Public Supports When Parents Lose Work

Technical Paper

Public Supports When Parents Lose Work

Abstract

This brief tracks how seven public benefit programs responded to the increased needs of families during the Great Recession, with a focus on the types of support available to children whose parents were both unemployed and low-income. Public benefit programs-particularly unemployment and SNAP benefits-expanded rapidly, providing important supports to families. However, unemployment insurance provides relatively low coverage rates, particularly for low-wage workers, leaving many families dependent on more traditional safety net programs during times of unemployment. The analysis relies on data from the Annual Social and Economic Supplement to the Current Population Survey.

Overview
At the peak of the recession, 18 percent of all children had at least one unemployed parent. Did benefits programs expand to meet these families’ needs? And how did millions of unemployed parents fail to receive any benefits despite the billions spent on unemployment insurance?

Key findings

  • During the recession, the number of children living with parents receiving unemployment insurance and SNAP benefits increased dramatically.
  • When parents lost work, higher-income children benefited most from unemployment insurance, while low-income children depended heavily on SNAP. 
  • Unemployment insurance receipt is lower among parents with less education, as well as among parents with less income.
  • Workers in low-skilled, low-wage jobs do not have good access to unemployment benefits. Trends are reversed for SNAP benefits.
  • The recession is not over for children. While unemployment rates have peaked, there were still 3 million more children living with parents who were unemployed in 2012 than in 2007.

Unemployment insurance and SNAP benefits greatly expanded during the recession. Between 2007 and 2009, the number of children whose parents received regular or extended unemployment benefits more than doubled. From 2010 and 2012, SNAP benefits reached nearly 15 million children living with unemployed parents each year. As entitlement programs, unemployment insurance and SNAP expanded automatically in response to newly eligible recipients, but Congress also passed the American Recovery and Reinvestment Act to expand them beyond built-in measures. Temporary Assistance for Needy Families (TANF) program showed very little sensitivity to economic conditions, serving only slightly more children in 2009–2011 than it had in 2007. Receipt of EITC, WIC and SSI were also less responsive.

Low-income children with unemployed parents depended heavily on SNAP benefits and had particularly low rates of unemployment insurance coverage. In 2012, among low-income children with unemployed parents, 77 percent benefitted from EITC, 58 percent from SNAP, and 65 percent from subsidized lunches. For higher-income children, unemployment insurance was the main support received when parents lost work.  Forty-one percent of children living with higher-income unemployed parents were supported by unemployment benefits at some point during the year, compared with 25 percent of low-income children. Higher-income families generally do not qualify for any public support programs other than unemployment insurance, though some may have benefitted moderately following drops in income.

Unemployment insurance receipt is lower among parents with less education, as well as among parents with less income. Only 18 percent of children whose unemployed parents had less than a high school diploma benefitted from unemployment insurance compared with 37 percent of children whose college-educated parents lost work.

Workers in low-skilled, low-wage jobs do not have good access to unemployment benefits. Some low-wage workers may not earn enough to qualify for unemployment insurance in their state, while some may fail to meet the nonfinancial qualifications for benefit receipt, assume they are ineligible, or may simply run out of benefits during a long unemployment spell. Though for low-income families that can get covered, unemployment benefits provide of an average of nearly $6,000 in benefits over the course of the year.

The recession is not over for children. Compared with 2007, in 2012, 3 million more children had an unemployed parent, 5.5 million more were receiving SNAP benefits and 1.7 million more were receiving unemployment insurance. Public benefit programs provide important supports to families and an economic stimulus, but reforms could increase coverage for those who need it most.

Policy recommendations

  • Improve unemployment insurance coverage for low-wage workers by expanding access, improving outreach and modifying circumstantial rules that ban benefits such as “voluntary quit.”
  • Amend TANF to make benefits more countercyclical by providing additional funds at times of high unemployment
  • Revisit Farm Bill amendments that would weaken SNAP provisions during times of high unemployment, limiting its capacity to support children and stimulate the economy.

Full Publication

Public Supports When Parents Lose Work

Children are affected when their parents lose work. Money is tighter and families are less able to meet monthly expenses and support their children's development. Also, parents' tempers may be short as they adjust to both the loss of their role as family breadwinner and reduced family income.

Children in low-income families are at particular risk because finances were tight before the job loss, and families are less likely to have a cushion to help them weather the period of unemployment. For these children, and for all children with unemployed parents, public benefits can provide critical supports.

This paper examines several public benefit programs over the past five years, tracking how different programs responded to the increased needs of families during the Great Recession and how supports differ for low-income and higher-income families. It addresses two key research questions:

  1. How much did different benefit programs expand during the Great Recession?
  2. How well do public benefit programs meet the needs of children whose parents are unemployed, particularly when parents are both unemployed and low-income?

The goal is to identify strengths and weaknesses of social supports for families during times of unemployment and to suggest policies to better support children of unemployed parents. The paper reviews the broad system of public supports available when parents lose work, including social insurance programs (e.g., unemployment insurance), which are available regardless of family income, and safety net programs, which are targeted at families with lower levels of family income. The analysis focuses particular attention on children in families where at least one parent is unemployed and where the annual family income is less than 200 percent of the federal poverty level (FPL), or less than about $38,000 for a family of three in 2012.

