This is a mystery that economists have struggled to decipher. The U.S. economy looks strong on paper, but Americans are unhappy with it. But few people seem to have paid much attention to the dizzying experience we just had. We built a real social safety net in the United States and then suddenly tore it apart.
Receive unemployment insurance. The CARES Act, passed in March 2020, included the largest expansion of benefits and eligibility in U.S. history. Francisco Diez, senior policy strategist for economic justice at the People’s Center for Democracy, which has organized unemployed workers during the pandemic, said this gave people “a sense of security.” “It felt like they could breathe and realize what they could do.”
Lashondra White was one of them. When she was furloughed from her job at Kohl’s department store in Detroit in March 2020, she began receiving more than $600 a week. “It was a chance to get out of this situation,” she told me last year. The situation was such that the pay was “terrible.” She had always wanted to have her own business, so with her extra money she fixed her credit score, rented her commercial space and opened an eyelash studio. Her studio is still open and mostly booked.
In 2019, unemployment insurance lifted 500,000 people out of poverty. In 2020, that number was 5.5 million. Yes, the program was riddled with problems, especially technical ones, which made it difficult for many people to sign up quickly. But once they were covered, “they saw something close to the actual benefit level they were entitled to,” Diez said.
It was short-lived. By July 2020, the $600 supplement had expired, and it wasn’t until December 2020 that Congress approved a $300 payment with new limits. By May, some states began opting out, leaving residents with only a fraction of the benefits they had before the pandemic.
In those states, “there was a real fear and concern and a sense of fear and abandonment from the politicians who chose to cut off benefits early,” Diez said. “This really undermines their belief in the nature of government as an institution where they can really see their struggles.”
The unemployment rate has been below 4% for more than two years, wage growth has outpaced inflation (which has fallen significantly), and economic output is strong. But consumer sentiment remains depressed, and even though it has picked up recently, it is still about 20 percent lower than before the pandemic began. This is a level typically seen at the end of a recession.
Why is the economic atmosphere so bad? There are probably many answers. It has become more difficult to obtain basic necessities such as housing and childcare. Lower inflation is great, but prices remain uncomfortably high. Republican voters may simply not like an economy run by a Democratic president. Americans may feel okay about the economy today, but they may be wary about the future.
All of these things can be true at the same time, but let me add one more reason why Americans may be doing well but feel financially insecure. During the pandemic, this country built the strongest safety net in decades, cushioning people against eviction, poverty, and hunger. and other sufferings. American life has improved materially considerably. Then we took it all up.
The message received is that the government could have done this from the beginning, but has chosen not to do so, and has chosen to withdraw those kinds of security again. Before March 2020, Americans were used to getting by without much government assistance, but now we’re finding that doesn’t have to be the case. They have tried to build their own safety nets, but they have depleted the savings they were able to cough up when pandemic-era public programs were in place.
So even if people are more likely to get a job and even get a raise that outweighs the increase in costs, they can still look down and think there’s nothing to catch them if they fall. This leaves us in a constant state of exhaustion. One wrong move and one misfortune, one layoff, and the lack of support to get back on your feet can spell disaster. No wonder many Americans lack confidence.
Here is an incomplete account of the safety net that was erected almost overnight to counter the economic aftershocks of the pandemic. During the public health emergency, the federal government required states to continue enrolling people who were already enrolled in Medicaid or who were already enrolled in Medicaid. This means that people are spared the difficulty of periodically re-certifying whether they are eligible, and also that their life circumstances may change (for example, if they earn a little more or get married). ) and it meant I didn’t lose my health insurance. From February 2020 to December 2022, more than 21 million people were added to Medicaid and the Children’s Health Insurance Program.
Congress increased food stamps by increasing benefits by 15 percent and ensuring that each household receives the maximum amount based on its size. Additionally, all students now receive free school meals. In fact, hunger remained steady in 2020 and 2021, even though millions of people lost their jobs.
Congress approved $46.5 billion in rent subsidies to keep people from being evicted. For the first time in history, the federal government is offering assistance to people who have fallen behind on their rent. A 2023 survey of Philadelphia renters found that the money not only gave people a better handle on their rent, but also made them less likely to experience “frequent and debilitating anxiety.” .
In 2021, Congress expanded child tax credit payments that had been in place from July 2021 until the end of the year, increasing benefits to up to $300 per month for children under 6 and $250 per month for older children. The amount has been increased and qualifications expanded. These payments became an important part of household income and alleviated hardship and hunger. They helped nearly halve the child poverty rate in 2021.
Last year, Jamila MichenerMargaret Brower, a political scientist at Cornell University and Margaret Brower, a political scientist at the University of Washington, launched a study asking people about the benefits they received during the pandemic.
“People tell us about all the benefits they received, what it meant to them, and what they did with it,” Michener said of the unpublished study. told me. People can feed their families, he said, becoming emotional. One woman told Dr. Michener how difficult it was to constantly have to say “no” to her own children, even to healthy foods like small snacks and fruit. But in the early stages of her pandemic, she was able to buy them what they needed.
Importantly, Americans received multiple benefits at once. They were able to continue on Medicaid while receiving monthly child tax credit payments and access to rental assistance. Most Americans are usually insensitive to various policy changes, but this time the scale and scope was different. They noticed it and were deeply grateful.
“People can breathe without as much pressure or stress,” Dr. Michener says.
After these overlapping supports were stripped away, child poverty more than doubled and family hunger soared. The same was true for evictions. Currently, 17.8 million people are losing coverage because states are allowed to force people to fill out paperwork to stay on Medicaid and terminate it if they don’t comply.
Individuals and families have been hit hard. In Kentucky, which opted out of additional food stamp benefits in 2021, the damage started early. Residents told Dr. Michener that they often have to go to food pantries for meals. One woman said that when she can’t make it to the food pantry, such as because her car breaks down, she eats noodles even though she can’t eat gluten.
Many people told Dr. Michener that they had to work harder for their jobs, and she said the word “struggle” came up again and again in interviews with researchers. She says Americans don’t have a lot of reassurance that they’re going to be okay, that even if the worst-case scenario happens, they’ll be okay and that they’ll be taken care of.
The disillusionment this creates is incredibly harmful. Indeed, if people become pessimistic about the economy, there is a good chance that the election will move away from President Biden. But it’s not just this election. Even if the experience of losing benefits somehow does not reduce political participation, it does mean that the government loses an opportunity to continue proving to Americans that it can make life better. It draws people into democracy and strengthens it. The worst case scenario, and more likely, is that the power turns off.
“A lot of the programs had a lot of things that changed people’s lives and made them better, and a lot of them have been rescinded,” Dr. Michener said. “You have to think people are stupid not to realize that.”