Millions fall back into crisis as stimulus and safety nets vanish

One of the most successful elements of the government’s response to the coronavirus recession - protecting people on the margins from falling into poverty - is faltering as the safety net shrinks and federal benefits expire.

Major recessions are especially fraught for low-income earners, whose finances can veer from tenuous to dire with one missed paycheck. But as the economy cratered this spring, economists and poverty experts were mildly surprised to discover that the torrent of government support that followed - particularly the $600 a week in expanded unemployment benefits and one-time $1,200 stimulus checks - likely lowered the overall poverty rate.

In fact, 17 million people would have dropped below the poverty line without the $500 billion in direct intervention for American families, said Zach Parolin, a researcher at Columbia University.

Now, data shows, those gains are eroding as federal inaction deprives Americans on the financial margins of additional support. If the unemployment rate stays at about 10% and no new stimulus is delivered, "we can expect poverty rates to rise and climb higher than those observed in the Great Recession," Parolin said. The poverty threshold for a family of four is $26,200, according to the U.S. Department of Health and Human Services.

Data collected by the Census Bureau capture the financial pain. For the week that ended July 21, the most recent numbers available, roughly 29 million U.S. adults - about 12.1% - said their household sometimes or often did not have enough to eat the preceding seven days, according to the Center on Budget and Policy Priorities. Nearly 15 million renters said they were behind on rent during the same period.

Bruce Meyer, a University of Chicago professor who studies poverty and inequality, said the Cares Act stimulus package more than offset lost earnings for many low-wage earners. This helped lower the nation's poverty rate in April and May, when it was projected to spike after the pandemic set off widespread job losses.

"We were sufficiently aggressive in responding to the pandemic early," Meyer said. "But if we can't sort things out soon, there's going to be a lot of people who are hurting."

Code of Vets is used to requests for help with funeral expenses, hospital bills and housing issues. Since the pandemic, the nonprofit says, it has been inundated by veterans who cannot meet their basic needs: groceries, medications, utility bills. Diapers are of chronic concern for those with young children.

In January, a typical pre-pandemic month, it handled 86 cases, said Gretchen Smith, who founded the nonprofit in 2018 to honor her father, a Vietnam veteran who struggled with post-traumatic stress disorder. In April, after more than 20 million Americans lost their jobs in the coronavirus pandemic, Code of Vets had more than 1,300 cases. The scale of need has been consistent, Smith said, even with the federal stimulus.

Last week, Smith said, one desperate mother admitted that she had resorted to stealing to feed her 5-year-old boy.

"What do we do at this point?" Smith said. "They're living on air."

Struggling people are raising rent money on GoFundMe and asking for help with groceries on Facebook Marketplace. In New Orleans, some have staged sit-ins at courthouses to block eviction hearings, with signs urging the local government to cancel rent: "You can't wash your hands if you don't have a sink."

Karin Smith, 52, of Jupiter, Fla., recently opened the two-bedroom townhouse she shares with her 13-year-old son to a fellow single mom with a daughter. They're all facing eviction, much like the 22 million other Americans behind on their rent, according to an analysis by the Covid-19 Eviction Defense Project, a Colorado-based community group. Despite the federal moratorium that ended July 24, some landlords are raising rent, issuing late fees and initiating eviction proceedings earlier than the federal deadline, which requires 30 days' notice for eviction.

Black and Latino renters are the most at risk: In July, 44% and 41%, respectively, said they had no or slight confidence they could make the next month's payment or were likely to defer it, according to a U.S. Census Bureau survey. About 21% of White renters felt the same, according to an Urban Institute analysis of the data collected between May 28 and June 9.

Karin could not stand the idea of a family being pushed out into the streets.

"It's like people are just standing around watching it," she said. "This time of year, we shouldn't be able to be evicted with storms. You can't have homeless people during hurricane season or a pandemic."

Karin lost her job as a U.S. Department of Education contractor on March 14 and told her landlord right away that the $1,650 rent would be a struggle. The landlord initially agreed to a payment schedule, she said, then on April 2 told Karin she would be evicted if she was even a day late.

Since then, Karin and her son, who has Ehlers-Danlos syndrome, which affects connective tissue, have been living on food stamps and unemployment benefits that did not arrive until May. The state jobless aid started at $125 a week and was recently bumped to $225. She was earning $96,000 a year, but as a single mom with tens of thousands of dollars owed in student loans, health insurance premiums and other expenses, she did not have a lot of savings.

"Things were so behind at the end of May, as soon as it was coming in, it was going out," she said. "With the $600 [weekly unemployment benefits], I could cover the necessities. I'm not sure what I can cover with [$225]."

Although Karin has a PhD in educational psychology, she has not been able to find a job in her field, and a minimum wage position would not cover the rent. When Sept. 1 rolls around, she does not know what the four of them - plus two cats and two dogs, most taken in from others who had been evicted - will do. Her son has been urging her to start selling household items to save up for a used mobile home. Karin said he's been pressing her ever since he read that Walmart allows RVs to park in its lots for free.

"Now I know why my great-grandmother never wanted to talk about the Spanish flu," she said. "When this is over, none of us will want to talk about it."

Diane Yentel, the president and chief executive of the National Low Income Housing Coalition, said the 40 million U.S. households projected for eviction by year's end - and the lack of legislative action to prevent them - is nothing she's ever seen.

