In this talk, H. Luke Shaefer reviews research on the impacts of the largest and most comprehensive expansion of the social safety net in modern times, and where the nation goes from here. September, 2021.
0:00:00.0 Kate Cagney: Let's go ahead and get started. Thank you for joining us today. I'm Kate Cagney, the Director of the Institute for Social Research at the University of Michigan, and I'm so glad you could join us today, either in the room or via Zoom for the next installment in our ISR Insight Speaker Series. For those of you aren't familiar with ISR, I'm just gonna share a few details. ISR has over 300 affiliated faculty who, along with ISR's excellent staff, conduct research that addresses topics such as wealth and inequality, race and racism, politics and public opinion, as well as a wide range of other topics, including teen drug use, economic behavior, aging, and health. Our faculty come from almost every school and college at the University, reflecting the true interdisciplinary nature of the work. The goal of this Insight Speaker Series is to create a forum for disseminating research findings from our faculty at ISR for the public good.
0:00:53.8 KC: Past topics have included the educational achievement gap during COVID-19, the latest results from the Detroit metro area's community study, looking at the pandemic's impact on Detroit, one of the nation's hardest hit areas as we know, and an examination of the role of research universities in the time of COVID-19. This is actually the first of our academic year, and I'm going to note that all recordings of these events are posted on the ISR website. Let me tell you a bit about today's talk. I have the pleasure of introducing our speaker, Luke Shaefer, the Herman and Amalia Kohn Professor of Social Justice and Social Policy and Associate Dean for Research and Policy Engagement at the Gerald R. Ford School of Public Policy. He's also a Professor of Social Work and the Inaugural Director of Poverty Solutions, which we'll learn more about today, an interdisciplinary Presidential Initiative that partners with communities and policy makers to find new ways to prevent and alleviate poverty.
0:01:55.5 KC: Shaefer's research on poverty and social welfare in the US has been published in top peer-reviewed academic journals in the fields of public policy, social work, public health, health services research, and history. So, a really wide range. That's terrific. And his work has been supported by the National Science Foundation, the Bill and Melinda Gates Foundation, the US Census Bureau, and a number of other sources. He's presented his research at the White House and before numerous federal agencies, he's testified before the US Senate Finance Committee, and has advised a number of the nation's largest human service providers. His work has been cited in a number of media outlets, including The New York Times, the Post, the Economist, the Atlantic... It's a long list, and has been on such programs as Marketplace and CNBC's Nightly Business Report. And I just wanted to emphasize his book with Kathy Eden, "$2.00 a Day: Living on Almost Nothing in America," was named one of the 100 notable books of 2015 by the New York Times Book Review, and it also won the Hillman Prize for book journalism.
0:03:01.1 KC: So, I hope that gets you enthusiastic about our inaugural speaker today. Luke will discuss the expansion of the social safety net during the COVID-era and its impacts on poverty and hardship. And I just wanna say one quick housekeeping piece before I hand things over to Luke. For those of us joining on Zoom, please note that we are providing live captioning of the event, and you can view those captions by turning on the closed captioning feature on your screen. And we'll also have a Q&A after the formal piece of the presentation. So, I'll be taking questions from the room and also questions via Zoom. And so, we'll trade back and forth as time allows. So. With all of that... Welcome, Luke. Thank you so much.
0:03:46.4 Luke Shaefer: Hi, everyone here and everyone there. It's great to be with you. I actually was in Washington this last week to testify in front of the Select Subcommittee on the Coronavirus Crisis, and that was a place where all but three members of the Committee decided to join virtually in the end. So, I testified to an empty room. So, this is a bigger in-person crowd. I'm really excited to have all of you here. I study poverty and extreme poverty. And so, I often maybe have been accused of being not the, like, greatest person at dinner parties, you know? I'm often maybe considered a bringer of bad news. And so, I'm particularly delighted to be here to talk about what I think is really, really good news.
0:04:41.1 LS: I am the social safety net, COVID-era cheerleader. And I think what we have done is actually quite remarkable and unprecedented in our history of the safety net. And so, I'm gonna sort of take you through some evidence, and I appreciated this opportunity, both of the Ford School where we have lots of ISR affiliates, including me, and for Poverty Solutions, where we have partnered with ISR and [0:05:10.8] ____ on Mike Mueller Smith's wonderful Criminal Justice Administrative Data Project, and I know lots, and lots, and lots of people who are so excited that Kate is here. So, a big welcome from Michigan for Kate Cagney.
0:05:27.0 KC: Thank you so much.
0:05:28.8 LS: So, I could take you to a fantasy world where a government that is sort of faced with a major crisis, unprecedented crisis, came together and bridged divides and came up with a set of solutions that really worked for people in a fairly quick way. And I think that it would sound like it was totally a work of fiction, at least in the United States. But in a lot of ways I think that's actually what we have experienced during the COVID pandemic. So, in March 2020, I was deeply worried about the economic impact of the COVID pandemic. I actually fully underestimated the concerns about the public health crisis, right? I was... I remember when my kids came home from school and I thought we were going back in two weeks, right? I think a lot of us had that experience of... Every day, of, "Oh, wait, this is... " And now I sort of look back and I'm like, "What in the world did I think was gonna happen in two weeks that we were gonna figure this all out?" A year-and-a-half later, they're back in school. So...
