COVID-19 and the unprecedented economic crisis it caused made 2020 one of the most economically challenging years for communities across the country. Almost two-thirds of Americans lived paycheck to paycheck during the pandemic, with women and people of color facing additional hardships like increased unemployment and disproportionate childcare burdens.
Yet 2020 was also a revolutionary year, with necessity becoming a driving force towards increased awareness of the challenges facing low-income Americans and transformative new policies—such as Biden’s child tax credit expansion (CTC) and the stimulus checks provided by the CARES Act.
A recent U.S. Census Bureau study showed the $1,200 (plus $500 per child) stimulus checks distributed during the pandemic led to the lowest U.S. poverty rate on record—9.1 percent in 2020, down from 11.8 percent in 2019—and lifted 8.5 million people out of poverty. (The poverty line is about $26,496 per year for a family of four.) Without the stimulus checks, the poverty rate would have instead jumped to 12.7 percent, the Census Bureau estimates.
And the expanded CTC, which provides parents $3,000 to $3,600 per child during 2021, is expected to show similar results: Experts estimate the plan will decrease child poverty by 40 percent, lifting more than four million children out of poverty.
Stimulus checks distributed during the pandemic led to the lowest U.S. poverty rate on record.
Now, advocates hope the successes of those economic interventions will provide momentum for the continuation of these policies and implementation of new federal programs like a guaranteed income. While transformational for all Americans battling poverty (over 37 million Americans), these economic interventions would especially help working moms, low-income women and women of color.
Despite widespread bipartisan support for both provisions, neither the stimulus payments nor the CTC were designed to be permanent solutions. Stimulus checks were intended to be one-time offers to help Americans during the worst of the pandemic, and Biden’s expansion of the CTC will end in December—though a majority of voters want it to become a permanent policy.
A more permanent solution could come from the Build Back Better Act (BBB), Biden’s signature bill working its way through Congress, that would provide funding for childcare and free education, extend the CTC, require 12 weeks of paid family and medical leave and implement many other transformative feminist policies. But the bill will require approval from every Democratic senator, and Sens. Kyrsten Sinema (Ariz.) and Joe Manchin (W.V.) have been reluctant to agree.
While policymakers negotiate over Build Back Better, poverty rates have already started increasing again, signaling the urgent need for more permanent stimulus policies. This uptick in the poverty rate will have very real consequences for low-income people, especially parents and women of color.
While policymakers negotiate what the Build Back Better plan will look like, poverty rates have already started increasing—signaling the urgent need for more permanent stimulus policies.
One mom, Johnnie (last name withheld for anonymity), receives guaranteed income through the Magnolia Mother’s Trust (MMT) program, which provides low-income Black mothers $1,000 per month for a year. Johnnie worked as an essential worker during the pandemic, but was forced to quit her job to care for her daughter.
In the Front and Center series, she shared the impact the stimulus check had on her life:
“The first stimulus check helped me catch up on back rent since I didn’t have any income while I was ill in early 2020, which really helped me. If I would’ve had some assistance from my employer, I also wouldn’t have been behind on my rent. Not having any income during the time I was out sick was really challenging; my car also got repossessed. So it took until getting my stimulus check that I was able to catch up on my car payments and insurance and get my car back, which was the way I got to work.
“I really think the government needs to have some kind of program to make sure that essential workers are taken care of if there’s another pandemic. I really just think that employers and the government need to be prepared better for something like this—have supplies, have support programs, have a plan in place. I just think of all of the people who lost their lives and it makes me so sorry all of this happened the way it did.”
Another MMT mom, I’esha, contracted COVID-19 last summer as she worked multiple customer service jobs, and was later unable to work due to a high-risk pregnancy. Along with her guaranteed income payments, the CTC helped keep her family afloat:
“To get the child tax credit payments that started coming last month has been a huge help. I was able to use the first payment in July to get prepared and buy my children their school things—there’s so much to get. The clothes, the shoes, the school supplies. I swear that list gets longer every year.