The coalition is lobbying for a national eviction moratorium through the end of the pandemic and $100 billion in emergency assistance to supplement rent payments and help landlords operate properties. The Heroes Act included these two programs but stalled in the Senate.

Before the coronavirus, homelessness had steadily increased for the past three years; 1 in 4 eligible households received help. Now more people are living on the streets, in their cars, crowding into apartments, and living in shelters or encampments, Yentel said. Social distancing, a key defense against the coronavirus, is impossible.

"When our collective health depends on our ability to stay in our homes, we all have a stake to ensure that tens of millions of people don't lose theirs," Yentel said. "Evictions during a pandemic are not only cruel and immoral, they are shortsighted and senseless."

Laura Thayer said her mind went blank when she got up to cross-examine her landlord. She said she had been in and out of court the past two months after her landlord denied her payment plan and lease renewal, and applied her past rent payment to another tenant and charged her late fees. The 50-year-old had experienced anxiety attacks before, but fighting to keep a roof over her and her partner's heads in a Springfield, Mo., multifamily apartment was a new kind of panic.

"The cards are stacked from the beginning, and to be honest, I can't believe I've made it this far," Thayer said. "I realize this could be one of the last few days in my place, or it could be the first of many."

Every day when she gets home, Thayer braces for the knock on her door. If she does not win this case, she does not know where she and her partner will live - especially because landlords often see eviction records and charge double deposits and extra fees.

Thayer fell behind on the rent after losing her job in December, after taking time off to care for her partner, who has health problems and recently applied for Social Security benefits. She did not qualify for unemployment insurance until June. She receives federal aid to cover utilities, but her EBT card did not qualify for renewal, because she had too much in her savings account: $2,200.

Hunger has hovered near record highs since the beginning of the pandemic as shuttered school meal programs and vanishing income left many without ways to feed their families. About 22% of the population has been food-insecure since the pandemic began, according to an April report by the Hamilton Project, an economic policy project of the Brookings Institution. For mothers with children 12 and younger, the figure is more than 40%, according to Lauren Bauer, who wrote the report.

"This is not just affecting families who suffered some sort of income shock," Bauer said. "This is really penetrating families with low-wage and essential workers."

Increased flexibility in the Supplemental Nutrition Assistance Program, which provides food stamps, helped fuel an unprecedented spike in SNAP enrollment, according to the Center on Budget and Policy Priorities. From March through April, 6 million people became newly eligible for SNAP. But the Trump administration recently decided against extending a food stamps waiver that allowed needy families to bypass certification, such as providing pay stubs. The move will reduce the number of eligible families in the coming months, even as other stimulus measures expire.

Food banks nationwide have struggled to keep up with demand, and surging grocery prices are compounding the strain, said Crystal FitzSimons, the director of school and out-of-school time programs at the Food Research & Action Center.

"When families are on limited and stretched budgets, or when they've lost wages to lost jobs or reduced hours of work and then food prices go up, their dollars don't go as far," FitzSimons said. "Low-income families work really hard to stretch dollars as far as possible, but with the cost of food is going up it really makes it hard for families to afford the diet that they need."

Suzanne St. John, 69, of Clearwater, Fla., hasn't had more than $25 in her savings account for as long as she can remember. The retired English teacher has to stretch her $870 in monthly Social Security benefits to support herself and her granddaughter, who moved in after losing her job in March. She depends on food stamps, which she uses to pay for grocery delivery since she's high risk for the coronavirus and does not own a car. But each month she worries her latest SNAP card will be the last.

"If it weren't for that, I don't know what I would be eating," St. John said.

Nonprofits and community organizations have stepped in to fill the gaps in many states. When the pandemic shuttered Boston Public Schools in mid-March, the YMCA of Greater Boston shuttered its aquatics and wellness programs, and funneled its resources into local food programs, chief executive James Morton said.

In 2019, the Boston organization delivered 837,000 meals. From March 16 to Aug. 7, it delivered more than 2 million meals and 91,000 bags of groceries. Morton said the YMCA is determined to help families meet their basic needs - food, shelter, child care.

"Let's feed our children, let's house our families, let's make sure everybody's got a decent job - those are not unique strategies, those are essential strategies," Morton said. "I think we're losing sight of that a little bit."

Lea, 24, of Marietta, Ga., woke up July 27 to find a note on her door from the sheriff. She had 30 days to come up with $2,278 or get out.

Lea, who declined to share her last name out of fear of retaliation from her landlord, was living paycheck to paycheck even before the pandemic. Now she's barely afloat. She lost her job, but her employer had a noncompete clause and she was not eligible for unemployment. Then her laptop broke and her car got towed. She's worked every kind of gig: babysitting, tutoring, cleaning cars and apartments. She got a loan from her mother. But it was not enough.

"I did everything I could to scrape money together," she said. "No matter what I was doing, I kept falling behind. No matter how hard I tried, there was another bill and another bill."

Desperate, she launched a GoFundMe campaign and hoped the kindness of strangers could save her from eviction. Donations came flooding in, and she was able to raise enough to pay off her late bills and fees from her landlord - at least for August.

But next month, she does not know where she'll get the money for rent, utilities or groceries. She's trying to sell her TV and looking into local women's shelters.

“I’d love to be more optimistic about what’s going to happen in the future,” she said. “But I just don’t see it.”