0:06:51.1 LS: But I was incredibly worried about the economic crisis, but that's because I've watched previous recessions. And in previous recessions, especially the most recent recession, which... The great... Called the Great Recession, that gets going at the end of 2007-2008, but really continues to get worse for many, many years, right? Across that. And so, during that period, we saw huge increases in food insecurity, right? Jumping from maybe a national rate of in the low teens to above 20% food insecurity. We saw huge increases in poverty over that period of time. We saw a huge loss of wealth, right? In these previous eras. So, what... Everything I knew from history was that, when recessions hit, they usually hit people at the lowest income... You know, lowest on the income ladder the worst. Our most recent experience, where we'd seen the biggest job loss, was particularly bad, in my view, when you look at a whole different set of metrics. And the sort of divided government didn't really have a track record of success in these situations.
0:08:12.0 LS: So, in this case, I think we saw a very different response. And, again, I'm only speaking to sort of the economic security response. In January 2021, we see the first case, the first COVID case, and then we declare a national emergency March 13th. On March 18th, we have this first... Family First Coronavirus Response Act. They did some good things in that, including bumping up SNAP benefits, Supplemental Nutrition Assistance Program. I work at the... As a special counselor to the Director of Health and Human Services for the State of Michigan. So, I remember the first day we sent an extra $35 million out to families on their Bridge Cards. In fact, it turned that to be a relatively easy thing for states to do, is to send out money, right? Through channels that already exist. I think we're gonna track back to that. And then, a pandemic EBT program where we knew that there were a lot of children who were on school lunch, but weren't on food assistance. So, they weren't gonna get that extra money we sent.
0:09:21.7 LS: So, Congress put in this new program to say, anybody at schools that is not on food assistance is eligible for these extra SNAP benefits. I think all school children, including the ones not on SNAP, we're just gonna make them eligible, we're gonna send them out the cards, and that really... That was a much more difficult path where we had to communicate... The Department of Health and Human Services of the State of Michigan had to communicate with the Department of Education to figure out who was on school lunch and... Reach out to them, give them a card, give them an actual card, give them something to sort of communicate the how and when they could use the money, and how much they could even find out that they had, right? So, that becomes sort of a bigger task, and that actually took states a long time. Michigan was the first out of the gate to do this. In fact, in an evaluation report, our state gets its own color, because... You know, when grading of this rolled out. But, by the end of May, there are still states that are struggling to sort of do these processes.
0:10:30.4 LS: So, I would say sort of that first March 18th act was pretty much in line with what I might have expected beforehand, right? We've got modest increases to programs that already exist, but still a lot of underlying concern about things like unemployment insurance. So, that's a program that's supposed to help people who lose their job through no fault of their own. But I and others have done a lot of work over the years to find major racial disparities and who's eligible based often on sorting in the labor market, service sector jobs that rely on sort of hour changes rather than formal layoffs. So, you're much less likely to be eligible. And a lot of states that had, over the years, put barriers in place, like a 1000 little prick-type barriers to say, "For this technicality, these groups aren't eligible," because they didn't wanna raise taxes to pay for the program more, right? So, that was a program that was not in great shape before. Our Cash Assistance Program, not in great shape before. That's our sort of welfare program, where... Basically, that had been turned into a block grant and states were using it for all sorts of things, rather than providing cash aid and sort of the... The fraction of money actually going to families had dwindled.
0:11:47.9 LS: So, the real game changer is the CARES Act. This happens in March 27th, I would say that's pretty fast sort of movement, right? And this does a number of really important things. The first is to rely on stimulus payments. Now, we had done stimulus payments in previous recessions, but they had really been limited to people who had tax liability in the past. So, people who didn't make enough to owe taxes, people who didn't work at all, would all be ineligible for those in the past. And, what these stimulus checks did was that, everybody down to zero income, you're eligible for a stimulus check. And it was really quite big, right? $1200 per adult, $500 per child. I made an argument to Biden that children should not be counted as 40% of an adult. But still, this is a big chunk of money going to families. And the income threshold goes all the way up to $150,000 a year. So, this was a really actually... You could argue it had been built on a previous approach that we had done, but in many ways it was quite different because it was so broadly available. So, you're talking about sending out straight money to families, all low to pretty upper income compared to when we think about the income distribution, families, no matter any hardship to COVID whatsoever.
0:13:27.4 LS: There's no eligibility besides sort of that you are within zero income to $150,000 and that's where it starts to phase out. So, that is a... I would say sort of built on previous types of approaches, but fundamentally different in the comprehensiveness, right? The broad-based eligibility. And then, we did two things with unemployment insurance. The first thing is that we recognized all of those problems that I was just talking about with the previous... Sort of the way that the program was operating going into the recession. We basically... We have something like 20% to 30% of all jobs are gig non-standard type jobs or just categorically ineligible, and then you have all sorts of people who are coming in-and-out for various reasons. Maybe somebody who's just started looking for a job who hadn't been working for a period of time. We broadened eligibility considerably and increased the amount of benefits. So, we made more people eligible, and we did this fairly, like, crude sort of $600. Everybody gets $600. By crude, maybe I should call it simple, right? So, it's simple, it's straightforward. This is still harder to administer, because the State governments have to create a whole different pathway, right? To giving benefits. But the $600 is easy. We're just gonna tack that on top of everything we give. Then there's the moratoriums for residential evictions and a Paycheck Protection Program that says we're gonna send money to employers that keep people in jobs.