“If I could talk to President Biden, I would tell him that he should make the child tax credit permanent, because so many people are still unemployed and the pandemic is not over. And people need help even without a pandemic going on.”
Even one-time cash payments helped low-income families escape cycles of debt and poverty, and plan for future hardships. But while the stimulus checks were an important stopgap measure, true economic justice will require addressing poverty’s root causes. Even with the reduction of poverty during 2020, the racial disparities were stark: 8.1 percent of white Americans were below the poverty line, compared to 14.6 percent of Black Americans.
Any effective plan designed to reduce poverty must focus on those most affected. One strategy economic justice experts are advocating for is guaranteed income, which involves recurring payments directed to specific groups. By focusing on marginalized communities, guaranteed income can address economic issues caused by systemic racism and sexism, and can give struggling Americans a way to meet their basic needs and invest in their futures.
The MMT program puts this policy into action, demonstrating that giving women an economic safety net leads to families escaping poverty and having the ability to set themselves and their families up for success. One mom participating in the program, Roneisha, has been able to use the guaranteed income to escape a crushing cycle of debt and poverty:
“The struggle with the job hunt makes the child tax credit payments and the guaranteed income I get through the Magnolia Mother’s Trust even more important this year as I work to find a job that pays an even semi-livable wage. It really helped me when I was preparing for my baby to come, I was able to get pretty much everything he needed. At the baby shower all we needed was just a few diapers and things.
“Before I got that call that I was selected to be part of the program, I was really struggling to keep on top of my bills and responsibilities. And now that I’m on this fixed income, it’s helped me get really good at managing my money and making sure I’m staying on top of everything and using this opportunity wisely. I’m hopeful that I can only go up from here.”
Tia agreed, adding:
“I know people say that if you have programs like these, people will stop working. I don’t personally understand that—I mean, I think it’s fine if someone made that choice, but for me I’ll always want to be working, I want to be adding to my money, not decreasing it. It’s not about not working; it’s about just being able to take a little time off—to take a week and spend it with your kids, then go back to work. I wasn’t able to do that before, to have that time off without being worried about covering the bills.
“And the things I was able to do in that year, I’m still benefiting from now. And I really don’t think I would’ve been able to do those things otherwise, or it would’ve taken so much longer. So just being able to accomplish things faster, that was huge. For me, being able to get out of affordable housing was such a big step.”
“People say if you have programs like these, people will stop working. … It’s not about not working; it’s about just being able to take a little time off—to take a week and spend it with your kids, then go back to work. I wasn’t able to do that before, to have that time off without being worried about covering the bills.”
On an individual level, guaranteed income, even for just a year, made a tremendous difference in the lives of these women and their families. And the results speak for themselves—the percentage of MMT participants able to pay all their bills without additional support soared from 37 percent to 80 percent during the program.
Similarly, after receiving guaranteed payments for a year, 85 percent of participating moms had completed their high school education, compared to 63 percent at the beginning of the program. MMT mothers were also 20 percent more likely to have children performing at or above grade level, and were 27 percent more likely to seek needed medical care than other moms not receiving guaranteed income.
A federal guaranteed income could decimate poverty rates and help marginalized communities grow and recover from generations of economic challenges. Like the stimulus checks, guaranteed income puts cash directly into the hands of people who need it most, without requiring people to use it in specific ways. This economic freedom allows recipients to make the best decisions for their families, and gives them the freedom to save, spend or invest in their long term goals.
By trusting low-income people and giving them the opportunity to develop a safety net, a federal guaranteed income policy would help address poverty in the U.S., prioritize the most vulnerable communities and help the country recover from the COVID-19 pandemic.
Front and Center is a groundbreaking series of op-eds—published by Ms. and created in partnership with the Magnolia Mother’s Trust—which aims to put front and center the voices of Black women who are affected most by the often-abstract policies currently debated at the national level. Get caught up here.