The Covid-19 pandemic has caused unemployment in the United States to reach its highest levels since the Great Depression. Yet in the first months of the crisis, poverty fell to historic lows and total income, made up of wages and government support, for the poorest households rose at an unprecedented rate. How could this be?
The answer, according to a recent study, is the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Passed by Congress in March, the Act was one of the largest expansions of the social safety net since the New Deal of the 1930s.
This expansion, however, was short lived. Key benefits, such as an additional US$600 in weekly unemployment benefits, expired at the end of July, forcing eight million people into poverty. After months of negotiations, Congress has yet to agree on new relief measures.
Political hostility to government programs that help people who are struggling economically has been growing for decades. Benefits have become less generous, less accessible, and more punitive. Though flawed on many fronts, the CARES Act was a sharp break from this orthodoxy. Direct cash payments and unemployment expansion increased total income for families in the lowest quartile by 11 percent compared to pre-crisis levels, providing a temporary reprieve from decades of stagnant income growth. That poverty has skyrocketed since these benefits expired should come as no surprise.
The relief provided by the CARES Act was critical for protecting people’s rights. According to a US Census Bureau Survey, most low-income households spent these extra funds on necessities, including food and rent, which helped limit the overall economic damage caused by the pandemic. Following passage of the CARES Act, spending by low-income households increased by 26 percent and almost returned to pre-crisis levels, an increase almost three times greater than that of high-income households.
Everyone has the right to an adequate standard of living, including adequate food and housing, as well as to benefits that protect them in case of sickness, unemployment, or caregiving obligations. With one of the highest poverty rates among economically developed nations, the US has long failed to realize these rights for millions of people.
The jolt of this crisis has made clear what the US can gain by changing course. Congress should build on this success and swiftly pass a new round of relief that includes direct payments and supplemented unemployment benefits without excluding undocumented immigrants and informal workers. The rights of millions of people – and the country’s economic recovery –depend on it.