The paper is based on analysis of data from the Annual Social and Economic Supplement to the Current Population Survey (CPS); unemployment, program benefit receipt, and family income are all measured over a twelve-month period. Children are counted as living with an unemployed parent if at least one parent was out of work and seeking a job at any point during the calendar year. Children are counted as supported by public benefits if they live in families receiving benefits at some point in the calendar year, whether or not the child is the direct beneficiary. Families are classified as low-income based on annual income during the same year as the job loss, and therefore the data include some families in which the parent(s) were making good monthly wages for part of a year and were out of work the rest of the year and some families where one or both parents had such low wages that the family was struggling to make ends meet even before the job loss.

The opening section of the paper provides motivation for the analysis by documenting the increase in the number of children affected by unemployment over the past five years and describing how this may affect children's development. The next section describes seven different public programs that support families in times of need and provides descriptive statistics tracking how each responded to the recession. A third section looks more closely at how public programs support the children of low-income, unemployed parents, comparing public supports for this vulnerable group of children with other groups, including children with higher-income, unemployed parents and children with low-income working parents. The concluding section discusses policy implications from the analysis. Details about data sources and methods are discussed in a technical appendix.

Growth in Needs during the Great Recession

Millions of children lived in families experiencing unemployment and economic hardship during the Great Recession. At the peak of the recession, 13 million children, or 18 percent of all children living with parents, lived in families with at least one unemployed parent during the calendar year. Unemployment rates remain quite high, and the most recent data (for 2012) show that 10.9 million children, or 15 percent of children living with their parents, continue to be affected by parental unemployment (see figure 1).

Figure 1. Rise in Children Living with Unemployed Parents

Children are affected by job loss regardless of family income. However, the risks to child development are highest when job loss is associated with low family income. As unemployment spells have been increasing in length, a growing percentage of unemployed families have been falling into poverty. In 2012, 4.1 million children affected by parental job loss were living in poverty and another 2.7 million were living between 100 and 200 percent of FPL—a total of 6.9 million children facing the dual risks of parental unemployment and low family income.

About one-third (32 percent) of these low-income children lived with parents who had been out of work for six months or longer; the other two-thirds lived with parents with shorter spells of unemployment. Many of those families with shorter unemployment spells may have been working in low-wage jobs before the job loss.

Healthy child development can be negatively affected when constraints in family resources make it difficult to provide nutritious meals throughout the month, pay rent on safe and stable housing, or find housing in neighborhoods that have good schools and are free of crime and noise pollution (Brooks-Gunn and Duncan 1997; Evans 2004). During the recession there were documented increases in the share of children experiencing food insecurity and families doubling up to save on rent (Dubay and Zarabazo 2013). Low-income parents may also find it difficult to find and retain high-quality child care services for their younger children and provide their school-age children with books, computers and other enrichment materials. Scarcity can affect parents' level of stress, the quality of family interactions, the family's material living circumstances, and access to supportive services (McLoyd 1990).

Children growing up in poor and low-income families and neighborhoods have consistently been found, on average, to be less prepared for school upon entering kindergarten, to have lower achievement during elementary school, to be less likely to graduate from high school, and to have lower earnings and worse health outcomes as adults. Carefully designed studies suggest that low family income—while not the sole cause of the poor results—is causally linked to negative child outcomes, with the strongest effects observed on cognitive outcomes and for children who experience poverty in early childhood or for prolonged periods (Duncan et al. 2011; Milligan and Stabile 2008; Dahl and Lochner 2012).

Parental job loss has effects beyond changes in family income, with job loss often leading to changes in family dynamics that can negatively affect child development. Research dating back to the Great Depression finds evidence of increased parental irritability and depression and higher levels of family conflict after parental job loss, with spillovers into less-supportive and more-punitive parenting behaviors. More recent research also highlights linkages between economic stress and parents' mental health, which in turn affects parents' interactions with their children and child outcomes.1 For adolescents, there may be negative effects on their own aspirations for success and attitudes toward work as they see their parents buffeted by economic forces (Barling et al. 1998).

A number of studies find that job loss (generally measured in situations where the job loss is outside the parents' control, such as plant closings) has a negative effect on children's school performance as observed in math scores, attendance, grade repetition, and suspension or expulsion.2 There also is some evidence that parental job loss has such long-term effects on children as lower rates of college attendance and lower adult earnings (Coelli 2010; Oreopoulos et al. 2008). Reduced family income, changed family dynamics, and lower adolescent aspirations may all contribute to these effects.

Response of Public Benefit Programs during the Recession

Overview of Public Supports for Unemployed Parents and Their Children

Some of the risks of parental unemployment to healthy child development can be moderated by public supports that offset the losses in family income. Unemployment insurance (UI) is the most obvious public support when parents lose work. Unemployed workers who qualify for UI generally receive benefits equal to half of their weekly wages (up to a maximum amount), though benefit rules vary considerably across states. When benefits paid for by state governments are exhausted (after 26 weeks in most states), the federal government can provide extended benefits for the long-term unemployed under certain circumstances, governed by the rules of the permanent extended benefits program (which provides extended benefits in states that meet certain economic conditions) and any temporary emergency unemployment compensation program (the most recent of which was enacted in July 2008 and expired in December 2013). All types of unemployment compensation are counted together in the measures of unemployment insurance in this analysis.

