Panel Paper: Public Benefits and Private Supports In Detroit In the Wake of the Great Recession

Saturday, November 10, 2012 : 10:55 AM
Salon D (Radisson Plaza Lord Baltimore Hotel)

*Names in bold indicate Presenter

Scott Allard1, Sandra Danziger2 and Maria V. Wathen2, (1)University of Chicago, (2)University of Michigan

The Great Recession led to record job losses, persistently high rates of unemployment, and lower earnings for many households.  Many public and private sources of support have helped low-income families cope with these consequences of the recession. Cash and in-kind safety net assistance programs (e.g., TANF, SNAP, EITC, Medicaid, UI) deliver more than $300 billion in assistance to tens of millions of low-income households. In addition, private nonprofit organizations and informal social support from family or friends provide several hundred billion dollars in assistance both to households that receive public benefits and to those not eligible for public benefits. Research has begun to explore how public programs such as SNAP, UI or Medicaid have expanded in response to rising need following the Great Recession, but few studies explore how low-income families have drawn on help from both formal and informal sources of private social support during this period. 

Using data from the first wave of the Michigan Recession and Recovery Survey (MRRS), a panel survey of working age adults in the Detroit Metropolitan Area, this paper examines the sources of public and private support that households with children and income near or below the federal poverty line have drawn upon in the wake of the Great Recession. The MRRS completed hour-long in-person interviews between late October 2009 and March 2010 with 914 working age adults (response rate of 82.8 percent), providing a detailed set of measures capturing economic shock, program participation, and receipt of private formal and informal supports.

We find nearly 8 in 10 low-income households with children received cash or in-kind benefits from at least one government program within the previous year (EITC, SNAP, SSDI or SSI, public health insurance, UI, TANF, or public housing assistance) and a similar share received help from families and friends or from a nonprofit charity. We find significant differences in public program participation by race even when controlling for income, although there are no significant race differences in receipt of private supports. Receipt of public safety net assistance is more likely among low-income households with respondents who experienced more than 6 months of unemployment in the year prior to the interview than among those in which respondents reported no job loss or experienced fewer months of unemployment during the previous year. Almost 3 in 5 low-income households with children combined public and private sources of support.

Such findings should bolster efforts by policymakers and community leaders to ensure that eligible families receive public assistance benefits to which they are entitled. We also find that many low-income households did not draw on private supports, although research is only beginning to understand how low-income families make decisions regarding whether and when to draw upon public versus private sources of support. A better understanding of who our public institutions and private organizations reach (or do not reach) is critical if we are to fill gaps in the safety net and help families cope with hardships during the slow recovery from the Great Recession.