Studying the impact of the U.S. safety net is vital to boosting human capital and improving worker well-being

It’s no secret that the social safety net in the United States plays an important role in helping vulnerable American families through times of crisis. Recent studies only reinforce this fact, showing that the coronavirus recession has led to an increased reliance on the safety net because workers who lose their jobs through no fault of their own turn to programs—from emergency unemployment benefits to nutrition assistance and paid leave—in order to support their families.

While we certainly know a lot about the importance of the safety net in protecting and safeguarding American families, there is always more to discover both about these programs and their implications and impact. That’s why I’m proud to be part of Equitable Growth’s Steering Committee, working on the organization’s 2021 Request for Proposals. Launched late last year, the 2021 RFP is focused on research that investigates the channels through which economic inequality affects growth and stability, and is organized around four specific channels of growth: human capital and well-being; the labor market; macroeconomics and inequality; and market structure.

I am particularly excited that this year’s request includes questions about the role of U.S. safety net policies on individual and family well-being. This will be vitally important in the coming months and years, particularly as the coronavirus pandemic and recession progress and eventually recede. U.S. safety net programs, such as Unemployment Insurance and the Supplemental Nutrition Assistance Program, provide direct economic buffers to households struggling to make ends meet. Though some opponents argue that enhancing the safety net leads to lower labor force participation rates, this view has largely been debunked.

In fact, despite claims that the temporary $600 weekly Unemployment Insurance enhancement in the Coronavirus Aid, Relief, and Economic Security, or CARES, Act in March 2020 would disincentivize jobless workers from finding employment, recent research shows that this program actually had a negligible effect on unemployment levels—and a big positive impact on the U.S. economy.

In addition to providing an immediate economic boost to families in need, another of the safety net’s purposes is to enhance worker well-being and increase productivity, thereby providing a boost to the economy more broadly. The safety net allows jobless workers to wait for employment opportunities that suit their skill level, experience, and pay requirements, rather than accept the first offer they get out of desperation for a paycheck. Studies show, for example, that wages and occupational mobility increase for workers if Unemployment Insurance is extended in economic downturns, both of which are good for post-recession growth and recovery.

Investments in the safety net also have important implications on the health, educational, and future economic outcomes of children in affected households. My recent research focuses on the effects of income and the social safety net—in particular, the Supplemental Nutrition Assistance Program—on child and adult outcomes. An Equitable Growth working paper I published in May 2020 alongside Martha Bailey, Maya Rossin-Slater, and Reed Walker shows just how vital SNAP benefits are during good and bad economic times. We find that, as they get older, children with access to nutrition assistance demonstrate improvements in human capital, economic security, and life expectancy, as well as a lower likelihood of being incarcerated.

In short, these children grow up to be better educated, healthier, and more productive as adults.

Likewise, a chapter I wrote with Diane Schanzenbach as part of Equitable Growth’s Vision 2020 project explains why strengthening the Supplemental Nutrition Assistance Program would reduce poverty, including child poverty, in the United States by notable margins, and would provide a much-needed macroeconomic stimulus by increasing consumer spending in the local economy. We also provide a slew of options for policymakers considering ways to strengthen this important anti-poverty program.

Data-driven research on safety net spending can not only help guide policymakers to make the most effective, biggest “bang for their buck” impact on family outcomes. This type of research also can illuminate the role of the safety net in how the economy and individuals are best able to weather recessions. This is a research area ripe for consideration in our 2021 RFP.

Another area in which I am looking forward to receiving proposals is the ways in which structural racism and climate change affect intergenerational upward mobility. These two issues are especially important and timely, given that both climate change and the coronavirus disproportionately affect people of color, who have also been more likely to lose their jobs in this recession, and as a result may have more need for safety net programs and protections.

In the aftermath of the worst economic downturn since the Great Depression and one of the deadliest public health crises in modern history, policymakers in the new 117th U.S. Congress and the incoming Biden-Harris administration will need to act quickly in order to help struggling American workers and their families, promote well-being, and boost productivity. Using evidence-backed research—such as that produced by Equitable Growth’s network of academic scholars—to help guide policy decisions and strategy will ensure those who need the support of the safety net the most will receive access to it as quickly and seamlessly as possible.

Equitable Growth is now accepting proposals submitted online to our academic grants, doctoral/postdoctoral grants, and Dissertation Scholars program. For more information on who is eligible, how to apply, and upcoming deadlines, please visit our 2021 Request for Proposals website.

January 13, 2021

Topics

Economic Wellbeing

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