In addition, very low income families with low assets can apply for monthly cash welfare under their state's Temporary Needy Assistance for Families (TANF) program, and families with low to moderate annual earnings (which may occur if a parent is working part of the year and unemployed for part of the year) can claim a tax refund through the earned income tax credit (EITC) in the tax season following the calendar year with low earnings. Families with unemployed parents may also receive cash assistance from the Supplemental Security Income (SSI) program if the family has low income and a child or adult member of the family is disabled or an adult is elderly.

Nutrition assistance programs also provide important support to families with unemployed parents. The Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) provided benefits to more than one in four American children in 2012, including large numbers of children with unemployed and working poor parents. The National School Lunch program (NSLP) is another source of assistance, with meals provided free of charge to school-age children below 130 percent of FPL (or about $25,000 for family of three in 2012) and for a reduced price of 40 cents to children between 130 and 185 percent of FPL (or between $25,000 and $36,000 for a family of three in 2012). Younger children (under age five) and pregnant women can receive modest amounts of food assistance through monthly vouchers from the Supplemental Feeding Program for Women, Infants and Children (WIC).

Together, these four cash assistance programs—UI, TANF, EITC, and SSI—and three nutrition assistance programs—SNAP, National School Lunch, and WIC—provide an important safety net to families with children. (This analysis focuses on cash and near-cash benefits and therefore does not include the Medicaid program, though it provides important health benefits to children with unemployed parents.)3 As shown in table 1, the size of these public benefit programs varies dramatically, with federal funding ranging from less than $6 billion for the cash assistance portion of TANF to more than $90 billion for unemployment insurance in 2012. (These funding levels do not include state spending, which is particularly significant for unemployment insurance.) With the exception of unemployment insurance, these programs are targeted toward low- or moderate-income individuals and families; four of the programs are exclusively targeted to families with children.

Table 1. Highlights of Public Benefit Programs Available to Unemployed Parents and Their Children

Growth in Supports during the Recession

Public benefit programs varied in their response to the Great Recession. Two of the largest programs in this analysis—UI and SNAP—expanded dramatically during the recession. For example, the number of children whose families received regular or extended UI benefits more than doubled between 2007 and 2009, with 8 million children in families receiving UI benefits at some point during 2009 (see figure 2). In addition, the number of children in families receiving SNAP also rose substantially, reaching nearly 15 million in 2010 and remaining at similar levels in 2011 and 2012. (SNAP administrative data shows even higher numbers of children served; see technical appendix for comparison of survey and administrative data measures.)

Both basic unemployment insurance and SNAP are entitlement programs, which expand automatically in tough economic times without being dependent on federal or state action. As unemployment rates rise, more individuals qualify for unemployment insurance, and as family incomes fall, more individuals and families meet the eligibility requirements for SNAP benefits.

The countercyclical nature of unemployment and SNAP benefits was heightened by Congressional actions. In July 2008, Congress passed legislation providing a temporary program of federally funded unemployment benefits that supported unemployed individuals and their families after regular benefits are exhausted, and in February 2009, Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA), which increased benefit amounts for both monthly SNAP benefits and weekly UI benefits. Such actions were designed to meet the dual purposes of protecting needy individuals and families and stimulating the economy by increasing the flow of near-cash payments to families who in turn would spend them in grocery stores and other elements of local economies.

The number of children living in families receiving unemployment insurance peaked in 2009 and since then has gradually declined. In contrast, SNAP caseloads have continued to remain high, leading some policymakers to fear that people are lingering on the program needlessly. However, as shown in figure 2, the persistence of high SNAP caseloads mirrors the persistence of high poverty rates, while the decline in unemployment insurance mirrors the decline in unemployment rates.4 As in past recessions, poverty rates and SNAP caseloads are expected to peak later than the peak in unemployment rates, as it takes some time for economic conditions to improve for those at the bottom of the economy. The recovery has been particularly slow after this recession, and the Congressional Budget Office projects that SNAP will peak in 2013 and then gradually decline.5

In contrast to unemployment insurance and SNAP, the Temporary Assistance for Needy Families (TANF) program showed very little sensitivity to economic conditions, serving only slightly more children in 2009–2011 than it had in 2007. This modest expansion was largely caused by the $5 billion TANF Emergency Fund that Congress enacted under ARRA. In its absence, TANF caseloads might have contracted, despite the recession, given the way the block grant program has been operating in most states.6 Capped funding, state policies that discourage access, and increased welfare stigma may explain why TANF is so much less responsive to the recession than its predecessor program, Aid to Families with Dependent Children, which had rising caseloads in times of recession (Zedlewski and Loprest 2011).

