’t solve the labor crisis
As the United States emerges from the pandemic and local economies reopen, there is an important debate regarding how relief program benefits should operate and evolve in the coming months. The debate is not just about COVID-related packages — such as the temporary $300-a-week unemployment benefits supplement, that at least 26 states propose to end —but is also about how we see the relationship between family economic resiliency and assistance programs.
These program benefits, such as the Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), and the Low-Income Home Energy Assistance Program (LIHEAP), have aided millions of Americans through crises for decades. Ending or limiting access to these critical programs is one of the most devastating ways to prevent assisted families from preparing for their economic futures and limit their ability to increase and maintain savings.
Last week, members of Congress reintroduced two measures: the Allowing Steady Savings by Eliminating Tests (ASSET) Act and the CSA Opportunity Act. Simply stated, the ASSET Act, sponsored by Reps. Jimmy Gomez (D-Calif.), Kim Schrier (D-Wash.), Jahana Hayes (D-Conn.) and Senators Sherrod Brown (D-Ohio) and Chris Coons (D-Del.), would eliminate or substantially raise asset limits for certain assistance programs. For example, if enacted, the bill would prohibit states from enforcing any limits on asset accumulation — such as a savings account — for families receiving benefits from TANF, SNAP or LIHEAP. The CSA Opportunity Act, sponsored by Rep. Matthew Cartwright (D-Pa.), is more narrowly tailored, would not be necessary should the ASSET Act be passed and would explicitly permit families from saving for college without fear of losing essential food, cash and utility assistance. But the question arises: Why have this debate as we emerge from the crisis, and what is the link with the larger debate about assisting families in meeting basic needs and how they prepare for their financial futures?
The answer is simple. Those in one corner of the debate have long argued that it is a conflict for families to receive benefits when looking for employment. For example, In 2012, then-chair of the House Budget Committee Paul Ryan (R-Wis.) said, “We don’t want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.” This message was neither subtle nor corroborated by evidence. In fact, a comprehensive literature review in 2016 by the Center on Budget and Policy Priorities underscored how little support exists for the disincentive theory argument.
Similarly, the evidence that additional unemployment benefits tend to discourage job seeking is inadequate. When announcing Texas’ plan to end the additional benefits, Governor Greg Abbott (R) claimed, “The number of job openings in Texas is almost identical to the number of Texans who are receiving unemployment benefits.” However, this argument only holds water if there is a perfect match between labor supply and demand; for example, if job seekers have the exact résumés employers want, childcare and transportation are readily available, and people do not have to move long distances, such as from El Paso to Houston to secure work. Further illustrating this flawed debate, in April data from the Bureau of Labor Statistics showed that job growth in the low-wage hospitality industry exploded and new research from the University of Chicago which examined relief program benefits and employment in 2020 reported similar findings. If program benefits are not the problem, then eliminating an extra $300 per week will not solve labor market failures in Texas or anywhere else.
Policymakers and their allies need to stop patronizing families for receiving assistance by falsely assuming that their intentions are of ill-will. Family finances are complicated, and they should not be made more complicated by enacting policies that would punish them for conditions beyond their control, or for needing food assistance after having saved a few thousand dollars for their kids’ college expenses.
Unfortunately, the argument that $300 a week in unemployment benefits is a “hammock” for families has gained significant traction despite the evidence to the contrary. History shows that families rely on assistance for relatively brief periods, even during periods of increased assistance such as economic instability. The opposition against the ASSET Act and the CSA Opportunity Act will heavily rely on the previously flawed arguments and stereotypes of struggling American families, with adversaries preferring to see families wipe out their savings accounts rather than access immediate, temporary help.
However, enacting legislation that will help families retain their savings would illustrate for Americans that Congress can rely on data and research to shape policy. More importantly, it would also help families preserve their hard-won assets, plan for their futures and position them for when the next economic crisis occurs. We need Congress to look ahead, and not down, at the American family.
Gary Cunningham is president and CEO of Prosperity Now. Since 1979, Prosperity Now has worked to make it possible for millions of people, especially people of color and those of limited incomes, to achieve financial security, stability and ultimately, prosperity.