COVID-19: Safety net needs more than stimulus cheques

Lena Simet and Amos Toh, Tribune News Service

The COVID-19 pandemic in the United States has left millions of people struggling to make ends meet. Massive government spending, especially the stimulus cheques, has provided crucial relief. But the checks are just a band-aid for a US social safety net that has been shredded by decades of budget cuts and draconian rules.

As analysts with the nonprofit group Human Rights Watch, we looked closely at recent census data regarding these stimulus checks. We found that of the nearly 40 million adults living in a household that received a stimulus payment in mid-May, 60% spent a portion on food, 49% on rent or mortgage, 44% on utilities and 24% on car payments. In other words, this money is going to essential needs, not frills or already-flush bank accounts.

Nearly 45% of households making less than $35,000 a year used the checks to cover three or all four of these necessities. The census data also reflect racial inequalities: 88% of Black adults relied on the payments for at least one of these necessities versus 66% of white adults.

We interviewed dozens of app-based “gig” workers in Texas about how they spent their stimulus cheques. Gig workers are a growing segment of the US workforce that is largely low paid and made up of workers of colour. Many said the payments helped them keep a roof over their heads and put food on the table, but the relief was temporary.

A 29-year-old delivery worker and mother of two said the money “comes and then goes so quickly.” A 59-year-old delivery worker said it helped pay her bills but she was “so far behind” that “they rack up as soon as you pay them.”

Irregular cash payments can’t fix long-standing problems with the social safety net. Census data shows that only 36% of households earning under $50,000 who lost labour income received unemployment benefits, even though these were expanded during the pandemic.

Workers struggled to navigate stringent and complicated eligibility requirements, frequent website glitches, excessive wait times on helplines and lengthy processing delays. The Labour Department’s inspector general said state unemployment agencies struggled to overcome “antiquated IT systems” and “insufficient staffing” as they tried to process the surge in claims.

A 25-year-old rideshare driver we spoke to said she stopped driving in March 2020, as COVID-19 was spreading rapidly. But the Texas unemployment agency did not approve her application until two months later, as her savings ran dry and she had resumed driving.

The 29-year-old delivery worker told us the unemployment agency denied her application, saying it couldn’t verify her identity. She tried calling the agency for hours and submitted multiple appeals, but to no avail.

Beginning in June, gig workers in Texas and 20 other states stand to lose eligibility for extended unemployment benefits. These states are ending pandemic unemployment aid early, even though Congress extended these measures until September. With one in four adults nationally still facing difficulty covering household expenses, cutting benefits is the wrong approach.

As various states and the federal government disagree on how best to provide relief, the priority should be ensuring long-term economic security and overhauling a badly frayed safety net. Everyone should have the protection they need to secure their basic human rights.

Meanwhile, the number of Americans applying for unemployment benefits dropped last week, a sign that layoffs declined and the job market is improving.

The Labor Department said on Thursday that jobless claims fell just 7,000 from the previous week to 411,000. Weekly claims have fallen steadily this year from about 900,000 in January.

The economy expanded at a healthy pace in the first three months of the year, the government also reported Thursday, and economists are optimistic that growth will accelerate in the April-June quarter, when it could top 10% at an annual rate. As the pandemic fades, states and cities are lifting more business restrictions - California just fully reopened June 15 - and the economy is picking up as consumers are traveling, eating out more, and visiting movie theaters and amusement parks.

Unemployment claims jumped 14,500 last week in Pennsylvania, the biggest gain by far of any state. Pennsylvania revamped its benefits filing system earlier this month, likely leading to some backlogs and distorting the overall data. Thirty-five states reported that claims fell last week. All told, 14.8 million Americans received jobless benefits during the week ended June 5, the latest data available. That was little changed from the previous week.

With many employers desperate to hire, some states are starting to cut off pandemic-related unemployment aid programs in response to business complaints that the assistance is making it harder for them to find workers. Starting this month, 26 states will end an extra $300 weekly federal unemployment payment and 22 of those states will also cut off all jobless assistance to self-employed, gig workers, and those out of work more than six months. The extra $300 ends nationwide on Sept. 6.