More Universal Programs Would Drastically Improve Financial Stability for US Families: Analysis

Calling on the U.S. Senate to improve the wellbeing of families across the country whose working hours and incomes are unpredictable or unstable, a new analysis published Tuesday details how universal programs have helped these families in the past--and how millions of Americans will benefit if these provisions are included and expanded in the Build Back Better Act.

Economic justice advocates say the Democratic Party currently has an historic opportunity to pass universal benefits as part of the Build Back Better Act, which has been passed by the House and is being negotiated by the White House and the Senate ahead of a Christmas deadline for passage.

According to researchers Julie Cai and Algernon Austin at the Center for Economic Policy and Research (CEPR), including universal benefits for families would markedly reduce poverty and income volatility, particularly if the Senate passes a bill that includes:

• a universal child allowance in the form of the expanded CTC "that provides a monthly per-child benefit to all families in a way that minimizes administrative burdens and stigma;"
• universal child care assistance; and
• expanded housing assistance "so that all currently eligible families actually get it."

With federal housing assistance chronically underfunded, only about 25% of families who are eligible for aid actually receive it--an issue which could be improved by the Senate's version of the Build Back Better Act.

"The House's BBB legislation includes new funding for public housing, housing assistance, and housing development, but it falls short of what is needed to ensure housing stability and affordability for working-class renters," wrote Cai and Austin. "The Senate should provide additional funding for housing assistance."

The economists also advised the Senate to build on the 2021 American Rescue Plan, which expanded the CTC to include low- and middle-income children in 2021 and offered the credit as a monthly payment for six months, instead of forcing families to wait for a lump sum in 2022.

"The Senate should strengthen this provision by increasing the value of the CTC and paying it on a monthly basis beyond 2022," wrote Cai and Austin.

Cai and Austin showed how three types of benefit programs for families--monthly in-kind benefits, monthly "cash" benefits, and annual lump sum tax credits--have provided a buffer for households with unreliable monthly incomes, protecting them from housing and food insecurity.

In-kind monthly benefit programs including the Supplemental Nutrition Assistance Program (SNAP) and housing assistance were most effective at providing a buffer for families between 2004 and 2016, according to Cai and Austin. Such programs "did more to buffer the loss of earnings due to work hour instability" than unemployment insurance, social security, and other cash benefits, and were also more effective than refundable tax credits paid in a lump sum.

"All of these programs provide essential benefits, but they too often impose considerable costs, burdens, and stigma on people seeking to access them," wrote Cai and Austin.

The researchers found that in-kind benefits particularly help Black and Hispanic children, who experience 40% more and 18% more work hour instability of their caregivers, respectively:

For each 10% increase in hours instability, cash benefits could buffer about 19% of the resulting income reduction for Black children. Among Black children, 54% of the income decline associated with a 10% increase in hours instability is offset by in-kind transfers. This is more than twice the effect that cash benefits make... For Hispanic children, in-kind programs' mitigating effect is nearly twice as large as cash transfers.

"Most of the buffering effect of in-kind benefits is due to SNAP and housing assistance," wrote Cai and Austin. "Besides its antipoverty effects, SNAP is proven to be highly efficient on a monthly basis to buffer households' negative financial consequences from frequent changes in work hours. This is consistent with prior research that has indicated SNAP's effectiveness in stabilizing income when income volatility or income shocks occur."

"Given its effectiveness, the federal government should continue to strengthen and modernize SNAP," they added.