Figure 2. Growth in Benefits Supporting Children, 2007–2012

Looking across all seven programs, NSLP exhibits similar patterns to SNAP, with the number of children living in families receiving free and reduced-price lunches increasing steadily throughout the past five years, reaching 21 million or 30 percent of children by 2012, as shown in table 2. This increase occurred without any direct Congressional action. As family incomes declined, more children signed up and qualified for free and reduced-price lunches, and, under the entitlement nature of child nutrition programs, federal funding increased automatically to provide schools with reimbursements for those meals.

The number of children living in families receiving WIC benefits also increased through 2009. While WIC is not an entitlement program (rather, its funding level is set by annual appropriations action), its funding levels for several years have been sufficient to avoid waiting lists and allow the program to serve all eligible families that apply for benefits. Caseloads appear to be somewhat sensitive to economic trends, though they also are driven by changes in the numbers of pregnant women, infants and children in the country (Hanson and Oliveira 2012; Danielson and Klerman 2013).

Table 2. Growth in Public Supports during the Recession

The earned income tax credit could expand or contract in recessionary periods, because while some families will become newly eligible as their earnings fall low enough to qualify for a supplemental earnings credit, other families will lose eligibility if they have no earnings throughout the calendar year. During this most recent recession, the program expanded, with the number of children supported by these tax credits increasing from 22 million to 26 million between 2007 and 2012. Congressional action (raising the maximum credit for certain families under ARRA) may have contributed to the expansion, but there is also evidence that worsening economic conditions contributed to the increase in EITC eligibility among tax filers with children (Jones 2013). The EITC is the most widespread federal benefit serving low- and moderate-income children, and it currently provides benefits to 36 percent of all children living with parents.

Finally, the number of children supported by SSI benefits increased only marginally during the recession, similar to trends for TANF. Whereas the flat trend is surprising for TANF given the increase in need for temporary assistance during the recession, it is not surprising for SSI, which provides ongoing assistance for individuals meeting fairly stringent criteria for disability. While measured disability does increase somewhat during periods of unemployment (and more families may fall below the income limits of the program), SSI caseloads have always been less sensitive to economic conditions.

In summary, many, though not all, public benefit programs expanded in response to the growth in the number of disadvantaged families. In particular, unemployment insurance and SNAP, two of the largest programs, expanded dramatically, because of both Congressional actions and built-in program parameters.

Another conclusion from this initial set of figures and tables is that the recession is not over for children. While unemployment rates have peaked, there were still 3 million more children living with parents who were unemployed in 2012 than in 2007. There also were 5.5 million more children receiving SNAP benefits and 1.7 million more children living in families receiving unemployment compensation than before the recession.

With the exception of unemployment insurance, the public benefits programs analyzed here serve a much broader population than children with unemployed parents—they also provide supports to many low-income children whose parents are working or whose parents have dropped out of the labor force. These groups were also negatively affected by the recession. For example, between 2007 and 2012, there was a doubling in the number of children living with working parents who were working part-time involuntarily (that is, their hours were cut, or they wanted a full-time job but couldn't find one) (Isaacs 2013). In addition, there were increases in parents who wanted a job but were too discouraged to actively seek work and so are classified as being in the labor reserve, rather than being unemployed. Altogether, 30.8 million children lived in low-income families in 2012, including 6.9 million children living with at least one unemployed parent, 18.7 million children with low-income working parents (without any spells of unemployment during the year), and the 5.3 million children whose parents were not in the workforce at any point during the year due to disability, discouragement after a long period of unemployment, or failure to ever enter the workforce (see figure 3).

Figure 3. Children by Family Income and Parental Work Status in 2012 (in millions)

In the next section, we examine how supports for low-income children with unemployed parents differ from supports to other low-income children to understand how the safety net supports children when parents lose work. We also compare patterns of benefit receipt between children with low-income, unemployed parents and children with higher-income, unemployed parents.

Supports for Children with Low-Income, Unemployed Parents

Unemployment insurance does not cover all workers. In 2012, only one-fourth of children whose parents were unemployed and low-income lived in families receiving unemployment checks at some point during the year. Rates of receipt were higher, but still far from universal in higher income families—41 percent of children living with higher-income parents who were unemployed at some point in the year were supported by unemployment benefits during that year (see table 3).

Unemployment benefits are counted as cash income when determining whether a family falls into low- or higher-income status. Therefore, 2 percent of children with unemployed parents were shifted from low-income status to higher-income status because of their parents' receipt of unemployment benefits. But even if we had classified children into low- and higher-income status before receipt of unemployment benefits, we would have found higher receipt of unemployment benefits among higher-income parents.

Children in low-income families are less likely than children from higher-income families to be covered by unemployment insurance for many reasons. Some low-wage workers may not have sufficient earnings to have the "base level of earnings" required under financial qualifications in their state. Other low-wage workers may "voluntarily quit" a job "without good cause" and for this or other reasons fail to meet the nonfinancial qualifications for benefit receipt. Parents who work part-time may not meet requirements for actively seeking full-time work (a nonfinancial requirement in some states). Some workers may assume they are ineligible and therefore fail to take the steps necessary to fill out and file the forms to apply for benefits. Finally, even if a worker acquires unemployment insurance, benefits may run out if the unemployment spell lasts for many months.

