SPI Blog Socioeconomic Impacts of COVID-19

The Babies in the River: Creating Equitable Safety Nets and Springboards to Opportunity

by Nisha G. Patel, Senior Fellow, SPI 

Some 25 years ago, I was a bright-eyed, young, graduate student at the Brown School and I learned the parable of the babies in the river. The townspeople in a village noticed that babies were beginning to appear in a river and were in danger of getting swept away by the current. Some people immediately jumped into the river, scooping up the babies to save them from drowning. Others ran upstream, to the source of the river, to figure out how the babies were ending up there in the first place. What follows the parable is the question: Which group are you in?  

When it comes to child and family poverty, as a bleary-eyed, seasoned, poverty fighter, the answer is clear to me that I fall into both groups. We need to address the immediate lack of adequate income, housing, nutrition, education, and health care, and we need to deal with the root causes, or we will forever be swimming against a raging current.  

As 2021 moves forward, the Biden-Harris administration and Congress will need to continue to focus on the immediate economic crisis, and also figure out how to replace the frayed safety net that proved inadequate as a response to the crisis, making key components of the CARES Act and the American Rescue Plan necessary in the first place.  

Prior to COVID-19, the safety net failed to address the structural issues that have been keeping many children and their families trapped in poverty. As just one example, for the past five decades, the Black unemployment rate has almost always been double the white unemployment rate, even in so-called tight labor markets where overall unemployment rates were in the very low single digits. We know that racial discrimination by employers continues to be a significant factor. We know that housing discrimination and exclusionary zoning have kept Black families and other families of color locked out of neighborhoods from which good jobs and schools are easily accessible. 

We also know that occupational segregation by race and gender is a factor. The economy lost 140,000 net jobs in December and all of the jobs lost were held by women, with women losing 156,000 jobs and men gaining 16,000.  

  • The unemployment rate for Black women was 8.4% in December, compared to 4.9% in pre-pandemic February 2020.  
  • The unemployment rate for Latinas was 9.1% in December compared to 4.9% in February 2020.  
  • The unemployment rate for white men was 5.8% in December. 

Disparities by race and gender also existed for employed workers who were paid low wages prior to COVID-19. Women were far more likely to be working low-wage jobs as compared to men. Far greater shares of Black and Hispanic people were working in low-paying jobs than white people. These disparities were amplified by the intersection of race/ethnicity and gender. Only 20 percent of white men were working in low-wage jobs, versus almost 40 percent of Black women and 46 percent of Hispanic women.  

The bottom line is that even in a so-called “good” economy, lots of people were locked out of opportunity – and we have needed ways to supplement or replace wages from employment. 

Then came the pandemic and the federal policy response, which was far from perfect in its distribution and in equitably supporting households most in need. The response was not universal, but it was designed to get direct cash to the majority of people in the U.S. through two primary mechanisms: 

  • Economic Impact Payments: one-time payments of up to $1,200 for an individual and an additional $500 per child without regard to current employment status. Notably, these payments left out undocumented workers or anyone living in a household with an undocumented worker.  
  • Unemployment Insurance: Pandemic Unemployment Assistance, which added $600 per week in federal benefits to state benefits. These payments meant that some workers received more in unemployment than they had received in weekly wages – which tells us that they were likely severely underpaid for their labor. However, these benefits ended in July and the need clearly did not.   

These cash payments dramatically reduced poverty for as many as 13 million people in the early months of the pandemic. What we  learned – and it is unfortunate that we have to keep learning it – is the importance and efficiency of direct cash in helping families to both survive a crisis and thrive over the long-term when they have the ability to save. Sadly, for the nation, nearly 8 million people slipped into poverty when the cash assistance ended. 

So, what needs to happen next? We need to reimagine our policy responses. In the immediate—so families can survive—Congress needs to pass another relief package that includes direct cash payments, as it is clear this pandemic is far from over. To address root causes—so families can thrive— we must acknowledge the disparities our systems have perpetuated, and create equitable safety nets and springboards to opportunity. These policies might include recurring monthly cash payments or child benefits to families with low income. People need immediate help, but we should also learn from the impact of the temporary measures Congress put in place and strengthen and improve these policies for the long term.