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Occasional Paper

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The following provides an assessment of the performance of both individual safety net programs and the cumulative impact of all safety net benefits and tax credits on household incomes in the early years during and following the 2007-09 recession. Specifically, I examine the extent to which various benefits and tax credits have moderated the impact of earnings losses for households in different positions in the income distribution, with special attention to the experiences of low-income households. In addition, I examine whether these moderating impacts differ for households of various racial/ethnic compositions, female-headed households, and residents of states with more and less accessible safety net programs. Overall, safety net programs have very significantly mitigated what would otherwise have been substantial, and in the case of lower income households, severe losses in income. This has been especially true for many working poor and lower middle class households who have benefited from their eligibility for a range of benefits and credits that are conditional on employment or earnings. However, heavy reliance on employment conditional benefits has reduced access to this income support for households with barriers to labor force participation, such as very poor female-headed households. In addition, across the income distribution non-white households have experienced both disproportionately large earnings losses and less receipt of compensating benefits and credits. Finally, the availability, accessibility, and generosity of benefits and credits varies so substantially across states that very poor households have experienced both the largest and the smallest declines in total household income depending on state of residence. In closing, I stress that many of the programs that have done the most to mitigate earnings losses were either temporary (tax credits) or exhaustible (Unemployment Insurance, TANF) and are not structured to accommodate a prolonged employment crisis such as that we are currently experiencing. Given the dramatic erosion of labor force participation among low-income households and the exhaustibility of the programs that have expanded the most since 2007, I expect the capacity of current safety net programs to mitigate income losses to falter substantially and potentially disastrously in coming years.


Center for Social Policy Working Paper.



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