Although coverage rates are low, unemployment benefits provide substantial support for those families fortunate enough to be covered—an average of nearly $6,000 in benefits over the course of the year in low-income families and more than $8,200 in higher-income families.

Low-income children with unemployed parents were more likely to be supported by public programs other than unemployment insurance. In particular, 77 percent lived with parents receiving EITC, 58 percent lived in families receiving SNAP benefits, and 65 percent were supported by subsidized lunches (see table 3). While school lunches provide modest assistance, both EITC and SNAP provided sizable amounts of assistance to low-income families affected by unemployment. EITC benefits averaged nearly $3,300 among those receiving the credit, and more than $2,500 when averaging in those with zero benefits. Similarly, SNAP provided an annual average of more than $4,100 in benefits to those receiving benefits in 2012 and averaged more than $2,400 annually to all low-income children with unemployed parents.

Higher-income families generally do not qualify for any public support programs other than unemployment insurance. However, because of the drop in income some higher-income families with unemployed parents qualify for reduced-price lunches, some qualify for a modest EITC, and a smaller number qualify for SNAP benefits for a few months of the year.

Table 3. Supports for Children, by Family Income and Parental Work Status, 2012

The third and fourth columns of table 3 provide context for benefit receipt among low-income unemployed parents by providing comparative information about benefit receipt among low-income working parents and low-income families where parents are not working or seeking work. This table confirms, for example, that the earned income tax credit is primarily targeted toward low-income working parents. While many low-income unemployed parents receive the ETIC (because their unemployment is for less than a full year or they are living with a working spouse), 100 percent of low-income working parents receive the EITC according to Census Bureau imputations. In addition, average benefits are slightly higher for steadily working parents as compared to those experiencing unemployment.

In contrast, low-income children with unemployed parents are more likely to be supported by SNAP benefits than low-income children with working parents (58 percent versus 35 percent).7 Annual amounts of benefits received also are slightly higher among those whose parents are unemployed, providing further evidence of the role that SNAP plays in supporting low-income families during times of unemployment.

Only a small proportion of children of unemployed and low-income parents live in families receiving cash assistance under TANF (12 percent) or SSI (5 percent). For those who receive them, annual benefits average $3,400 and $9,300, respectively. Rates of TANF and SSI receipt are lower among low-income families where parents work without unemployment and are highest among children whose parents are not in the workforce. These parents include those who are disabled, students, discouraged workers who have dropped out of the labor force after a long period of unemployment, and parents who have never entered the paid labor force.

Finally, WIC receipt also is relatively low—25 percent of children whose parents are low-income and unemployed are in families receiving WIC. Note that receipt would be considerably higher if measured only for infants and other children under age 5. Rates of receipt are fairly similar whether low-income parents are working, unemployed, or out of the labor force, suggesting the program is more of a general support for low-income infants and pregnant women than a particular support for children whose parents are unemployed. The value of WIC benefits is small, with average monthly benefits averaging $45 per person in 2012 according to administrative data (survey data on value not available).8

A Closer Examination of Support from SNAP and Unemployment Insurance

Unemployment insurance is the main public support for higher-income children, while low-income children depend most heavily on SNAP when their parents lose work. While the EITC provides significant support (covering more than three-fourths of low-income children with unemployed parents) it is primarily targeted to low-income working parents. In addition, the EITC may be less effective than SNAP at cushioning families against temporary losses in income, because the tax credit is not distributed until the tax season following the year that unemployment was observed. In this next section, we explore patterns of receipt for SNAP and unemployment insurance more closely, analyzing differences by parental education, length of unemployment, and family income, as well as analyzing joint receipt of SNAP and UI benefits.

As shown in figure 4, unemployment insurance is lower among parents with less education, as well as among parents with less income. Specifically, only 18 percent of children living with unemployed parents without a high school diploma lived in families receiving unemployment benefits, compared to 37 percent of children whose college-educated parents lost work. This provides further evidence that workers in low-skilled, low-wage jobs do not have good access to unemployment benefits. Trends are reversed for SNAP benefits—only 11 percent of children living with college-educated parents were supported by SNAP benefits when their parents lost work, compared with 65 percent of children living with low-skilled parents.

Children living with parents who have been out of work for 6 months or longer have higher rates of both SNAP and unemployment benefits than children whose parents are unemployed for shorter periods. Some families may rely on private savings and other sources of support during short spells of unemployment. As families are out of work longer, they are more likely to fall into poverty or low-income status, and thus more likely to qualify for SNAP benefits. A study tracking families over time found that 35 percent of long-term unemployed parents had incomes below FPL during the months of unemployment (Zedlewski and Nichols 2012).

Figure 4. Support from SNAP and Unemployment Benefits among Children with Unemployed Parents, by Parental Characteristic, 2012

To further understand the interplay of SNAP and UI benefits, we examine joint receipt of these two benefits over the course of a calendar year and divide the low-income population into those with incomes below FPL and those with incomes between 100 and 200 percent of FPL. The former are more likely to be eligible for SNAP benefits than the latter, but even the latter group may qualify for SNAP benefits some months of the year (because SNAP eligibility is based on monthly income).

