Trevor Mattos, Boston Indicators
Bansari Kamdar, Phillip Granberry and Fabian Torres-Ardila, The Mauricio Gastón Institute for Latino Community Development and Public Policy
May 10, 2021
This article appeared in a recent issue of the MassBenchmarks Journal, a publication of the University of Massachusetts in cooperation with the Federal Reserve Bank of Boston.
Back before the COVID-19 crisis hit and the economy was relatively strong in the aggregate, Massachusetts’ Latinx population—a diverse and growing community that makes valuable economic and cultural contributions—had the lowest incomes and lowest homeownership rate among racial/ethnic groups in Massachusetts.i Latinx working-age adults tended to have lower levels of educational attainment and were more likely to have limited English language proficiency. These, in part, contributed to higher levels of unemployment and food insecurity before the pandemic.1 Then the COVID crisis hit in March of 2020, serving to compound many of these pre-existing challenges, as Latinx workers were more likely to work in restaurant and hospitality jobs that faced severe layoffs and greater exposure to the virus. To make matters worse, cities with large Latinx populations also experienced higher rates of COVID-19 transmission.2
While both state and federal lawmakers took wide-ranging action to aid struggling families early in the pandemic, policy interventions did not offer a panacea. Latinx families with undocumented workers, for example, were most likely to be ineligible for government supports. In what follows, we explore the disproportionate social and economic impact of the COVID-19 crisis on the Latinx population and model one specific policy approach to help foster a more equitable economic recovery—a guaranteed income for Massachusetts. As many struggle to buy groceries, pay rent, or afford other necessities, there is no perfect policy solution. But one promising strategy to bolster economic security in tough times is to give families direct cash assistance. This approach is well suited to the COVID crisis, where other social supports haven’t been enough, and to meeting the needs of the Latinx population, which has been hit especially hard. Cash assistance also treats recipients with dignity and offers flexibility by empowering them to choose for themselves how to allocate their resources.
While unemployment jumped for all racial and ethnic groups during the pandemic, it increased most among Latinx workers. Massachusetts had record low unemployment at the start of 2020, but the virus spread quickly, leading Governor Charlie Baker to declare a state of emergency on March 10, 2020. Restrictions on businesses that were critical to slow the spread of the virus led to many layoffs and an overall unemployment rate of 17.7 percent in June—at the time, the highest in the country. For Latinx workers, many of whom work in hospitality and food services jobs vulnerable to the new restrictions on businesses, the unemployment rate spiked to 29.9 percent.ii
In response to high rates of unemployment, the U.S. Congress took measures to provide aid to struggling households. Government assistance was initially robust but lapsed for several months, and it did not reach everyone in need. Provisions in the Coronavirus Aid, Relief, and Economic Security Act enacted in March 2020 extended unemployment benefits, expanded eligibility and increased weekly payouts significantly.3 However, the Federal Pandemic Unemployment Compensation program, which added an extra $600 to weekly payments, expired in July 2020. Later supplements to unemployment assistance took time to come and were less generous. What’s more, undocumented workers, including those who pay taxes with an Individual Taxpayer Identification Number, were ineligible to receive any assistance. With the majority of Massachusetts’ estimated 215,000 undocumented immigrants being of Latin American or Caribbean origins, Latinx workers were most likely to have lost jobs and not qualified for any form of government relief.4
The pandemic posed challenges for everyone’s mental health, especially those in Latinx communities in the aftermath of the first rise in COVID-19 cases. Before the pandemic, members of Massachusetts’ Latinx population were less likely to report their mental health struggles than White respondents, according to findings from the Behavioral Risk Factor Surveillance System.5 But the virus and the economic crisis multiplied the share of the entire population coping with depression and anxiety and disproportionately impacted Latinx communities.iii
In the face of increased need for mental health services, the state government, at times in conjunction with the federal government, took important steps to boost capacity and access to services. These actions increased telehealth services’ availability by providing temporary emergency licenses to out-of-state clinicians and mandating commercial insurers to cover telehealth services.6 The state also instituted changes to prevent the termination of Medicaid coverage during the national emergency.
Food insecurity doubled overall in Massachusetts during the pandemic, with Latinx and Black households having struggled the most. Even before the pandemic, nearly one in four Latinx households displayed low or very low food security—three times the state average and more than double the rate of other racial groups.iv With the onset of the pandemic, all racial/ethnic groups experienced sharp upticks in food insecurity, but rates for White and Asian households were roughly half those of Black and Latinx households.
In response to the rapid rise in food insecurity following the first COVID-19 surge in early 2020, the government implemented new policies that helped some but did not reach everyone. Among the new policies were Pandemic Electronic Benefit Transfer (P-EBT) and increased flexibility in SNAP (and higher SNAP benefits for most, but not all),v WIC, and school nutrition programs. Massachusetts was one of the first states to launch a P-EBT program, a federal program that reduces food hardship among low-income families with children by providing a voucher to compensate for school meals missed during remote learning. But some Latinx households—especially mixed status and immigrant households—may have endured higher rates of food insecurity as a result of being ineligible (an estimated 132,000 undocumented immigrants in Massachusetts from Latin America or the Caribbean7 are ineligible for government assistance) or hesitant to access SNAP or other supports due to the potential risk to their immigration status.vi
Housing instability increased most for Latinx and Black households after COVID first spiked in Massachusetts, and eviction filings increased as protections and income supports began to phase out. Before the pandemic, almost one in three Latinx households was paying more than 30 percent of their income on housing, a common threshold for being considered “housing cost burdened.” Alongside Black households, the Latinx population had the highest housing cost burden in Massachusetts preceding the crisis. Then, the subsequent jobs and income losses caused by the pandemic made it much more difficult for many families to pay for housing. During the early months of the pandemic, Latinx and Black households were roughly two times more likely than White or Asian households to have missed the previous month’s rent or mortgage payment.
