Global “stay at home” orders to reduce the spread of COVID-19 have led to massive unemployment and economic challenges of major proportions. This has exacerbated problems for households that were already financially unstable while putting millions of other households at new risk. In an effort to provide relief to families and businesses, the US Congress is passing large, landmark legislation intended to provide assistance. There is also a call for state governments to pass “pandemic packages” to help as well. The challenge for social workers and many others during this time is trying to keep up with what the legislation (original and then various iterations) provides, how it is implemented, and how these policies may have racially inequitable impacts.
Partnerships with organizations who lead in policy analysis and discussion are more important than ever. The JIF team joined webinars with the North Carolina Justice Center and The National Association to End Homelessness (NAEH) to better understand how the COVID-19 Federal CARES Act is responding to the needs of some of our most vulnerable community members, neighbors who are unable to work from home, and thus face unemployment and the risk of homelessness and those currently experiencing homelessness. In this blog post we offer a snapshot of federal policy efforts to address these economic challenges and where gaps remain.
One of the key provisions of the CARES (‘Coronavirus Aid, Relief, and Economic Security’) Act, the Economic Impact Payments (EIP), what folks have been calling stimulus checks, are non-taxable payments. These funds of up to $1200/individual, are in addition to any other tax refunds. They also will not impact eligibility for Medicaid, SNAP (formerly known as Food Stamps), or TANF. They also will not be garnished for unpaid back taxes or for outstanding student loans. However, a person’s EIP may be taken for child support or by private creditors and financial institutions. Click here for more information about what people may receive based on their income. A social security number is required to receive this payment, which leaves many hard-working individuals and families without needed support.
To be eligible to receive an automatic payment, individuals must have filed a 2018 or 2019 (deadline extended to July 15, 2020) tax return. Some people who paid companies to help them prepare their taxes are experiencing delays in getting their payments. Propublica wrote an insightful article on that topic here. In addition to qualifying through work income, those receiving social security, railroad retiree benefits, SSDI, SSI, and veterans benefits now also qualify for the EIP. Folks who do not fit these criteria can complete a simple form for non-filers on the IRS website. Those who don’t have a bank account can receive their EIP by check, prepaid debit card, which can be purchased at drug stores, or by CashApp. There are a lot of scams emerging so it is important to note that the IRS refers to these checks as Economic Impact Payments and not stimulus checks. The IRS isn’t contacting people by phone, text, or email and there is no processing fee.
While $1,200 will help many individuals and families, we know that from a racial equity perspective, some people will need more financial assistance and many will need help to cover the extended period for which they may be out of work. As reporters at ProPublica have pointed out here, the poorest people in the US, the ones who need this help the very most, are running into many barriers to getting their check.
Unemployment insurance (UI) programs are also seeing changes. The federal government is supplementing $600/week for those receiving benefits in state UI programs through the CARES Act. Another program, Pandemic Unemployment Assistance, is helping those who don’t qualify for unemployment under the usual rules, such as independent contractors and small businesses. Further, the Pandemic Emergency Unemployment Compensation, attempts to bolster support by providing 13 additional weeks for those who have maxed out state benefits. Individuals covered under DACA (Deferred Action for Childhood Arrivals) are eligible for UI as long as they have work authorization.
The CARES Act also includes modifications to existing federal funding sources to support community members at risk of or experiencing homelessness. The existing Emergency Solutions Grants (ESG), which are typically around $280 million/year, are now funded at $4 billion by the CARES Act. These funds can be used for outreach, shelter, rapid rehousing (a type of rental assistance with auxiliary services), building construction, and operating costs. The federal Housing and Urban Development department (HUD) has already released $1 billion. With the increase of ESG funds under the CARES Act, there will be additional flexibility in how funds can be spent including lifting the cap on the maximum that can be spent on shelter provision. The fair market rent (FMR) provision for rental assistance is waived making a greater range of rental properties available (though the “rent reasonableness” provision remains, leaving some ambiguity). Anyone with an income of less than 50% of area median income (AMI) is eligible for assistance with no treatment or performance requirement allowed. Funds can now be used for shelter expansion and de-concentration to meet CDC guidelines for physical distancing, non-congregate shelter (backing up FEMA funding), connections to permanent housing, landlord outreach, and rental assistance for up to two years to end or prevent homelessness.
The CARES Act also provides additional funds through the Community Development Block Grant (CDBG), increasing it to $5 billion. Uses of CDBG funds are flexible, which will mean increased competition because it isn’t dedicated for homeless services. There is no limit on the amount that can be spent on public services, a change from only 15% before the pandemic. Rental assistance funded through this mechanism is currently only for three months, although this may change.
Lastly, in terms of funds related to housing assistance, the CARES Act created the Coronavirus Relief Fund of $150 billion to provide in direct assistance for states, territories, and tribal jurisdictions. North Carolina’s allocation is a little over $4 billion. These funds might be useable for rental assistance. However, while very flexible in how funds can be used, this CARES Act mechanism will incur intense competition across potential uses and needs. Details here.
Finally, the CARES Act created the Paycheck Protection Program (PPP) that provides refundable loans to small businesses. The first round of funding was spent out with another released April 23. Non-profits are now also eligible for this program. Click here for more details. This excellent commentary by PolicyLink on the intersection of COVID-19 and race describes the racial inequities inherent in the PPP, with much of the first round of funding going to large restaurant chains and shutting out women and minority owned businesses. This was largely because applicants had to apply through banks that “prioritized existing customers — a hurdle for small business owners of color, especially African Americans, who have weaker banking relationships because of discriminatory lending policies and the legacy of redlining.”
We expect additional iterations of the CARES Act and state-level responses as we continue through the course of this pandemic. We’ll continue to share details about those policy supports, the stark racial disparities that COVID-19 is revealing, as well as ways that we can move forward in solidarity to disrupt these inequities in our policy, practice, teaching, and research. One step is to pay attention to policy – understand it, watch how it is implemented, and make sure the people who need it the most are served.