As shown in figure 5, 60 percent of poor children with unemployed parents live in families receiving SNAP without UI benefits, 6 percent are in families receiving UI benefits without SNAP benefits, and 14 percent receive both UI and SNAP. Families may receive both unemployment insurance and SNAP benefits if they receive UI benefits for part of the year and then turn to SNAP when their UI benefits run out or if their incomes and UI benefits are sufficiently low that they are eligible to receive SNAP benefits. About one-fifth (21 percent) of poor children with an unemployed parent live in families who do not receive benefits from either program.

Figure 5. Joint Support from SNAP and Unemployment Benefits among Children with an Unemployed Parent, 2012

Patterns are quite different for children whose parents are unemployed but have family incomes placing them above 200 percent of FPL. A large share of those children (37 percent) are in families receiving unemployment benefits only, with a relatively small share in families receiving joint benefits (3 percent) or SNAP but not UI benefits (4 percent). More than half these children live in families who do not receive either of these public supports. They are unlikely to be eligible for SNAP benefits (which are generally limited to families with incomes below 130 percent of FPL) and also may not apply for or be eligible for unemployment insurance for various reasons.

Children in families with incomes between 100 and 200 percent are more evenly split across the four categories—21 percent live in families receiving UI only, 21 percent in families receiving SNAP only, 14 percent have joint receipt, and 44 percent neither benefit. Many of these families have too much income to qualify for SNAP benefits.

This does not mean that children without support from UI or SNAP are without any support from the safety net. Many of these children live in families receiving EITC, which provides substantial amounts of assistance, though with a time lag. Only 9 percent of children with unemployed parents in families with income between 100 and 200 percent of FPL do not receive UI, SNAP, TANF, SSI or EITC, and the percentage without support drops to 5 percent when adding in the modest benefits provided under NSLP or WIC, as shown in figure 6. The percentage without any reported public support drops to 1 percent among poor children. That is, 99 percent of poor children with unemployed parents live in families who are supported by some type of public benefit.

Figure 6. Children without Public Supports When Parents Lose Work, 2012, by Family Income Relative to the Federal Poverty Level

In contrast, higher-income children tend to live in families that receive unemployment insurance or no public supports. These families are much more likely to rely on private sources of income, such as earnings or child support from a working parent, or money withdrawn from the family's savings or retirement accounts. Families may also increase the limit on their credit cards, turn to nonbank credit such as payday and pawnshop loans, or borrow from family or friends (Mills and Monson 2013). Children in these families are less likely than low-income children to be affected by economic hardship. However, as discussed earlier, they still may be affected by changes in family dynamics and stress, as their parents struggle to find new jobs and keep up with monthly bills.

This analysis of benefit receipt by family income confirms that most safety net programs are clearly targeted toward low-income children and families. It also shows that low-income children with unemployed parents benefit from many of the same programs as low-income children with working parents, including SNAP, EITC, NSLP, and WIC. Unemployment insurance operates much differently, providing social insurance without regard to family income. Its relatively low coverage rates, particularly for workers with low wages, leave many families dependent on more traditional safety net programs during times of unemployment.

Conclusion and Policy Implications

The experience of the past five years illustrates some of the strengths and weaknesses of public supports for children with unemployed parents. Public benefit programs—particularly unemployment and SNAP benefits—expanded rapidly, providing important supports to families and a much-needed stimulus to the economy. Other programs not typically viewed as countercyclical, including the school lunch program, WIC, and the earned income tax credit, also played a role in supporting children with unemployed parents.

Yet unemployment insurance provides less coverage than most people realize. Despite the billions spent on unemployment benefits, millions of unemployed parents failed to receive any UI benefit. Low-income, unemployed parents have particularly low coverage rates, with only one-fourth of these children supported by UI benefits in 2012.

In past recessions, very low income parents, particularly mothers, could apply for cash assistance under the former Aid to Families with Dependent Children program if they failed to qualify for UI benefits. Access to cash assistance under TANF is much more restricted, and TANF caseloads did not expand much during the Great Recession despite the sharp increase in parental unemployment and child poverty. Access to the SSI program is also limited (to individuals meeting the program's definitions of elderly or disabled) and the SSI program had fairly stable caseloads during the recession, supporting a small percentage of children with unemployed parents.

Lacking access to cash assistance, many low-income families turned instead to nutrition assistance programs, including SNAP, NSLP, and WIC. While benefits are modest, particularly for school lunches and WIC, these programs served millions of children during the recession, helping families put food in their children's stomachs. NSLP and SNAP caseloads remained quite high in 2012, consistent with continued high child poverty rates.

The earned income tax credit also provided substantial support for low-income children whose parents had spells of unemployment during part of the year. Both coverage rates and average benefits were quite high among unemployed low-income parents, though not as high as among low-income working parents who did not experience unemployment.

