COVID-19 and the Importance of Minimum-Income Systems

March 16, 2020

Most wealthy countries have a minimum-income system that provides an income floor to low-income people who aren’t eligible for benefits that are tied directly to past or current employment. During downturns, well-designed minimum-income policies automatically respond to spikes in need and help stabilize the economy. This makes minimum-income programs an essential part of the policy response to the current crisis. Unfortunately, the United States has a limited and kludgy minimum-income system.

The cornerstone of the US system is Supplemental Nutrition Assistance Program (SNAP, or food stamps). As a relatively uniform national program, SNAP is immediately responsive to changes in need, and played a major role in the response to the Great Recession. At the same time, SNAP benefits are modest (maximum benefit is $194/month for a single person living alone) and can only be used to buy food to prepare at home. (Among the food and basic household items that SNAP can’t be used for: hot food, food prepared for immediate consumption, pet food, cleaning supplies, and hygiene items). 

Moreover, a heavy-handed work-hours requirement was added to SNAP in 1996 on top of the more reasonable activation requirements then in place. Non-elderly adults without children must show that they have worked at least 80 hours a month in order to receive SNAP for more than three months. The requirement has weakened SNAP responsiveness and accessibility for many disadvantaged poor adults. This is likely one reason why “deep poverty” is higher today among non-elderly adults not living with children than it was before 1996. The Trump administration is trying to further tighten this provision, although so far they’ve been blocked in the courts. The Families First Coronavirus Response Act improves access to SNAP by waiving the work test and certain other kludgy requirements, but only temporarily. 

The weakest link in our minimum-income system is the general lack of any cash income floor for low-income people who are not elderly or unable to work at all due to a long-term disability. States can use Temporary Assistance for Needy Families (TANF) funds to provide monthly cash assistance to low-income families with children. But TANF is so structurally unresponsive to changes in need that the number of families receiving monthly cash benefits barely budged during the Great Recession. In fact, in a growing number of states, there are more low-income children being cared for in foster care and by grandparents than there are being cared for by their own parents with assistance from TANF. 

Congress should immediately act to ensure that TANF provides actual Temporary Assistance — money to meet basic needs — in a way that is immediately responsive to changes in need, and provides an all-purpose income floor for people with little to no income. This would mean: 1) lifting the long list of onerous conditions that low-income people must meet in order qualify and maintain eligibility for assistance; 2) requiring states to provide a minimum monthly cash benefit on top of SNAP — and like SNAP, this benefit shouldn’t be limited to households with children; and 3) paying for this minimum monthly benefit with federal dollars. Beyond this current crisis, we need to fundamentally reform TANF along these same lines as soon as possible. 

When it comes to an income floor for children, we should follow Canada’s lead by ensuring that all children in low-income and working-class households receive a monthly child benefit without the burdens and hassles of TANF. The Canada Child Benefit provides an income floor (CA$553/month for children under 6; CA$467/month for children 6 and over) to all Canadian children with incomes. The maximum benefit is available regardless of parental earnings and doesn’t start phasing out until a family has an income of roughly $31,000 a year. 

While Canada’s welfare state for people without children is undeveloped in many respects, all of the provinces operate social assistance programs that provide a decent basic benefit to very low-income unemployed and underemployed people without children, something non-existent in nearly all of the United States. Quebec’s Social Assistance program, for example, provides a base benefit of CA$690/month for a single adult who is able to work, and CA$828/month if they are temporarily incapacitated. 

Finally, it is worth remembering that both TANF and the punitive work test added to SNAP in 1996, are bipartisan failures for which President Bill Clinton, Speaker of the House Newt Gingrich, and, it must be acknowledged, then-Senator Joe Biden are jointly responsible. In fact, in June 1996, Sen. Biden cosponsored a “Bipartisan Welfare Reform Act” with Sen. Arlen Specter (R-PA) that included nearly all of the provisions, including the SNAP cuts, that ended up in the final welfare law signed by President Clinton in August 1996. This may seem like ancient history, but Bruce Reed, the Clinton staffer who pushed hardest and longest for the1996 bill is apparently in charge of policy for the Biden campaign and was previously Biden’s chief of staff when he was Vice President.

Support Cepr


If you value CEPR's work, support us by making a financial contribution.

Si valora el trabajo de CEPR, apóyenos haciendo una contribución financiera.

Donate Apóyanos

Keep up with our latest news