Why wasn’t the pandemic worse? Federal funds and public programs, experts say.

By: - August 31, 2021 3:40 am

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When Effie Alofoje-Carr saw the stimulus payment from the American Rescue Plan Act hit her bank account this year, she cried. 

“It was huge; it has saved our lives,” Alofoje-Carr, who lives in East Lansing with her husband and eight-year-old son, said of the stimulus checks that the federal government sent to residents across the country in an effort to provide financial relief during the COVID-19 pandemic.

Alofoje-Carr, whose career is in maternal infant health and education, and her husband, who has a job in information technology, have continued to work throughout the pandemic, and the past year and a half has hit them hard. Alofoje-Carr’s husband was deemed an essential worker but his pay was cut. She got COVID-19 over the winter holidays, which ended up being a battle that lasted months. There are the constant anxieties about health, and of being parents during a pandemic that has killed more than 600,000 people in the United States and more than 21,000 in Michigan.

And all of that is atop the stress emanating from years of “hustling,” Alofoje-Carr explained, of juggling multiple jobs and consulting in order to make it. But when the stimulus payment came, it was as though she and her husband could finally exhale.

“Never in our entire years of being together have we been able to have savings we could hang onto,” she asid. “Because of the economic stimulus, we actually had money to get our car fixed. We were able to have our bills paid.”

“The stimulus brought lots of relief,” she said. “The biggest emotion the stimulus brought was hope.”

Alofoje-Carr’s story is one that is being told across the country. And it’s this economic relief she cites that paved the way for a pandemic that has been far less worse than it could have been, according to University of Michigan researchers who recently analyzed a trove of U.S. Census Bureau data about the pandemic.

The biggest emotion the stimulus brought was hope.

– Effie Alofoje-Carr of East Lansing

When the COVID-19 pandemic was tearing through the United States economy in spring 2020, leaving the country with unemployment rates not seen since the Great Depression, the U.S. Census Bureau began collecting data on people’s lives during the pandemic. 

The bureau found out if people didn’t have enough to eat, if they were collecting unemployment, what mental health challenges existed, and if they were worried about being able to pay their rent or mortgage, among a vast array of other data. 

The narrative the numbers told was one we know well at this point: People were hurting. They were depressed and anxious. Some were getting sick with no health care; others didn’t know how long they’d be able to stay in their homes. 

But, for much of the pandemic, the extent to which those hardships existed remained stable, or even declined, according to the Census Bureau surveys. And by the time COVID-19 had been in the country for a full year, these problems were dissipating. 

That is, of course, not to say the pain caused by the pandemic isn’t still here; there’s plenty of deeply rooted hurt — but food insecurity isn’t rocking families like it had been. People are, increasingly, able to pay for household items. 

“Material Hardship and Mental Health Following the COVID-19 Relief Bill and American Rescue Plan Act” | University of Michigan Poverty Solutions chart

The challenges individuals and families faced during the pandemic have upended everyone’s lives — but the COVID-19 landscape could have been even rockier, according to researchers from U of M’s Poverty Solutions initiative. 

The reason it wasn’t? 

Financial support from the federal government, the researchers said.

“In April 2020, over 20 million Americans lost their jobs,” Director of Poverty Solutions Luke Shaefer and Patrick Cooney, assistant director of policy impact at Poverty Solutions, wrote in their report analyzing the data from the Census Bureau’s household pulse surveys

Director of Poverty Solutions Luke Shaefer

“With the unemployment rate higher than at any point since the Great Depression and businesses across the country shuttered, the stage was set for widespread hardship. Yet, what we see in the data is that when the federal government took action in the form of robust, broad-based cash income transfers that responded to macroeconomic conditions, hardship was held at by and by some estimates even declined,” they write.

In other words, the researchers said, the level of hardship faced by U.S. households during the COVID-19 pandemic can be directly linked to the federal government’s response. From stimulus checks to expanded unemployment benefits, widespread emergency federal aid for both low- and middle-income individuals and families translated to crucial financial relief for a public experiencing the kind of public health disaster the world hadn’t seen since the 1918 influenza pandemic, according to the researchers’ report.

“We have this incredible data that tells us about the well-being of families in real time, and then you have these moments when huge amounts of unrestricted cash have gone out the door from the federal government,” Shaefer said of the household pulse surveys. “We wanted to see how responsive the Census Bureau markers of hardship were to that money going out. When we first saw the charts, I couldn’t believe how incredibly responsive these hardship trends were to the money going out.”