Looking across seven different cash and nutrition assistance programs, almost all low-income families were able to access at least some public supports during times of parental unemployment. Moreover, the combination of cash assistance, nutrition assistance, and tax credits served to mitigate the number of children experiencing poverty according to poverty measures that look at more than cash income. The increase in child poverty was less severe when measured under alternative measures that explicitly take into account the value of tax credits and nutrition assistance benefits as compared with official poverty statistics that focus on cash income only. For example, the official child poverty rate rose by 1.3 percentage points between 2009 and 2010, while the supplemental poverty measure rose by 0.8 percentage points.9

Even with the safety net, families still struggled to meet children's basic needs during the Great Recession. During the recession, families found it harder to provide food for children (as shown in increased incidence of food insecurity), were more likely to double-up with other families, made greater use of payday loans and other forms of credit, and struggled economically in other ways. But without the safety net, unemployed parents would have found it more of a challenge to meet their children's basic needs.

While the system of social insurance and safety net worked somewhat, there are clearly areas that could be improved to better support children when parents lose work. One potential area for improvement concerns access of low-wage workers to the unemployment insurance system. While many states recently adopted reforms intended to expand access to groups with lower coverage rates, including low-wage workers, coverage rates remain low.10 Additional reforms may be necessary to reach disadvantaged workers and others who are not adequately covered by the current system, such as improving outreach and the application process or modifying rules that ban benefits if a worker leaves a job under circumstances classified as "voluntary" quit.11 But enacting such reforms may be difficult given the strain on state unemployment trust funds during the recession and the fact that some states are retrenching on unemployment benefits and moving toward less coverage.

Federal policy has focused on the long-term unemployed. After regular benefits are exhausted, unemployed workers can apply for extended benefits under the regular Extended Benefits program or, until it expired, the temporary Emergency Unemployment Compensation program. This latter program, the eighth program instituting federal compensation enacted by Congress during times of recession, was authorized from July 2008 through December 2013. Efforts to extend Emergency Unemployment Compensation benefits into 2014 have met resistance in Congress, despite high numbers of long-term unemployed. Extending benefits further would help some children with long-term unemployed parents.

Another area of potential reform concerns the TANF program. Given its failure to serve more people when unemployment rates exceed 10 percent, it cannot be expected to respond to future recessions under its current structure. The program could be made more countercyclical by amending the complex rules governing the existing contingency fund to make the program more effective at providing additional funds in times of high unemployment. The program could also make work participation requirements more sensitive to economic conditions to avoid providing states with disincentives to serving families during bad economic times (Lower-Basch 2013).

Finally, the SNAP program responded rapidly to changes in unemployment rates and family economic conditions and continues to support millions of children still living with low-income and unemployed parents. Its level of support was strengthened during the recession because Congress enacted a temporary increase in benefits, effective April 1, 2009 to November 1, 2013. With the recent ending of this benefit increase, and with caseloads finally peaking in late 2013, program costs are projected to stabilize and gradually decline. However, costs are still high, and Congress considered different approaches to cutting SNAP costs during debate on the Farm Bill (the Federal Agriculture Reform and Risk Management Act of 2013, which became the Agricultural Act of 2014).

Several of the Farm Bill amendments adopted in the House in 2013 would have weakened assistance during times of high unemployment. In particular, one provision encouraged states to cut off SNAP benefits to adults and children if the parent could not find a job or opening in a work and training program. Parents of infants under one would have been exempted, but many unemployed parents of older children would likely have lost benefits, given the scarcity of work and training programs for SNAP participants. Another provision would have weakened current waiver authority for adjusting work participation requirements for childless adults in areas of high unemployment. Such provisions would have reduced the countercyclical nature of the SNAP program and cut benefits, ending assistance to children whose parents were still struggling to recover from the Great Recession. They were dropped from the final legislation, enacted in February 2014. If they are added to future legislation, SNAP will not remain a strong countercyclical program with the capacity to support children with unemployed parents and provide economic stimulus during future recessions.

Technical Appendix

This technical appendix provides data sources and other methodological information about key terms and measures.

Data Sources. This analysis draws on data from the Annual Supplement on Economic Conditions (ASEC) to the March Current Population Survey (CPS) for 2008 to 2013. The CPS ASEC provides information about employment, income, poverty, noncash benefits, and program participation measured for the previous calendar year.

Children. The analysis is limited to children under age 18 who are living with parents; children living with relatives and children who are living in their own household are excluded from the analysis.

Children with Unemployed Parents. Children with at least one unemployed parent include children living with at least one parent who fits the official definition of unemployment (out of work, available for work, and actively looking for a job) at any point during the preceding calendar year. Estimates of children living with unemployed parents would be lower if measured as children living with unemployed parents in a typical month, rather than at any point across the year (6.2 million in an average month of 2012 as opposed to 10.9 million at any point during the year [Isaacs 2013]). Counts of children with unemployed parents do not include children living with parents who are working part-time but desire full-time work, or children living with "discouraged workers" who have dropped out of the labor force.

Employment status of nonresident parents is not counted. As noted above, children living without parents are excluded from the analysis, even if they are living with an unemployed grandparent or other relative. Children of teen parents are excluded if the teen parent is living with her parents.

Children in Low-Income Families. Children living in families that have annual family incomes of than 200 percent of FPL are defined as low-income. In 2012, the threshold for 200 percent of FPL was $38,180 for a family of three.