0:15:21.2 LS: So, we have that first. Then, those stimulus checks are one time, so those are getting a little further in the rearview mirror in the fall of 2020. And pandemic unemployment ends. That's not the eligibility extension, right? That's not the... Not making people more eligible, that stays in place through the rest of the calender year. But the extra $600 goes away, so we sort of have a notch kind of at the end of the summer. Then Congress acts again with the COVID Relief Bill in... At the end of December. Now, this is an interesting one, 'cause some people argued that the Cares Act was simply sort of a political expediency, right? This was more than we'd ever done. I guess you could make an argument this was an unprecedented time where people really could come together on safety net stuff. The December bill, there's no election coming up, right? There's no... In fact, you've got President Trump and a Republican Senate that's supporting a bill that is conceivably gonna make things look a lot better off in January.
0:16:29.9 LS: So, it's really kind of hard to say that there was any sort of political reason, besides this was something that Congress thought they should do for people. And then, finally the American Rescue Plan, which... You know, this a third round of stimulus payments, right? So, you've got a smaller stimulus payment with the COVID Relief Bill. And then, a third round which is $1400 for every person. Kids get the same amount. So, folks like me sort of apparently had some sway, right? Saying we should treat kids the same. We are gonna extend eligibility for unemployment insurance. We're not gonna go to $600, but we're gonna go to, like, a $300 supplement. And then, we're gonna continue on with expanded food assistance and $21.5 billion in rental assistance funding. So, this is sort of like a sweeping package.
0:17:23.6 LS: And then, the final thing, something... The thing that's nearest and dearest to my heart is the... This expansion of the Child Tax Credit. So, the Child Tax Credit is one of those refundable credits that we had, a tax code that says, "Raising kids is expensive, and society has a reason to help parents in that work." But again, sort of based on the previous type of regime, we always said, "If you didn't earn some base level... Those who have no income, those who have a very, very low income, they don't get that credit and they don't get the full credit unless their earnings get to a certain point." So, the Child Tax Credit, which we often think of as one of our most important anti-poverty programs, left about a third of kids out, about a third of kids didn't get the full credit. And it was about half of kids of color, because of where it sort of... The earning they were in, the earnings distribution, didn't get the full credit. And it had no effect at the very bottom for the family that I've written about in the past, because it just left them out.
0:18:28.0 LS: This said, we're gonna take a similar approach to what we did with the stimulus checks and make even the lowest income kids eligible for the same amount. And we're gonna have the same amount for kids and families that make no money to kids and families who make $100,000 a year. Everybody's gonna be treated exactly the same. And, in this case, that was a difference, because we actually did more with the Child Tax Credit for folks before who were at $100,000 than we did for folks who were not making any money at all. Okay. So, the other thing that was really different about this recession is the amount of data that we have. So, the growth, you really saw, sort of, the expansion and the growth of the data to evaluate in real time and see how things are going.
0:19:19.2 LS: So, what I'm gonna do today is just show you a set of data that I think point to a lot of evidence about the impacts of what we've done. And some of that is in spending data. So, the first thing we're gonna talk about is this incredible... Worth 10% sample of all credit and debit card expenditures that Nathaniel Hendren and Raj Cheti... That they have, that we can follow... We're not just looking at sort of a... We don't have any survey sampling that we have to be worried about, it's just a straight sort of random sample of all credit card and debit card spending. And then, the Census Bureau also started facilitating this online survey called the Pulse Survey, which was really meant to track in real-time how people were doing during the pandemic. And that, again, is so much different than when we've done before with our official poverty rates, our food insecurity rates. We usually are sort of conducting the survey in March...
0:20:29.2 LS: Of the year after, sort of, what we're trying to measure, right? So, we're talking to people in March of 2021 about their incomes in 2020, and then reporting on it in September of 2021, right? So, there are huge lags in this. And this experience has been entirely different from that. Alright. So, what happens with expenditure? So, I told you a little bit about sort of this Hendren and the other guy. I have a soft spot for second authors of... Or second name collaborators, right? This is following this administrative data just on people who are swiping stuff on debit cards, on credit cards. Again, not a perfect picture of well-being, but more comprehensive, we don't have to be worried about people... You know, a non-random survey response bias or anything like that. So, just interesting sorts of data. And they're gonna basically set it to January of 2020... And I just wanna remind everyone, January of 2020 is like a really good month, right? We are in the end of the longest recovery, the longest economic expansion that started under Obama, continued under Trump...
0:21:48.0 LS: And poverty is about as low as it's been in decades, according to our national estimate. So, we're gonna set it there. And we see sort of this... The onset of the crisis happens, this huge shock downwards, right? In spending. This is like a dramatic shift, a 30% drop, in spending, and I think that that is sort of the combination of three things, right? That's a combination of people losing their jobs, people being freaked out about losing... The possibility of sort of losing their jobs, seeing the writing on the wall, right? And then, everybody starting to change their behavior based on the public health crisis. I do remember my first credit card bill sort of after being fully in the pandemic looked a lot different from some of my previous credit card bills. So, this shocks downward. But this is pretty amazing, right? We talked about the national emergency declared, and then the CARES Act gets implemented, and those first stimulus payments go out really quick, right? And that's one of the things that we saw about the stimulus payments is that, because they're relatively simple, people get the same amount, there's not a huge amount of eligibility to be figured out... We could get those out pretty quickly.