“If we ever wondered if the well-being of families is sensitive to money in their pockets, I don’t think we ever have to wonder that again because the results are so clear and simple,” Shaefer continued.

Published at the end of May, the report takes a look at how Americans were reporting various challenges throughout the pandemic and the role the federal government — specifically the American Rescue Plan Act of 2021 and the CARES Act of 2020 — played in mitigating and alleviating widespread financial fallout from the pandemic.

When there was federal support, such as after the CARES Act and the American Rescue Plan Act were passed, reports of hardship fell. Financial instability and mental health issues particularly decreased once individuals and families accessed direct stimulus payments and expanded unemployment benefits, the researchers explained. Meanwhile, reports of financial problems and mental health challenges increased sharply in November 2020, when COVID-19 infections were rising and Congress was delaying action on economic recovery efforts.

There’s a question of what we do during severe recessions: What we did (during COVID-19) worked, and it worked better than anything we’ve ever done before.

– Director of Poverty Solutions Luke Shaefer

But once stimulus checks arrived, peoples’ lives started changing, the report said. Families could buy groceries and pay rent; others were able to afford medical procedures and pay down debt. Widespread federal aid works, and that concept should help to inform future public policy, U of M researchers said.

“There’s a question of what we do during severe recessions: What we did [during COVID-19] worked, and it worked better than anything we’ve ever done before,” said Shaefer, who is also a U of M professor. 

“During an unprecedented recession, Americans were not reporting they were worse off financially,” he continued. “I don’t think people appreciate how effective what we’ve done has been. When we hit the next recession, we have a model for what we can do that can buffer families from extreme hardship.” 

Shaefer hopes the widespread economic stimulus payments and the expanded unemployment benefits aren’t seen as “the one time we did this.”

“What we did this time around was so much more generous than what we did in the last recession,” he said. “This time, we used a broad-based cash safety net response…the political support for it clearly seemed based on what a broad group benefited from it.”

Policy experts across the state agreed with the report’s findings.

Brian Parthum, an economist at the Southeast Michigan Council of Governments (SEMCOG), for example, said the federal government’s stimulus checks “certainly have worked.” 

“If they were facing hardship, it gave them a cushion with which they could purchase necessities,” Parthum said. “The payments to people who didn’t need it for necessities were able to spend it and reinvest it in our economy, which creates demand for jobs and supports our business community.”

“Material Hardship and Mental Health Following the COVID-19 Relief Bill and American Rescue Plan Act” | University of Michigan Poverty Solutions chart

Making the child tax credit permanent

Alex Rossman, director of external affairs at the nonpartisan Michigan League for Public Policy (MLPP), too agreed with the University of Michigan’s researchers’ conclusion that federal aid has proven to be crucial during the pandemic. 

He also urges lawmakers to make permanent the temporary initiatives in the American Rescue Plan Act — such as the expanded child tax credit — to better financially protect the public in future emergencies. 

“From the onset of the COVID-19 pandemic, we have felt it has magnified the importance and value of the safety net in general, whether that is unemployment, food assistance, or the child tax credit,” Rossman said.

Shaefer also emphasized this point and said “the single most exciting thing there is is the expansion of the child tax credit.”

As part of his ongoing research, Shaefer and his colleagues have looked at Census Bureau survey responses following the first two child tax credit payments to families in July and August. Again, they found “hardship drops pretty precipitously after those checks went out.”

“We need to make that permanent; that’s my number one priority,” Shaefer said of the child tax credit. “If it rolls out the way we’d like it to, you could be talking about reducing child poverty by 45%. That’s pretty amazing.”

Additionally, Shaefer said the expansion of SNAP benefits under the American Rescue Plan Act is “very positive, and I hope that will be a permanent thing.”

Public policy experts like Rossman and Michigan’s Children Vice President Robert Dorigo Jones also emphasized that increased investment in public programs, such as the expansion of the child tax credit and unemployment benefits, results in crucial financial support for individuals and families struggling during the pandemic. It’s that combination of direct aid, like the stimulus checks, and systemically addressing deeply rooted societal issues, like poverty, that’s key to providing a financial buffer for people during emergencies, they explained.

