This commentary was published in CalMatters on January 25, 2021
Inequity has proven to be the primary challenge of this recession. Low-wage workers bear a bigger burden—from greater health risks to higher unemployment. And labor market declines have been concentrated among communities of color and women. Without deliberate policy action, this crisis portends a future of even higher income inequality and lower upward mobility.
Our December PPIC Statewide Survey shows that many Californians in households making less than $40,000—about one in five—are struggling. Forty-two percent of low-income Californians cut back on food to save money and 36% were unable to pay a monthly bill, compared to 12% and 9%, respectively, of Californians in households making $80,000 or more.
Given the severe economic distress, how can policymakers help our state avoid the pitfalls of previous recoveries, which left low-income Californians further behind? An equitable recovery requires two key strategies: First, target critical support to those most affected in the near term. Second, help people climb the economic ladder in the long term.
In the short term, controlling the public health crisis is essential for the return of full economic activity. Policymakers must also stanch the economic slide for the hardest-hit households, businesses and regions.
- Unemployment insurance and safety net programs—especially federal expansions and stimulus—helped prevent or limit poverty, housing instability and food insufficiency. State policymakers should ensure that existing federal programs reach as many people as possible and use state programs to fill gaps in access and boost the amount of support.
- Now is the time to invest in future-oriented job training. Employment in some sectors may never fully recover, and the pre-recession labor market did not provide robust opportunities for everyone anyway. Training programs should target regions, sectors and communities with larger employment losses in 2020 and prioritize careers that offer upward mobility.
- Relief for businesses is essential. Community Development Financial Institutions could help direct support to businesses in greatest need—including in historically underinvested communities. And leveraging funds through public-private partnerships will be necessary given the scale of this crisis and the limitations of the state budget.
- A robust care sector is critical to the state’s rebound—as the challenges faced by working parents make clear. Policymakers should consider subsidizing or expanding family leave and programs like In-Home Support Services, the California State Preschool Program, Head Start and Transitional Kindergarten.
Federal stimulus passed in December and near-term policies proposed by Governor Newsom prioritize some of these critical supports.
Over the long term, creating equitable economic growth will require investments in future opportunities for communities that have been consistently left behind.
- Investments in people should start young. Expanding high-quality child care and early learning for low-income families would have outsized effects later in life, including increasing educational attainment, earnings and economic mobility.
- College education creates well-documented pathways to economic advancement. Greater access to the state’s public institutions should be a priority—especially for low-income residents, African Americans and Latinos, all groups who are historically underrepresented in higher education.
- Investments need to reach communities that have long been underserved. Ensuring that low-income communities and communities of color have a seat at the table is a first step toward reversing longstanding inequities—and building capacity for future economic vitality and resiliency.
Although providing for an equitable recovery will be challenging, most Californians support policies to reach this goal, according to our December survey. About 8 in 10 Californians favor increasing government funding for job training and child care for lower-income working parents, and roughly 7 in 10 support expanding the Earned Income Tax Credit. Two-thirds support free college tuition and eliminating college debt. However, it should be noted that only one proposal—job training—garners bipartisan support.
Newsom’s budget proposal projects substantial revenues that could be used as down payments on broad-based opportunity. Taking bold action today is vital to help the many Californians facing economic turmoil. Yet building an equitable future will also require long-term policy commitments that can withstand looming budgets shortfalls and downturns.
While this crisis is unprecedented, it threatens to repeat history by leaving low-income households further behind. With smart policy choices targeting those most in need and investing in long-term opportunity, we can chart an equitable path forward.