Relief Packages Needed to Prevent Hundreds of Thousands Falling into Poverty

This post first appeared on Tallahassee Democrat.

The Senate began its month-long recess on August 13 without a completed deal on legislation that could help the millions of Americans still struggling with the economic effects of the pandemic. According to the Bureau of Labor Statistics, Florida’s unemployment rate was 11.3% in July, more than four times that of the pre-pandemic levels.

While the COVID-19 pandemic has affected everyone, poor households and those on the economic margins have faced the brunt of the employment impacts, because so many are employed in the recreation, tourism, hospitality and agriculture industries.

About one-third of Florida’s households fall into the category of “Asset Limited, Income Constrained, and Employed,” or ALICE, according to the United Way. These households may not be officially poor, but struggle to make ends meet. My work with researchers at Florida State University found that as many as 600,000 Floridians may be added to this category due to the COVID-19 recession while over 1 million more will fall into poverty.

The CARES Act, passed in March, softened the blow for these struggling households. Government payments will keep roughly 380,000 households from falling into poverty due to the added unemployment benefits and stimulus check the act provided. However, these benefits ended in July, with no end to the shutdowns in sight.

Democrats and Republicans have politicized the pandemic, turning the process of producing a second relief package into pointless gamification. While both parties agree that a second stimulus check and increase in unemployment benefits are needed, they cannot agree on the amount of the stimulus or unemployment benefits.

In the Republican-backed HEALS Act, each adult would receive a $1,200 stimulus check along with $500 for each dependent. Unemployment benefits would start at $200 per week and eventually increase to $500 per week. In the Democrat-backed Heroes Act, each adult would receive a $1,200 stimulus check along with $1,200 for each dependent, with a limit of three. Unemployment benefits would be $600 per week just like the CARES Act.

It does not stretch the imagination to also believe that, regardless of which side of this issue Americans stand, doing nothing is the last thing they hoped to get from their leaders.

As FSU’s research shows, the CARES Act was effective at keeping many ALICE families above the poverty line. But it was not enough to deal with a shutdown lasting this long. The recession is still estimated to drag roughly 1.3 million Floridians into poverty by the end of 2020 if the economy does not recover.

With no vaccine in sight, no one knows when businesses will be able to operate at full capacity. But we do know that our legislators will soon reconvene. The future of Florida’s ALICE and poor households may well be held in the balance.

Mike Accardi is a data scientist and earned his M.S. in Applied Economics from Florida State University. This article is based on his research team’s final project for the MS in Applied Economics at Florida State.

The feature image is from Pexels.

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