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California’s Safety Net in Recession and Recovery

Caroline Danielson | June 2021

Summary

The COVID-19 pandemic has brought about health, employment, and educational crises in California and in the nation. State and federal policy measures—including stimulus payments, increased unemployment insurance (UI) payments, increased food assistance benefits, and extended eligibility periods for some safety net programs—averted a sharp increase in poverty in the early months of the pandemic. Nonetheless, we know low-wage workers take longer to recover from recessions and may have an even longer-term need for the social safety net than they did after other recent downturns.

California’s social safety net bolsters low incomes, and many safety net programs also have individual goals, including providing a safety net for children, supporting nutrition and health, and incentivizing work. When economic crises occur, how well do—and can—these programs respond to increased demand? Are there gaps in the safety net? In this report we look at evidence from the Great Recession and draw from stakeholder convenings that we held in January 2021. Our analysis focuses on the responsiveness of Earned Income Tax Credit (EITC), CalWORKs cash assistance, and several nutrition programs: CalFresh, WIC, and school meals.

  • We find that benefits and participation increased after the Great Recession. This is true even of CalWORKs—California’s Temporary Assistance for Needy Families (TANF) program—despite national evidence that cash assistance through TANF did not expand to meet increased need.
  • We find robust evidence of elevated need for safety net benefits during the last economic recovery. Likely reasons for this prolonged need include laid-off workers turning to unemployment insurance first, families relying initially on informal resources such as food banks or family and friends, and a slower economic recovery for low-income workers compared to high-income workers.
  • We also find evidence of gaps in the availability of expanded support. Key groups facing serious limitations in the social safety net include working-age adults who do not live with dependents and undocumented immigrants and their family members.
  • California’s largest social safety net programs share several features that create particular challenges during economic downturns. Stakeholders point to gaps in program eligibility, incomplete take-up of programs, and an insufficiently systemic approach.

Although much of the safety net is funded and regulated by federal policymakers, state decisionmakers can take steps to support the safety net and foster an equitable recovery:

    • Filling gaps in the federal recessionary response, such as those that affect adults without dependents or mixed-status families.
    • Developing a state toolkit of administrative measures to increase the responsiveness of programs during recessions.
    • Creating multiple points of delivery—state lawmakers recently took a step in this direction by providing Golden State Stimulus and Grant Program rebates to tax filers but also one-time payments to Supplemental Security Income (SSI/SSP) recipients and to CalWORKs participants.
    • Improving handoffs across programs to reduce bureaucratic obstacles to enrollment.
    • Continuing to increase participation among eligible Californians.

Now that California seems to be emerging from the COVID-19 economic crisis, this may be an opportune time to take stock of the pandemic’s impact on the social safety net and consider how best to leverage safety net resources to promote an equitable recovery in the aftermath of this recession and in the future.

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