“Public investment in services that are public goods or provide a public benefit, like child care, education and housing, is essential when a crisis arises,” Dorigo Jones said. “Having state investment in our public sphere, having a strong state and local government, that helps us respond faster when things come down from the federal government. If, for example, we had a stronger database for renter and landlord information, rental assistance could have gotten out faster.”

Divided state government

It’s this idea, one of strong public programs and government being vital during emergencies, that Rossman too emphasized and said should not draw the kind of partisan debate it historically has.

“At the state and federal level, there tends to be a political divide over government assistance programs in general; we don’t think there should be any political divide over those programs and the pandemic has shown us the value of those programs,” Rossman said. “People who may not have used them before have utilized them during the pandemic. There’s a better appreciation for an understanding that safety net programs work.”

But, that political divide exists in Michigan’s state government, Dorigo Jones pointed out, which has led to emergency pandemic funding from the federal government not being dispersed to residents and organizations in the state. 

While Gov. Gretchen Whitmer, a Democrat, has outlined a series of proposals for the federal government’s COVID-19 relief funds for Michigan, Republican lawmakers have largely resisted appropriating the monies. Michigan has budgeted just 7% of about $6.5 billion in federal COVID-19 relief funds from the American Rescue Plan Act.

This, in turn, has led to individuals who have recently aged out of Michigan’s foster care system and were unable to access the recent stimulus payments being at risk of missing out on as much as $1 million in federal funds, Dorigo Jones said. 

Through the American Rescue Plan, Michigan received some $10 million for the Chafee foster care program, which provides resources to those exiting the foster care program — but that funding has not been appropriated by the legislature. The state House passed a bill appropriating the Chafee funding in May, but the Senate has not voted on it. While a large chunk of the foster care funding can be spent through 2022, funding for 23- to 27-year-olds who had been part of the foster care system can only be spent through the end of September.

“We’re getting to the point where this money might not get out the door,” Dorigo Jones said. “At least 1,000 people in Michigan are going to miss out on a stimulus check, and that might be the only stimulus payment they have access to because there’s all this disagreement in our government.”

Dorigo Jones also noted that Michigan has close to $1.5 billion in childcare assistance funds from the American Rescue Plan Act and the CARES Act, which also has yet to be appropriated by the state legislature. This, Dorigo Jones said, is funding that could be going to support child care providers, many of whom are now earning poverty or near-poverty level wages, as well as make child care costs more affordable for Michigan families. As the state government sits on this money, more and more childcare providers are leaving the profession because they can’t afford to be in it, Dorigo Jones said. 

“The pressures of divided government are so great that it’s leaving money on the table,” he said. “It’s become such a problem that lawmakers are leaving billions of dollars on the table.”

“Material Hardship and Mental Health Following the COVID-19 Relief Bill and American Rescue Plan Act” | University of Michigan Poverty Solutions chart

‘Get back to work for $10 an hour during a pandemic? Get out of here’

As legislators look to what has worked during the pandemic, Alofoje-Carr hopes they understand there’s a reason the stimulus payments made such a difference for struggling families: People have for years been unable to afford the costs of living. 

They haven’t been making living wages, they haven’t been able to put away savings, they haven’t been able to access affordable health care, and that has led to much of the public being entirely unprepared to navigate the fallout from the pandemic, she said.

“COVID-19 has illuminated the haves and the have-nots,” she said. “People cannot afford the effects of this virus. People are judged for taking unemployment. Why? They finally have the opportunity to slow down, take care of their health and bodies and families, not pay astronomical amounts for child care, and people say they need to get back to work. Get back to work for $10 an hour during a pandemic? Get out of here.”

“I need policymakers to know families need to be put first,” Alofoje-Carr continued. “Do not make work something where parents cannot put their families first. Everyone is so stressed out. That’s what I need policymakers to know: The burnout is insane.” 

And, Alofoje-Carr said, she hopes lawmakers and society at large will better understand: those with privilege need to take a step back and listen to the families who have been struggling the most during the pandemic.

“People with resources don’t have to consider any of this — they cannot wear the mask or consider the vaccine because they have access to resources others do not,” she said. 


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Anna Gustafson
Anna Gustafson

Anna Gustafson is the assistant editor at Michigan Advance, where her beats include economic justice, health care and immigration. Previously the founder of the Muskegon Times and the editor at Rapid Growth Media in Grand Rapids, Anna has worked as an editor and reporter for news outlets across the country.