0:23:05.4 LS: And it starts an immediate rebound in consumer spending, so that by June, just sort of a month later, we're at about 10% below and we continue to inch up. And then, you can sort of see we start to flat line in the fall of that year, and I think that that's part of a response to the fact that we had our stimulus, our main stimulus go out, expanded unemployment insurance is loading in as that line is going up. And then August 1st, that's where those extra $600 drops, and we sort of flat line. Now we're not sort of falling back to that 30% below, but we're not making any more progress until the next stimulus payment goes out and we see again expenditure has shot upwards. The third stimulus payment goes out, again... It's almost like a new intercept, right? With consumer spending. And then finally, my favorite, the advanced Child Tax Credit, goes out, and that's only affecting a subset of households at this point, but you can see we're stabilized to the point where... I had the... Right about now, right? Talk about real-time data. September 5th of 2021, our consumer spending is about 18% higher than it was in January of 2020.
0:24:24.9 LS: And January of 2020 is a pretty good year. That's a pretty good moment in history. So, now we might take consumer spending... Well, it sort of leaves out those who are lowest income. Some folks who don't have a credit card or debit card. It's a fairly small fraction of the US population, but it could still be a meaningful one. And maybe there's sort of heterogeneity within, right? It actually turns out... The first part is an important critique, right? We're missing some Americans, and probably disproportionately those with the biggest challenges. In terms of breaking this down by decile though we see the biggest return to spending is actually among the lowest income folks who have debit cards and credit cards. And that's because, I think, for higher income folks a lot more of that, the spending that they would have been doing in the counterfactual is a luxury, if you will, right? Or the vacations that are stopped. And more of sort of the spending of low income households is stuff that's necessities, on rent and what have you. So, we actually see a steeper slope in that return right there for the lowest income households, but we still are leaving out some folks.
0:25:47.6 LS: Here's basically the same chart, but with one addition, and this is in a paper that my colleague Mike Evangelist and Pinghui Wu and I just published in Health Services Research. You can see, just 2020 January through August of 2020. So, this is just looking at the period that we're rolling out pandemic unemployment insurance and the stimulus checks, right? You can see where the economic impact payments are going out. So, you can see, the black line sort of shocks downward to 30% decline in expenditures, right? As the health crisis comes in, the government acts and it immediately pops back up to 10% below. And the decline in healthcare spending is even more dramatic, it pops even further downward. And we think that some of that, of course, is that people are more worried about going to the doctor, because other sick people may have the virus. But when you look into surveys about why people aren't going to the doctor during this period, they're also mentioning a lot about not having the money to go to the doctor.
0:26:54.9 KC: So both, I've lost my job and I... One of the things, if I don't have a lot of money, that I can stop spending on is my co-pays for my medication or my doctor visits, my preventative stuff. And actually interesting, a lot of the excess deaths that are happening in this early period are not related to COVID, right? There's more people who are dying from a number of other sort of types of things that people tend to die of, because they're not getting the healthcare that they need. So, we think there's a combination of both fears of going to the doctor, but also the income concerns. And we think we can see this in this chart. So, what we did was... The dependent variable is spending and in that case we're looking at healthcare spending, and then we're gonna put in a variable for the UI Claims rate. And we think of that as sort of the degree to which the economy is worsening in a place. So, you can see for every increase in the UI Claims rate, healthcare spending is going down, all consumer spending is going down. The FEUC, that's the week that we start eligibility, but we have both an FEUC sort of saying, "Here's the intercept of when we started this expanded eligibility in each state by week."
0:28:28.2 LS: And then, we're gonna interact the impact of the UI Claims rate with the FEUC. And so, what we find is that the claims rate, right? Is causing people... Sort of the more the economy is worsening, it's causing more people to stop spending on healthcare... And also stop spending on everything, right? But on healthcare. So, we think that that's in line with people are more worried, right? Or they don't have the resources to spend. And then, when we interacted with the FEUC, you can think of that as a shot of the $600, we see it flips the sign and cuts the fraction... Sort of cuts the negative effect a little bit more than in half.
0:29:17.8 LS: And the impact is bigger among non-expansion states, right? So, the impact of that extra money going from UI is having a bigger effect on healthcare spending in states that didn't expand than did expand. And that makes sense, because the states that did expand, people are gonna have sort of lower underlying healthcare costs. And then, of course, if we look at the economic impact payments. Again, this is not... This is not a test that I'm gonna bet my firstborn child in. But we see in that week that the economic impact payments go out... Pretty big, positive impact on spending, both on healthcare and on consumer spending. So, money, right? Money is acting like healthcare policy. People are choosing to use the money on healthcare.
