Dynamics in Safety Net Use for Middle Class Households in the Great Recession
*Names in bold indicate Presenter
A lackluster recovery however, characterized by slow job growth and negative wage growth beyond the official end of the Great Recession, has meant that middle-class families continue to rely on safety net programs to make ends meet (Mishel et al. 2012). This increased use has the potential for middle class families reap higher benefits from safety-net programs than lower-income households. Research by Robert Moffit (2013) finds that the distribution of transfers benefits during and in the aftermath of the Great Recession were not strictly progressive; individuals at the bottom of the income distribution saw smaller transfer benefit amounts than those on the boundary of the federal poverty line. Research by Marianne Bitler, Hilary Hoynes and Elira Kuka (2014) similarly measure whether the Earned Income Tax Credit program responds appropriately to economic need, and find that the EITC serves as a stabilizer for only certain demographic groups, not all, leading to unequal distributional outcomes. To the extent that normative safety net policy objectives aim to reduce hardship for the poorest of families, the increase in use among middle class families demands further study.
This papers seeks to understand the underlying phenomena associated with the growing use and contribution of safety net dollars to middle class income in the aftermath of the Great Recession. I measure frequency and duration of the safety net program use and benefit allocation for both means-tested programs and social insurance programs using the Survey of Income and Program Participation and Current Population Survey and test to see whether the likelihood of program specific safety-net use among middle-class households varies in a fundamentally different way from low-income households. Understanding how the middle class’s use of the safety net is similar or different from those at the lower end of the distribution can shed light whether existing policy design of key safety net programs should be amended to support these income group directly.