Children Supported by Public Benefits. Children are counted as supported by public benefits if they live in a family receiving the benefit at some point during the calendar year, whether or not the child is the direct beneficiary. Unemployment insurance, TANF, and SSI were measured at the family-level. Nutrition assistance benefits (SNAP, free and reduced-price school lunch and WIC) were measured at the household level because information was not available at the family level. Finally, receipt of EITC was constructed as a parent-level measure, meaning children were coded as receiving an EITC if at least one parent received the tax credit. Note that EITC receipt was not determined by direct questioning of respondents but rather was imputed based on the Census Bureau's tax model, which simulates individual tax returns to produce estimates of federal, state, and payroll taxes.

Public benefits are generally underreported on the CPS ASEC, meaning the number of people who say they receive a given public benefit on the survey falls short of the number indicated by administrative data (Wheaton 2007). As such, counts and percentages of public benefit receipt tabulated using the CPS ASEC are likely to underestimate actual program receipt. On the other hand, program receipt from the CPS ASEC may be higher than administrative measures because the CPS ASEC measures receipt at any point over the preceding calendar year, whereas administrative data are generally reported as average monthly counts. Finally, counts may be elevated because children are counted as being supported by a benefit that comes to a member of the household, whether or not the child directly benefits. For example, the analysis considers children supported by SSI if a parent, sibling or other family member gets SSI; it considers infants whose older siblings get school lunches as being supported by NSLP; and it counts school-age children whose younger siblings get WIC benefits as being supported by WIC.

The net effect of these differences between the two types of measures is that survey measures are generally lower than administrative measures, with the exception of SSI and WIC, as shown in table A.1.

Table A.1. Number of Children Supported by Benefits in 2012, Survey and Administrative Measures (millions of children)

Figure A.1. Trends in SNAP Receipt among Children in Survey and Administrative Data

Figure A.2. Trends in TANF Receipt among Children in Survey and Administrative Data

Notes

1. Much of the earlier literature is reviewed in McLoyd et al. (1994) and Kalil and Deleire (2002).
2. Studies of the effect of parental job loss on student achievement use different techniques (e.g., examining job loss after plant layoffs) to attempt to measure the effect of the loss of unemployment itself, rather than underlying parental characteristics that may be associated with a higher incidence of unemployment. For effects on student achievement, see Stevens and Schaller (2011), Ananat et al. (2011), Rege et al. (2011), Kalil and Ziol-Guest (2008), and Kalil and Deleire (2002).
3. For more information on the role of Medicaid in protecting children during the recession, see Dubay and Zarabazo (2013).
4. While poverty based on cash income rose during the recession, alternative poverty measures, which count the value of SNAP benefits and refundable tax credits as household income, show less of an increase in poverty. That is, the increased SNAP benefits lifted many children and families out of poverty.
5. See Congressional Budget Office, "Supplemental Nutrition Assistance Program—May 2013 Baseline," accessed April 1, 2014.
6. A more detailed analysis of caseload trends using monthly administrative data found that caseloads increased modestly (by 16 percent) through December 2010, and then declined (by 5 percent through December 2011), with the rise and fall roughly following the availability of funding through the temporary TANF Emergency Fund. See Pavetti et al. (2013).
7. This comparison is cross-sectional and so does not directly compare families before and after job loss, but longitudinal studies that follow families before and after job loss confirm that use of SNAP benefits increases during periods of job loss. See Zedlewski and Nichols (2012). Note that they measured poverty based on cash income plus the value of SNAP benefits.
8. "WIC Program Participation and Costs," US Department of Agriculture, Food and Nutrition Service, accessed April 1, 2014.
9. Counting of tax credits and nutrition assistance benefits is not the only difference between the SPM and official poverty measures; the SPM also differs in its definition of family, level of poverty threshold, treatment of differences in geographical costs of living, and other details. See Short (2012).
10. Specifically, twenty states adopted an "alternative base period" reform that helps low-wage workers show they had enough earnings to qualify for benefits by including their most recent employment and earnings. Fourteen states also increased eligibility for part-time workers (who in some states are denied benefits if they are not actively seeking full-time work) and a similar number of states expanded coverage for workers who quit their jobs because of certain compelling family obligations (e.g., caring for a sick family member). Fifteen states provided extra benefits to long-term unemployed workers enrolled in training programs. See National Employment Law Project (2012).
11. For more information on reforms to unemployment insurance, see Isaacs (2013), Shaefer (2010), and Shaefer and Wu (2011).

About the Authors

Julia Isaacs is a senior fellow in the Center on Labor, Human Services, and Population at the Urban Institute. An expert in child and family policy with wide-ranging knowledge about government programs and budgets, she leads the Kids' Share analyses of public spending on children, directs research studies on Head Start and child care, and is evaluating state efforts to modernize families' access to nutrition assistance, child care and Medicaid. Before joining the Urban Institute, Isaacs was a Brooking Institution fellow, coauthoring the Pew-funded study, Gaining or Losing Ground: Economic Mobility in America, and studying the school readiness of poor children and the effects of the recession on children.

Olivia Healy is a research assistant in the Center on Labor, Human Services, and Population where she contributes to research on publicly funded programs designed to support low-income children and families. She is interested in early childhood care and education, specifically in the dynamics of child care subsidy use and associated family well-being outcomes.

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