Data clear: New stimulus needed

Basic protections needed in unemployment insurance, SNAP, energy and other assistance as the COVID-19 virus surges in Iowa and other states in a weak economy.

As the long-awaited next round of federal aid and stimulus remains mired in political infighting, the hardship in Iowa — and around the country — is acute. As a new report from the Center for Budget and Policy Priorities (CBPP) makes clear, households are struggling to pay for the basics now, and that need will only grow if the $600 per week federal “PUC” boost to unemployment insurance benefits expires as scheduled next week.

The receipt of SNAP (food stamps) is up 14 percent in Iowa since February of this year, but the share of Iowans reporting food insecurity continues to grow. According to the CBPP’s analysis of the Census Bureau’s Household Pulse Survey, 1-in-8 (12 percent) Iowa families with children reported (for the last week of June and first week of July) that their household sometimes or often didn’t have enough to eat in the last seven days.

Housing insecurity is also a growing problem. Iowa set up a small fund with CARES Act funds to provide short-term assistance for those unable to make rent or mortgage payments — but disqualified those receiving PUC benefits from even applying. There is about $20 million left in the fund (out of $22 million) but when the PUC expires next week, the demands on this program will skyrocket. According to CBPP, 1 in 6 Iowa tenants are already behind on their rent.

These hardships will be especially stark for Iowa’s Black and Latino workers and their families. Unemployment rates are persistently higher for workers of color. These workers are disproportionately represented among the front-line and manufacturing (especially meat processing) jobs that have posed a higher risk of exposure to the virus. In the absence of meaningful and enforceable workplace protections, the temporary boost to UI benefits provided something of a refuge. As an administrative judge concluded in approving unemployment compensation for a worker who quit because of safety concerns concluded in one recent UI case, “the working conditions at Tyson were unsafe, intolerable and detrimental, and rose to the level where a reasonable person would feel compelled to quit.” But that option evaporates next week.

All of this hardship would be even worse in the absence of the CARES Act provisions for enhanced unemployment insurance, and increased federal support for SNAP, LIHEAP (Low-Income Home Energy Assistance Program), and other social supports. Iowans are suffering with those programs in place, and they will suffer more if social supports are allowed to return to levels previous to COVID-induced shutdowns.

The latest data on initial unemployment claims, released today, show the persistence of Iowa’s economic woes during the pandemic, with nearly 400,000 filing claims in the last 18 weeks.

It is crucial that, with the virus surging in Iowa and other states and the economy projected to remain weak, that our federal representatives move quickly to enact a stimulus package that continues and expands upon these basic protections. We need an extension of expanded unemployment benefits, more opportunities for paid leave, more federal support for child care, SNAP, and LIHEAP, and robust fiscal relief for states and localities. And it is just as crucial that Governor Reynolds and the Iowa Legislature pass along any discretionary state assistance to those in the most need.

Colin Gordon is senior research consultant at the nonpartisan Iowa Policy Project and a history professor at the University of Iowa.

Encourage Iowans to seek both jobless, housing benefits

The new rental and mortgage assistance program offers relief in one breath to Iowans economically harmed by COVID-19, and then snatches it away in the next.

Amidst the worst employment crisis since the Great Depression, Governor Kim Reynolds and her colleagues seem fixated not on the magnitude of the crisis, but on the generosity of the CARES Act unemployment programs and the obstacle they apparently pose to getting Iowans back to work.

First, Iowa Workforce Development issued a chilling directive (from which they have now retreated) which very nearly suggested that only those actually laid out by the virus had any claim on unemployment insurance. Now the new “Iowa Eviction and Foreclosure Prevention Program,” (which offers rental and mortgage assistance to households “at risk of eviction or foreclosure due to a documented COVID-19 related loss of income”) actually disqualifies those receiving unemployment insurance from applying.

The logic here is difficult to fathom. Those thrown out of work by the pandemic are struggling to make ends meet, and to sustain rent or mortgage payments. Aren’t these exactly the Iowans who should be eligible for a program of rental or mortgage assistance? Instead, the new program offers assistance to “Iowans who have been economically impacted by COVID-19,” in one breath and then snatches it away in the next — penalizing and stigmatizing those most at need by treating receipt of the federal Pandemic Unemployment Compensation (PUC) benefit ($600 a week through July 25) like a failed drug test.

But even if we put the savage inequity of this aside, the Governor’s evident distaste for the federal supplements to unemployment insurance is just bad fiscal policy. Let’s do the math. As of this week, 178,619 Iowans are receiving regular unemployment benefits and another 17,545 are receiving Pandemic Unemployment Assistance (PUA).  The PUA base benefit is paid for with federal dollars, and recipients under both regular UI and the PUA also get the $600 PUC benefit through July. That’s an inflow of over $120 million a week, from the federal treasury into the pockets of working Iowans.

If we assume an effective state income tax rate of 2.3 percent and effective sales tax rate of 5.3 percent (both based on estimates by the Institute on Tax and Economic Policy for Iowans earning between $22,000 and $40,000/year), that’s a boost to state income tax receipts of $2.8 million dollars a week,[1] and a boost to state and local sales tax receipts of $6.4 million dollars a week. In the seven weeks before the PUC expires July 25, that’s a net revenue of gain of $64.5 million — or enough to pay for the mortgage and rental assistance program (which has been allotted $22 million of Iowa’s CARES Act funds) almost three times over.

And these are conservative estimates. The unemployment totals do not include the over 150,000 UI (including those from the last two weeks) that have been filed but not yet processed. They do not include the retroactive benefits payable to those qualifying for UI. They are based on the minimum monthly benefit under the PUA. And they do not include the stimulus or tax revenue impact of state-funded UI benefits.

For the health and safety of working Iowans, we should be encouraging and enabling as many as possible to qualify for unemployment benefits. And, as long as federal government is picking up the tab, we should jump at the chance to backfill state and local budgets with the tax revenues that accompany such benefits.

[1] The state’s June 3 fiscal update echoes this estimate, attributing a $31.4 million increase in state income tax receipts over the 10-week period from March 19 to June 2 ($3.1 million a week) to withholding from UI benefits. This estimate is slightly higher because it includes the withholding from state-funded benefits as well.

Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project. He is a professor of history at the University of Iowa.