0:30:09.3 LS: Alright. So, let's think a little bit about what we can do to get at this question of the people that we're missing. So, the Pulse Survey, as I mentioned, is this great thing the Census Bureau did. It's a little bit of a mess, right? The questions... They have to move pretty quickly. And then, of course, we all hope there'll be locked into the questions, 'cause we don't want them to change the questions overtime, right? But, in retrospect, we probably could have done a little bit better on the questions. But another interesting note is early on in the pandemic a lot of people are comparing the results from this Pulse... So, here we have a question about the share of respondents reporting, "Sometimes there are often not enough food in the past seven days." And a lot of people are trying to compare this and a couple of other surveys to pre-recession estimates of food insecurity. They're very, very, very smart people. But, the first thing that, when you did that, that really struck out was that the rates we were getting in the recession during the COVID were so much higher than what we saw before.
0:31:22.7 LS: And so, a lot of people at the beginning, we had quite a bit of discussion about increases in food insecurity that were two to four times higher than what it was before the pandemic. So, we just had a... Our official food insecurity report come out that is the full comparison, right? Of what food insecurity was in 2020 compared to 2019. Using the same questions and the same methods, and it actually found no increase in food insecurity during 2020, right? So, there's a little bit of a sort of a measure question there. And my take and the take of some others is that, these surveys, like the Pulse, actually were administered online, right? So, these are surveys where they sent out links, you would go and enter your results in, right? You would go answer the questions online. And the official food insecurity surveys are all interviewer-based.
0:32:28.3 LS: So, if somebody calls you up, and asks, "Are you having trouble putting food on the table?" And it looks like people answer the same questions different... Differently if they're talking to someone or if they're just answering the question themselves online. And my hunch is that if they're answering it online, that they're more likely to say what's true with them. And if they're talking to someone, they might be embarrassed that they're having trouble putting food on the table. That I can't really prove right now, but it does create this sort of interesting juxtaposition where I think, in some cases, especially when we're asking people to report on hardships in their lives, the way that you ask the question, is it direct input or is it surveyor based, is gonna matter for the underlying rates. And I think it could matter actually a great deal. So, that's something I wanna sort of continue to study. In the meantime, we have this chart that is all consistent, right? Again, the question isn't great.
0:33:35.6 LS: It... Not having enough food probably, in virtually all cases, is gonna be a matter of not having the money to buy food. But there are other reasons, right? So, we don't love the question, but it's consistent. It was all administered the same way, so. I had families with kids up in the top line, because I think it's useful to remember the families with kids across... If I threw up any measure of hardship, they would have higher rates of hardship than anybody else, compared to sort of the adult population, is what the sample is. And then, adults without kids, right? So, these are adults with kids, adults without kids. And both lines you can see, starting in August 2020, that's where the trend line starts, we see an increase in the hardship over the end of 2020. And remember, that's the period of time when the federal government isn't doing anything, right? So, we do a lot in the Spring of 2020, and then things start to expire and the EIPs start to get further and further in the rearview mirror. And expenditures are sort of staying flat, if you remember, during this period. They're not increasing. But, then that COVID Relief Bill goes out, and we see a set of stimulus payments go out. And you can see, boom, right? Hardship shocks outward. And then ARPA, even bigger stimulus checks go out, and then boom.
0:35:05.4 LS: So, from December of 2020 to April of 2020, we're actually seeing a 40% decrease in people reporting that they don't have enough food to eat. I mean, that's just incredible, right? One, that's a... That's... We're talking millions and millions of people who are answering differently on this question. And two, that we have the data that we can actually see this for once, right? We've never had, I think, the same granularity of intra-year changes over time. And then, as we might expect, right? We've got a shock in ARPA and we're getting further away from the stimulus checks and things are either leveling out... Going up a bit, right? From this slower flow. And then, that first Child Tax Credit payment goes out... And again, for families with kids, food insufficiency shocks downward. For a house with... Adults without kids, I'm sorry, I keep on not quite getting the unit right, we see it stays pretty flat. So, a difference in differences, I've designed, like I just did with expenditures, would show a big decrease associated with the Child Tax Credit for a households with kids, but not for those without.
0:36:20.9 LS: And there's actually one more sort of set of weeks here and that stays about flat at 11.2%. That's a 20% drop of where we are, and just think about this drop, right? From where households with kids were at in December of 2020 to where they are now. See a pretty similar pattern with a question about financial insecurity. So, this is just simply like... A share of respondents saying it's very difficult to pay their usual household expenses. Kind of a catch-all, right? Not a lot of specificity here. But again, it's consistent over the time period. And again, we see the exact same results where hardship levels are rising last Fall as we're getting sort of further and further away of action. And then, shocking down pretty precisely after this new... The new aid starts to go out.
0:37:23.0 LS: So, we're at higher spending on credit card and debit card expenditures from where we were in January of 2020. The biggest changes were most quickly evident among the lowest income folks, or at least those in the lowest income communities. And our hardship rates on a monthly level are much below where they were at the end of 2020, when we were measuring things like our annual food insecurity. So, there is a potential argument that we're actually at some of the lowest rates of food hardship at this particular moment in time than we've ever recorded.
