We examine trends in employment, earnings and incomes over the last two decades in the United States, and how the safety net has responded to changing fortunes, including the shutdown of the economy in response to the COVID-19 pandemic. The US safety net is a patchwork of different programmes providing in-kind as well as cash benefits, and it had many holes prior to the pandemic. In addition, few of the programmes are designed explicitly as automatic stabilisers. We show that the safety net response to employment losses in the COVID-19 pandemic largely consists only of increased support from unemployment insurance and food assistance programmes, an inadequate response compared with the magnitude of the downturn. We discuss options to reform social assistance in the United States to provide more robust income floors in times of economic downturns.
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J. Ziliak gratefully acknowledges support from the US Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, grant AE00103, through the Institute for Research on Poverty at University of Wisconsin. This work has been supported by the Nuffield Foundation via the IFS Deaton Review, ‘Inequality in the Twenty-First Century’ (reference WEL/43603).
Moffitt, Robert A. and Ziliak, James P., "COVID-19 and the US Safety Net" (2020). Economics Faculty Publications. 13.