With the federal relief package that just passed, we can be more confident that Massachusetts households will get through the COVID-19 recession intact.
Last year, the federal government greatly expanded unemployment benefits. Employers in the state contribute to a trust fund to pay for normal unemployment benefits (26 weeks) and half of the cost of extended benefits (13 weeks), but that fund was quickly exhausted by the huge job losses last year. The federal government shouldered the costs of extended benefits, funded extra weeks beyond the basic 39 (26 plus 13) weeks, supplemented weekly benefit amounts and created a benefit program for gig workers. The new federal relief package continues these program expansions through August, allowing workers to claim up to a total of 79 weeks of benefits.
In Massachusetts, in the week ending March 13, there were 132,277 people collecting normal unemployment, 114,470 collecting longer term unemployment and an additional people 287,934 collecting gig worker unemployment for a total of 534,681 people collecting. It staggers the mind to imagine the economic havoc that would result if those benefits were not flowing. Of course, some unemployed workers may be in households with other sources of income, but allowing those households to save, or to avoid depleting their assets, positions them to contribute to a strong recovery when COVID-19 loosens its grip on the economy.
As broad as the unemployment relief program is, there are many families that are not covered or do not receive enough relief to pay the rent. It’s impossible to know for sure how many are falling through the cracks, but national statistics suggest that roughly 20% of renter households are behind on rent. The state legislature has made rental assistance a very high priority and we have also worked to assure that both renters and landlords know that the assistance is available and that they are able to take advantage of it. Our strong eviction moratorium expired in October, but evictions have remained below pre-COVID-19 levels. The new federal aid package provides additional funds for housing assistance. It will give strong support to the state’s rental assistance efforts as well as expanding other programs, including programs for homeowners.
The new package also expands food assistance. There are communities in Massachusetts where there are long lines of anxious people outside food pantries. The state legislature has made food assistance a high priority, and the new federal package expands several existing federal programs which will help many households.
Fighting poverty for the longer term, the new federal aid package increases tax credits for lower income families. According to the Center for Budget and Policy Priorities, nationwide, these tax measures “will lift 4.1 million additional children above the poverty line — cutting the remaining number of children in poverty by more than 40 percent — and lift 1.1 million children above half the poverty line (referred to as ‘deep poverty’). Among the children that the Child Tax Credit expansion will lift above the poverty line, some 1.2 million are Black and 1.7 million are Latino.”
The fiscal assistance that the new federal package provides to states will assure that we are able to sustain robust efforts to protect businesses and households from both the virus and the recession. For example, with these funds in hand, the state legislature is moving a bill to provide emergency sick leave protections for workers affected by COVID-19 and reimburse employers for the cost of the leave. The same bill will provide state tax relief for people on unemployment and for businesses that have received “Paycheck Protection” loans
The COVID-19 recession precipitously destroyed many businesses and the livelihoods of many workers. It drove home more clearly than any prior recession that free markets cannot always protect people, that economic fate may turn against anyone however deserving they may be. Let us hope that we can sustain bold efforts to eliminate poverty in our country as this recession recedes.
- Massachusetts Division of Unemployment Assistance
- Center for Budget and Policy Priorities analysis of the American Rescue Plan
- Century Foundation explanation of unemployment benefits flow
- Additional resources on the American Rescue Plan