0:38:03.8 LS: I'm gonna skip this one. So, the David Johnson... Oh, I'm sorry. The Supplemental Poverty Rate is a measure that records sort of what our property poverty rate is... Doing a better job of accounting for all of the government intervention that we've had. And in 2020, it falls to a record low of 9.1%, right? We've never recorded that and nobody's simulating that back in time has ever recorded that. And it's a pretty big drop. And we see the biggest chunk of this is... You can actually see the big impacts of Social Security, right? And why elderly poverty... The elderly experience the lowest rate of poverty of anyone in the country. But, if we take that off the table, and remember, actually, Social Security is just money, right? Being delivered on a monthly basis. Economic Impact Payments lift 11.7 million Americans out of poverty, according to the Census Bureau. Expanded Unemployment Insurance Benefits lift 5.5 million out. And I think... And you see the bigger impact of the EIPs, because it's not restricted on recent labor market participation, right? So, you think about sort of the more broad-based eligibility that we have with that.
0:39:30.2 LS: So, one more thing from this particular report, right? So, this is our September report that just came out... Reporting on poverty for 2020. We see big declines in child poverty among all the large racial ethnic groups. The biggest percentage point change is among black children, right? That's a 6.8 percentage point change in poverty. That's also true that's a proportionately a slightly smaller change or, if we're giving ourselves confidence in our goals, roughly the same as the decline in poverty experienced by non-Hispanic whites. So, what we know about the approach that we've taken during COVID is that it's had huge positive effects across all racial and demographic groups that we have. But we didn't see sort of proportionately a bigger impact among subgroups that experience the highest rates of hardship and the highest rates of poverty. We see sort of proportionately the same, right? So, I think this is one of those things where, if we wanted to go even further among the groups that had the highest poverty rates, we would have to target more, right? For them. And we'd have to figure out the ways to do that. But if we wanna see big improvements across every group, then the broader-based sort of approach is a factor, right? This one I'm excited about. I'm only gonna do three more slides, and then we'll be done.
0:41:17.0 LS: But it's nice to have the opportunity to show charts. So, we talked about consumer spending is up. That could be just a result of more debt, right? That people are taking on more debt, sort of it's bad spending, maybe we shouldn't be concerned about that. We compare it now to the fact that hardship is defined, right? And hardship is clearly responsive. We certainly didn't see huge spikes in poverty or hardship that we saw in the previous recessions where things got a lot worse, right? But it could be that people have more access to debt, that they're putting themselves in a hole that they're gonna have to dig out another time. But when we look at... This is from Experian, for credit scores 2019, 2020, 2021. We actually see credit scores have improved over this period of time. Credit card balances have declined, right? That's almost a $1,000 decline in average the credit card balance. I'm presuming that's among people who have a balance. And then, the revolving utilization rate, right? This is the amount of... The sort of credit amount that you have accessible to you that you're using, that actually declined 5 percentage points. So, Americans have better credit, and they're using less of the credit that's available to them than they did at the end of the longest economic recession that we've ever had.
0:42:53.5 LS: They have a bit more mortgage debt, right? So, they... There's more... A higher debt load of mortgages out there. A tiny bit more auto loan debt. But we could consider those as good outcomes, right? If people are in a better financial place, those are sort of good debt decisions that they might make. So, the question then would become, "If people have more mortgage debt, are they also sort of more behind on that?" And we see this sort of last one, the average 90 to 180 days past due. If I took any segment of how past due you are, we would find at least a cutting in half, if not more, in this case, of people who are delinquent in those loans. So, I only have data sort of broken out, we can't look at this data by race and income, but I can look at it based on geography and sort of racial makeup. And there's a Urban Institute Report that finds all of these trends are true for every racial, ethnic group that we've sort of looked at before, as of last Fall. So, hopefully as time goes on, we'll be able to say more about what that looks like now in 2021. So, spending is up, hardship is down. Credit is better. Levels of sort of bad debt are down. And people are... A smaller fraction of people, at least, with housing debt, are behind on their housing debt.
0:44:42.0 LS: And some of that's probably related to the fact that checking account balances have shocked upward. So, again, we sort of go back to the national emergency is declared, and then EIPs start to go out. We can see the first income quartile, right? Those would be the lowest income earners up to the top. We see every group sort of shocks upward. This is a percentage change in what's in a checking account. And we're using checking account here because that's sort of the most common type of account, right? We think of it as easy liquidity, it's not sort of assets that you have hidden away somewhere. So, we see a big increase, a 100% increase, among the lowest income checking account holders, and increases across the whole group. And again, the further that we get away from the action at the beginning, sort of the lower that is, but we're still, as of last Fall, pretty far ahead of where we were going into the pandemic.
0:45:56.2 LS: I and a lot of other people were incredibly worried about people falling behind on their rent. And it was interesting to see there are a lot of articles about it, a tsunami of evictions that was coming. And we don't have perfect data on this, right? We could think of the hardship data as being one thing where we say, "Are you... " If I put up the trend of people saying they have fallen behind on their rent, it follows a very similar trend line in the Pulse. This is interesting data because it comes from administrative data from 11 million different rental apartments and these are bigger sort of multifamily type units.
