ARP is a rescue, not a restoration

Hope is on the horizon for Americans. Ohio’s unemployment rate continues to decline. The United States is reporting an average of 2.7 million daily vaccinations as of the end of April. The American Rescue Plan (ARP) is rolling out across the country, promising direct payments to workers, increased tax credits, and expanded food, shelter and income-protection benefits. All to help solve the country’s situational poverty crisis caused by the pandemic.

But will this solve Cleveland's generational poverty crisis?

The struggle to solve our community’s generational poverty crisis continues unabated. The minimum wage in Ohio is still $8.70/hour. This translates to an annual salary of $18,0961.

As 2021 began, unemployment rate for all groups in Ohio has fallen in the past few months. But the pain of not having a job is not spread evenly. Unemployment rates for Black and Hispanic adults were tracking at double the rates as those for white adults2.

These economic realities have existed for decades, and Cleveland has been bearing the burden of disastrous poverty rates: 46% of children, 27% of working-age adults and 23% of seniors are living in poverty3. The inequity of generational poverty cannot be solved with the stroke of a pen.

Children and Poverty

Among ARP’s benefits to children are a 15% increase in Supplemental Nutrition Assistance Program (SNAP) benefits and nearly four times the purchasing power of fresh foods and vegetables through the WIC program4.

Households with children under 17 stand to benefit from $1,400-per-child stimulus payments. The increased benefit levels and direct payments of the fully refundable Child Tax Credit will benefit nearly 2.4 million children in Ohio alone. When combined with refunds through the Earned Income Tax Credit (EITC) program, half of the nation’s children could be lifted above the poverty line5.

But for how long?

As of today, the increased SNAP allocations are set to expire this September, which will reduce the SNAP benefits by 15% per family. No additional direct payments are scheduled for delivery to Americans, and the American Rescue Plan only allows for a one-year extension of the $3,000- or $3,600-per-child tax credits. To paraphrase Blood, Sweat and Tears, “What goes up may come down.”

Working-age Adults and Poverty

In addition to the benefits eligible for families with children, working-age adults who have lost their jobs in the past year will receive an extra $300 per week in unemployment compensation and be eligible for a tax waiver for a portion of their unemployment compensation6. According to CHN Housing, the City of Cleveland and Cuyahoga County received nearly $35 million to keep tenants in homes and landlords afloat.

But how long can they tread water?

The extra $300 in unemployment compensation is set to expire on Labor Day. Residents of Cuyahoga County and the City of Cleveland who applied for rental assistance with CHN Housing between July 1, 2020 and April 26, 2021 self-reported annual income losses totalling more than $249 million. A U.S. Census Bureau survey of Ohio residents showed that the threat of housing instability is very high7.

40%

of residents had “no confidence” or “slight confidence” in their ability to pay next month’s rent.


22%

of residents were not current on rent. Of that 22% ...

75%

were “very likely” or “somewhat likely” to leave their homes due to eviction in the next two months.

Seniors in Poverty

The ARP’s provisions for seniors include money to help older adults live independently ($1.43 billion), receive health care at home ($12.7 billion), and put food on their tables ($37 million)8.

What happens when the money is gone?

More than 85% of Cuyahoga County seniors rely on Social Security as their primary source of income, which averages less than $20,000 a year9.

Older Adults in Cuyahoga County (Ages 65+)

So What's Next?

The COVID-19 pandemic is a once-in-a-century occurrence, but poverty has been a plague in Greater Cleveland for generations. The ARP will provide short- and near-term relief to those who have suffered due to the pandemic, but it is no vaccine against long-term poverty.

Neither government programs, social service agencies nor generous philanthropists working alone will solve the problem. And even working together, poverty will not be eliminated in a fiscal or calendar year. United Way of Greater Cleveland leverages its strengths to be a voice, resource and innovator for those in need. Long after the COVID-19 pandemic is relegated to history, people will still need United Way’s help, and United Way will still need help from people like you.


Sources:

1 U.S. Census Bureau, 2018 American Community Survey, MIT Living Wage Calculator.

2 "Racial Disparities Extend to Unemployment in Ohio." Emily Campbell. Center for Community Solutions. 4 January 2021.

3 "Cleveland is Now the Poorest Big City in the Country." Emily Campbell. Center for Community Solutions. 21 September 2021.

4 "Help to Put Food on the Table: Facts on Nutrition Assistance in the American Rescue Plan." USDA. 22 March 2021.

5 "American Rescue Plan Act includes critical expansions of Child Tax Credit and EITC." Chuck Marr. Center for Budget and Policy Priorities. 12 March 2021.

6 "American Rescue Plan will Help Millions and Bolster the Economy." The Center for Budget and Policy Priorities. 15 March 2021.

7 U.S. Census Bureau Household Pulse Survey Data for Ohio Residents. 20 December 2020.

8 "American Rescue Plan Improves Senior Health and Financial Security." Howard Bedlin. National Council on Aging. March 16 2021.

9 U.S. Census Bureau, American Community Survey 1-year estimates.