With the risk of an eviction crisis on the horizon, the Massachusetts state legislature created special protections for households struggling to pay for housing, but they expired too soon. Relatively early in the pandemic, the state enacted one of the most comprehensive eviction bans; alongside pausing all eviction-related court proceedings, the state stopped late fees, and negative credit reporting. When the moratorium expired in October 2020, the Centers for Disease Control (CDC) instituted a national eviction moratorium until December 31, 2020. However, an important difference in the policies is that the CDC rule allowed landlords to initiate eviction filings (but just not actually evict tenants until 2021). Preliminary evidence revealed that shortly after the expiration of state protections, eviction filings began to increase.8
While there’s no assessment data to date on the direct academic impacts of the pandemic, surveys of families with school-aged children showed some troubling trends.9,10 Taken together they suggest real concern about the quality of academic and socio-emotional supports that many students received in 2020, especially since so many Massachusetts students are attending school either fully or partially online. Here are some key takeaways from the surveysvii:
Even though Congress passed important legislation to aid in the recovery, the depth of the economic fallout from the pandemic makes it likely that the effects of the crisis will outlast federal interventions, especially in less advantaged communities. As this would only serve to deepen the economic inequality that predated COVID-19, we in Massachusetts ought to consider ambitious policy strategies that can make a difference for struggling families. Here we focus on one specific policy idea that would simultaneously help Massachusetts residents weather the current economic downturn and have greater economic security in the years ahead: A Guaranteed Income for Massachusetts.11 It would be available to all low- and moderate-income families, but because Latinx families are more likely to be lower-income, a policy like this would direct a proportionately larger share of resources to them. The principle behind a guaranteed income is that in higher-income places like Massachusetts, we should at least be able to ensure that everyone can attain a basic standard of living. One of the best ways to do so is through direct cash assistance because it is flexible and allows families to choose for themselves how best to allocate their resources. Versions of this idea have emerged in various forms across the country, including Chelsea, Massachusetts, which introduced an ambitious new program in November 2020.12 Implementing a guaranteed income program on a larger scale could do a lot to help drive an inclusive recovery from the current crisis and recalibrate our economy going forward.
One approach to building a guaranteed income program in Massachusetts is to enhance the state’s Earned Income Tax Credit (EITC) so that it covers more families and delivers larger cash benefits. The current EITC is a refundable tax credit given to low- and moderate-income working families, and it is recognized as an effective anti-poverty program. Even still, its current structure is modest and leaves many families out. The state’s credit complements the federal credit, currently matching 30 percent of the federal credit.ix The EITC’s structure (represented by the graph below) works to increase benefit levels along with household income up to a maximum credit range, which then phases back down as households approach around $50,000 in annual income, depending on household size. So households with no income receive no EITC; those with very low incomes receive next to nothing; and households with moderate incomes also receive very little. By implementing a suite of five reforms to the state EITC, we could make it so that every family earning up to $70,000 receives a minimum of $1,200 per year, and often much more. Support for this approach seems to be growing, as evidenced by a new EITC overhaul bill State Senator Jamie Eldridge filed in January 2021, which mirrors many of the provisions we outline below.13
Here are five reforms that if implemented together would help move the state EITC toward creating a minimum guaranteed income for Massachusetts:
The overhauled EITC would create a minimum guaranteed income and increase economic security across Massachusetts. It would double the number of recipients and double the average dollar amount distributed to recipients. Low-income households would receive more than half of all cash assistance directed through the credit and a plurality of recipients would be people of color. Note that while taking these key steps to reform the state EITC would provide critical, regular cash support to many, it still only goes part way to providing a truly guaranteed minimum standard of living for all. A transformation of that scale would likely require federal leadership, but these local reforms could inspire nationwide uptake of the idea, and get Massachusetts out in front of the problem.
The reformed credit would be well targeted to benefit Latinx and Black households in particular since they tend to have lower incomes than other racial groups in Massachusetts. For example, the Latinx share of the state population is 12 percent, but this group would make up 20 percent of recipients. By contrast, 71 percent of Massachusetts residents identify as non-Latinx White, but they tend to have higher incomes and so a relatively smaller share would benefit from the reformed EITC.
Of course, the reforms would require additional state revenues—about $1 billion more per year. How we raise the revenue to fund the expanded EITC could either reinforce our objective of greater economic and racial equity or work against it. This is because state and local taxes in Massachusetts currently place a greater tax burden on lower-income individuals and households. It is crucial to fund EITC expansions by raising progressive revenues to avoid reinforcing the existing regressive tax structure.
Three primary avenues ensure that new revenues are raised from those with the greatest means: 1) personal income taxes, 2) wealth taxes, 3) corporate taxes. While raising the $1 billion needed to fund expansions to the state EITC seems like a tall order, it is important to keep it in perspective. The state currently affords corporations more than $1 billion each year in special business tax breaks (e.g., tax breaks for mutual funds). The question is not whether we have the resources to create more economic security for lower-income families in Massachusetts; it is whether we have the political will and resolve to do so. With the complex social and economic impacts of the COVID-19 crisis, a guaranteed income for Massachusetts could be an important part of an inclusive recovery strategy and a rebalancing of the economy in the years to come.