0:46:30.1 LS: But we're able... I know this is probably a little bit hard to track, but we're following April 2019, 2020 and '21, May, sort of every... Every month, where were we at? And in most months, I think you could paint a picture of maybe 1.5, maybe two percentage point drop in people who are paying their rent. But certainly not... That equates to a very small fraction of people. There's certainly not a big gap in this group. And the interesting thing is, from the employer side, right? So, I think a lot of us were worried about a tsunami of evictions. On the landlord side, there are a lot of claims of, by putting the moratoriums in place, people had stopped paying their rent, and that this was irresponsible policy. And I would say, based on the data we have, there's just no evidence that even in not being able to... Not having to pay their rent, not having to face eviction in the short term, that there was any meaningful increase in the number of people who didn't pay their rents. Maybe a little bit of evidence that they didn't pay it on time, but when we're talking still above 93% of people paying their rent, there's just not sort of a big change, certainly not one you would expect with the biggest employment loss of modern times.
0:48:06.2 LS: Last two slides, right? Here's an interesting thing. We see that job loss... This... I thought 1978... I debuted in 1978, so I thought that was a good starting year, right? So, this is just charting sort of job growth from January to August. There's been a lot of talk about all the safety net stuff we did retarding our return to the workforce. And I think this opens up a really interesting place of discussion, where we see 2020, right? Of January, of August. I'm just using that, 'cause that's the data that we have in 2021, right? And looking at that period for every year going back in time. One of these things is not like the other, right? Huge job losses during the COVID era. And then, in 2021, actually, the most job gains, right? So, if President Biden wanted to say, "I created more jobs than anybody ever during my time in office," he would be legitimately able to make that claim. So, any concern that our safety net was keeping people from the workforce is only in comparison to how many jobs we lost, right? And where we think we should be. Not in comparison to any historical record of how many jobs can be gained in a certain amount of time.
0:49:27.5 LS: Alright. So, in conclusion, consumer spending is well above where it was. Hardship appears to be considerably lower than where it was in 2020, potentially in previous years. Poverty in the first year of the pandemic fell. Food insecurity stayed stable and did not rise, whereas in previous recessions had risen quite a bit. Credit scores have risen, credit card debt has fallen. Homeowners are less likely to be behind on mortgage payments. Maybe there's been a very small increase in people behind on their rent, but certainly nothing to the degree that we feared. And checking accounts have more money in them, at least as of the last data. So, the final thing that I reflect on is, I think this is... Clearly, it's probably clear to everyone, I think this is like a miracle, right? This is... And I also don't think there's a lot of people talking about it to the degree that I think is merited. And so, it's possible that people aren't talking about it because I have a totally skewed vision of what's going on, right? Or maybe people aren't talking about it because it doesn't... Maybe it's uncomfortable. It doesn't... We don't wanna minimize hardship, and clearly I would never say there's not a lot of hardship out there. But I also think it's incredibly important to recognize successes when they happen. And this happens to be, I think, a real bipartisan success story. I went way too long, so I'm gonna stop there. We'll take a... Answer some questions.
0:51:11.8 KC: So, let me just check if there are any questions in the room before I move to Zoom. Okay. Well, as you're thinking through what questions you might like to ask...
0:51:24.1 LS: I had like three more slides. So, if there's no questions...
0:51:28.7 LS: You have to give me more slides.
0:51:30.7 KC: Oh, but here you have 100 people, right?
0:51:30.8 LS: Oh, okay.
0:51:30.9 KC: On Zoom. So, I'd like to share some of their questions. So, what is a permanent option to the economic stimulus payments? Would increasing the minimum wage potentially produce the same results as these stimulus payments?
0:51:45.3 LS: Good question. So, the first thing that I would like to lock down is that we have an approach to responding to recessions, and that it was an approach that was built on a bipartisan consensus. So, the next time a major recession comes, we should play from that playbook rather than doing too little. And I would say, in previous recessions, we did too little, and we did things that took too long to administer. In this case, we did enough. Some people might have an argument we did too much, right? But we also tended to do things that happened very quickly. So, economic impact payments are broad-based, they're done in cash, but we don't have to guard to see what people are using the money on. It turns out they did crazy things like pay their rent and pay their grocery bill, when you provided cash. And the broad-based eligibility meant there wasn't a lot of added administration, it was easy to do. So...
0:52:49.0 LS: I hope that we can take that blueprint for dealing with a recession forward with us. At least debate maybe the income threshold, which should be lower. The thing about it is that, those stimulus payments are incredibly popular, right? And as somebody who's always studied poverty for decades I've always thought giving money to poor people was a very unpopular thing to do. But we just, over the last two years, a year and a half, gave billions and billions of unrestricted money to poor families. And it has proven very popular. So, maybe people are thinking differently about COVID or maybe it's the fact that middle class families got it too. And so, maybe some of the reluctance was more about animosity. So, I very much hope that the federal government makes the Child Tax Credit permanent. That's a policy that variations have been used all across the world in other countries. Every time other countries do it, they've seen big poverty reductions. We've implemented it now, we've hit... Gotten money out to more families with kids than at any other sort of social intervention we've done.
0:54:04.0 LS: We saw hardship decline. That's something we can take forward with us. Then we definitely need to look at long term reforms to unemployment insurance. I think what we did during the recession was an acknowledgement of how broken that system was. So, we need to fix that. And then, I think we can start to think about what the stimulus payments mean for other cash transfer type programs. But I think there's a variety of different options for that. So... Ask about the minimum wage. Actually, it turns out the minimum wage is not that effective at reducing poverty, because so many of the people who receive the minimum wage already have incomes above that. Now, it is really good at reducing inequality, right? So, we can see that if we raise the minimum wage, it has a very small effect on poverty. We will have a bigger effect on reducing inequality because it's essentially a redistribution of wealth.
