The voices of Urban Institute's researchers and staff
July 16, 2014

How our safety net does - and does not - protect children when parents lose their jobs

July 16, 2014

I hardly need empirical support (though plenty exists) to claim that children in low-income families suffer when their parents lose their jobs. Since money was tight before the job loss, public supports for these families are critical to help offset losses in family income and reduce the risk that job loss will hurt children’s healthy development. So, does our safety net meet that need?

You’d perhaps think that unemployment insurance would save the day, but only about a third of children living with an unemployed parent receive UI benefits. Coverage rates tend to be low because many workers assume they are ineligible for the program, while others fail to meet non-monetary eligibility requirements that disproportionately affect low-wage workers.

Worse, only about a quarter of low-income children with an unemployed parent received unemployment insurance benefits in 2012, while 41 percent of children with higher-income unemployed parents did. So, how do newly unemployed, lower-income families get by?

As it turns out, many of them turn to nutrition assistance programs. More than half of children with low-income, unemployed parents relied on food stamps and almost two-thirds lived in families participating in the National School Lunch Program.

Safetynet

Why nutrition assistance programs and not cash assistance? In part, because cash assistance has become much more restrictive since welfare reform. Despite the sharp increase in parental unemployment and child poverty during the Great Recession, caseloads for Temporary Assistance for Needy Families did not expand much. This meant that very low-income families who failed to qualify for unemployment insurance were less able to rely on cash assistance.

On the other hand, the earned income tax credit (EITC) provides a great deal of support to low-income families, covering more than three-fourths of low-income children with unemployed parents (based on earnings before unemployment or from another parent). However, the EITC is primarily targeted to working parents. And parents don’t receive benefits until the tax season after they experience unemployment. This amounts to a one-time benefit, making it less effective at cushioning families against temporary losses in income when they occur.

To be clear, our safety net provides critical support for millions of families. But too many families with the most acute need are slipping through the cracks. This is a particularly serious problem given what we now know about how important it is for children to have economically and emotionally stable environments. Reforming our unemployment and cash assistance programs to improve access and coverage for those who most need it could help families become self-sufficient more quickly and promote children’s healthy development.

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