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Is the Safety Net Catching Unemployed Families?

(September 11, 2012) Is the Safety Net Catching Unemployed Families? is one of many studies on poverty recently updated by the Urban Institute. This report was authored by Austin Nichols, Sheila R. Zedlewski. Here is an excerpt. The entire brief is available in PDF format.
The vast majority of unemployed families received some help from core safety net programs in 2009. Among those experiencing unemployment, receipt of unemployment benefits doubled between 2005 and 2009. Enrollment in the Supplemental Nutritional Assistance Program (SNAP) also increased. Public Assistance played a limited role in unemployed families' lives. About 15 percent of low-work, unemployed families got no help from the safety net. The American Recovery and Reinvestment Act (ARRA) of 2009 clearly helped to strengthen the safety net. This extra help has mostly ended, leaving many families to contend with high unemployment and a frayed safety net.

The text below is an excerpt from the complete document. Read the entire brief in PDF format.

The federal safety net has evolved to support lowincome working families and shifted away from supporting those without work for the entire year. How do the safety net programs work when employment disappears? Food assistance and refundable tax credits have become much more important in recent years, while cash welfare payments have dwindled. Thanks in part to legislation enacted to address the recession, most low-income unemployed families received at least one safety net benefit.

The share of low-income families with children experiencing unemployment in 2009 was startlingly high (figure 1). Four in ten of these families had a least one parent unemployed for at least three weeks. Unemployment struck 38 percent of low-income single parents in 2009, arguably the most vulnerable families with only one potential wage earner. Nonetheless, unemployment was even more common among twoparent low-income families in 2009. While many more low-income families struggled through an unemployment spell during 2009 than in 2005, unemployment was common for them even in 2005. Indeed, the lack of full-time, full-year work often leads to low-income status.

In response to the recession, the 2009 American Recovery and Reinvestment Act (ARRA) strengthened the safety net. The federal government funded an increase in weekly unemployment benefits, extended their duration, and gave states incentives to liberalize access to these benefits. ARRA also increased Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) benefits by 13 percent and encouraged states to facilitate access so more eligible families enrolled in the program. Further, ARRA provided states with additional funding for their Temporary Assistance for Needy Families (TANF) programs to pay for increased demands for short- or longer-term cash assistance and to finance new subsidized jobs programs. ARRA increased funding for states' Child Care and Development Funds (CCDF) to help them pay for subsidized child care for families no longer able to absorb these costs. Also, ARRA temporarily extended the child tax credit by reducing the refundability threshold from $11,000 to $3,000.

Existing refundable tax credits also could help low-income unemployed families. Some families with part-year earnings would newly qualify for the earned income tax credit (EITC) as total annual income dropped below the credit thresholds. Of course, families unemployed throughout 2009 no longer qualified for the credit. The scheduled increase in the child tax credit over this period (in addition to the ARRA refundability expansion mentioned earlier) also helped many low-income families. Refundable tax credits based on income during 2009 usually only become available in 2010.

End of excerpt. The entire brief is available in PDF format.

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