0:55:02.1 LS: But my biggest concern is it doesn't hit a lot of people who need the help who are either not working... More likely have sort of sporadic work histories. And so, raising the minimum wage might help them for a bit. We'll sort of set the employment disincentives aside, right? As a debate that continues. They're probably small, maybe they don't exist. I think they're probably small labor market disincentives, right? But the people who get the minimum wage are better off. But then there's a whole lot of people, who for a variety of reason, be it disability, don't get it. And so, I think this experience makes me think more about sort of more comprehensive solutions.
0:55:45.3 KC: I'm going to share another question from Zoom, if I may? And I know we're about at time, but I hopefully...
0:55:51.7 LS: I'll be quick on this one. Yeah, I'm happy to go five minutes, and people leave if they need to.
0:55:55.2 KC: Okay. That's great. Thank you.
0:55:57.2 LS: Whatever works.
0:56:00.0 KC: Between August 2020 and August 2021, there was a 2.9% decrease in food hardship. Is this a significant change? And if so, what does this say about the barriers to food security and what we should be doing about it?
0:56:11.3 LS: Great. So, I think the things that we've learned is that there is a lot of hardship out there. And I think... My take is that based on the way we were asking about it, the surveyors sort of asking questions, we were probably... Had undercounted it in previous iterations. So, I think we can think a lot more about the right ways to look at how to measure it and how... But we do... We know a lot now about the impacts of food hardship. There's a very large literature. And what we know for sure is that food hardship now is responsive to government intervention. So, August, right? August, we see... I think for families with kids August 2020 to August 2021, we're a bit lower, right? But when the government isn't acting, food hardship is going up, and when the government acts, we see it decline. And again, I think that that points to the fact that some of the biggest, sort of the most important tools in our arsenal is... Could be cash transfers, right? I think this is pretty strong evidence that food hardship is responsive to cash transfers. Cash transfers are easier and more simple to get out the door. And so, we can rely on them more. I think that the Child Tax Credit is an example of that, where we saw a pretty big drop off. I am worried, right? I would expect food hardship to continue to increase over the next few months with unemployment insurance sort of expansion going away. You wanna do one more or do you wanna leave?
0:57:57.3 KC: So, I actually have my own question, if I may?
0:57:58.4 LS: Oh, good.
0:58:00.7 KC: I was struck by your comment on... Related to mode effects and... Right? The likelihood that people are more willing to share vulnerable information about their lives, and that you thought, in the case of a web based survey, people would be more likely. So, this... Since this is ISR...
0:58:17.8 LS: Yes, exactly. That's why I brought it up.
0:58:19.9 KC: We care so much about these kinds of questions, I wonder if you could comment a bit more on that.
0:58:23.5 LS: Yeah. So, I think that there are some things where people... We certainly know that there are some things that people, will... Are less likely to tell another human being. And what's suggested to me and what we've seen in this experience is that I'm having trouble putting food on the table, maybe one of those things, right? Or I'm having trouble paying my rent. That makes a lot of sense to me. Yeah, it's also conceivable that when I direct input it, maybe somehow I... We get higher rates of food insecurity than there actually are, but it could be my bias, but I have a hard time figuring that out. Like, why that would be the case. And so, I think this is an area, right? Where I don't feel like... I'm not making a definitive statement. But when I saw those big gaps, right? We saw like 2% to 400% increases in food hardship based on the survey... Person administered versus the direct input, it seems to be pretty consistent across those sort of direct input.
0:59:46.3 LS: Then I went back to some of the previous surveys that had actually been web based, and I asked similar questions, and every single one I found registered higher rates of hardship among the ones that were administered directly, where people entered in their answers. So, I would say they don't seem to be of the scale that we saw early in the pandemic. So, maybe there's something else going on. But at this point, when we see all of the other wealth of data, like food expenditures, by the time we're interviewing in the early pandemic, are down. But they're only 10% down, right? Except for at the very start. I think we have enough evidence now to say, as of May of last year, we had not seen a doubling or quadrupling of food insecurities. And so, I think it's incumbent upon us as sort of survey researchers to figure this out a bit more, right? And so, I think it'd be interesting to do like randomized sampling, you answer the question, equal sample sort of answer the question differently, and then try different parameters to figure out what is actually driving the different responses.
1:00:57.1 KC: Well, that's...
1:00:57.7 LS: Thank you.
1:00:58.5 KC: A great suggestion and a good charge.
1:01:00.9 LS: Yes.
1:01:01.1 KC: For this constituency. So, we really appreciate it. That was a terrific review. And also I think a really interesting illustration of how policy can matter.
1:01:10.5 LS: If we know anything now, we know policy matters.
1:01:13.7 KC: Right.
1:01:14.2 LS: And, you know, as someone who has written a work that has really sort of, I think, tried to cast light on really big problems, I am like... There's another interesting thing where it seems actually hard to get people to pay attention when things are better than we expected, right? There is... I have become a believer of news cycles seem to be fed by bad news, whatever it is. And so, I'm thinking a lot about that too. Thank you. Appreciate it.
1:01:43.6 KC: Great. Thank you so much.