Duke University Sanford School of Public Policy
For the past several decades, our safety net has primarily been aimed at promoting and rewarding work and has provided relatively little assistance for low-income families that are not employed. This means that some of the key programs in the social safety net are not structured to provide poverty relief during times when unemployment is rising rapidly and increasing hardship for families.
Many Americans are now facing extensive economic hardship and finding ways to mitigate this problem is a policy imperative. Lower-income families who are already struggling are particularly in peril due to widely documented shortcomings of the safety net during recessions; a spike in food insecurity highlights the concern. Even though in the past unemployment insurance has not been a commonly used resource for the SNAP population, its use should be promoted now. Given the dramatic increase in hardship, the extent to which SNAP and unemployment insurance together will be able to shelter families from economic distress remains an open question. Moreover, despite the increase in eligibility for unemployment benefits among the SNAP population, at least half of SNAP recipients are still unlikely to receive any assistance from unemployment insurance.
In 2018, individuals in the United States gave $292 billion to charities – approximately 1.4% of GDP. Households earning over $2 million (0.1% of the population) gave about 30% of the total household contributions in 2016. Yet the well-off have been characterized as being less generous and uncompassionate, though there is little systematic or reliable evidence to support this. The importance of charitable services is especially acute during the coronavirus crisis when need grows in the face of an overstretched government.
When it comes to monetary donations during their lives, we find that the rich are at least as generous, if not more so, than the poor. It is clearly important to take household wealth into account when analyzing donative behavior because households donate out of existing income and wealth. According to trends observed from 2000 to 2016, the popular conception that richer people give a smaller proportion of their income is wrong. Prior evidence to this point is likely driven by outliers, insufficient data across the income distribution, or estimation techniques that muddle interpretation.
The “Great Lockdown” arising from the COVID-19 pandemic has not been universal – essential workers, who are vital for the core functions of the economy and the society, are still on the job. But not all essential workers face the same level of risk of infection. Some of these workers are “frontline” and must provide their labor in person while others can work from home.
Essential workers have been called on to meet our basic needs during the COVID-19 shutdown. The provision of hazard pay to these workers may be merited both because of the risks they are taking by remaining on their jobs as well on equity grounds. Hazard pay could also help recruit workers into these jobs at a time when they are especially vital. This is especially the case given the generosity of the unemployment insurance benefit increase under the CARES Act which may leave some low-wage workers doing better collecting unemployment benefits than continuing their frontline employment. Other benefits should also be considered including support for the childcare needs of these workers, paid sick leave (where not otherwise mandated under the CARES Act), coverage of COVID-19 health expenses for those who lack health insurance, and death benefits to the families of those who have died of the virus.
States are contemplating and initiating the reopening of their economies at a time when the virus has not completely disappeared and months before the earliest vaccine is even possible. However, protective gear and testing remain in limited supply. One alternative could be to use specific industry characteristics to guide industry openings in a way that lowers contagion risks and maximizes economic benefits while broader testing becomes available and the efficacy and reliability of immunity testing is ascertained.
As mounting economic pressures force states to decide when and how to lift lockdown measures, they lack clarity in prioritization of occupations and industries. Prioritization of occupations with a low proximity index combined with industries with low operational capacity under lockdown conditions will not only minimize the resurgence of the virus, but also maximize the economic impact of reopening. As we better understand the development and duration of immunity to the virus from prior exposure, immunity testing has the potential of becoming an important part of the strategy. While widespread immunity testing would be first best, now and in the future, prioritizing first responders, health care providers, and caretakers, followed by subsequent, selective use in industries which would contribute significantly to revving the economic engine at a lower risk to spreading the virus could provide a better way forward.
More than 26 million workers have filed for unemployment in a span of five weeks in the United States. Looking beneath the headline numbers can provide a clearer view of the fast evolving situation. Initial Unemployment Insurance (UI) claims together with a novel data source of job vacancies posted on the internet, collected on a daily basis, provide a more detailed account of how the labor market evolved over the last weeks and how it is likely to continue to evolve.
We observe broad-based declines in job postings and spikes in unemployment insurance claims across states, sectors, and occupations. The broad based nature of the collapse in vacancy postings and spikes in UI claims suggest the current damage is not solely caused by stay-at-home orders; it is too large and pervasive. Just as employers across the nation reduced hiring and began to lay off workers at about the same time — regardless of the specific stay-at-home orders in their state — lifting the stay-at-home orders does not necessarily or automatically change the outlook for demand of products and services. We therefore conclude that the damage to the economy is unlikely to be undone simply by lifting stay-at-home orders.