Policymakers must act to prevent economic hardship, deep recession

Betsy Hammer and Nan Madden
Mar 16, 2020

The novel corona virus is having unprecedented impact around the world. As policymakers focus on the necessary medical and societal responses to save lives, we also urge policy action at all levels of government to reduce the overall economic harm and support Minnesotans to maintain their well-being.  

We all have a responsibility to do what we can to flatten the curve. That means practicing social distancing and other steps recommended by public health officials that will help focus medical interventions on those most in need – but which will also have massive implications for many Minnesotans’ incomes. As conferences, sporting events, concerts, and social gatherings are canceled, we are already seeing the impact on those who work in related industries. The economy may already be tipping into recession, and policymakers must act to alleviate financial hardship and reduce the threat of a more serious recession
The disruptions to the economy and other aspects of daily life are laying bare serious holes in the safety net. Many Minnesotans will face challenges with their ability to meet basic needs while protecting their own health and their families and communities. This includes people out of work and those sent home from work, as well as those who do not have access to services in the usual places. 
These times require immediate policy responses, as well as additional tools down the road. They will require flexibility in our programs and policies to ensure that we meet the needs of our people and our communities as situations change. Policymakers should take the following steps: 

Maintain and expand access to essential supports, and fill holes in the economic safety net. Many financial supports - like Unemployment Insurance, Child Care Assistance, food assistance through SNAP, and the Minnesota Family Investment Program – currently have requirements such as working a certain number of hours, actively looking for work, meeting with caseworkers in person, or being on hold through waiting periods. These need to be waived so people aren't prevented from accessing essential supports due to conditions beyond their control.  

Through the course of this pandemic and the resulting economic disruption, financial hardship will certainly grow. Services that help people meet their basic needs in tough times must expand to meet the need. In addition, some systems will need to adapt and provide alternative service delivery options, like ensuring children have access to food while schools are closed. 

Too many workers face economic insecurity because they do not have paid sick days or paid family leave. We need both near-term and long-term solutions to expand the ability of Minnesotans to care for themselves and family members without sacrificing their economic security. 

Enact economic stimulus measures focused on those hit hardest. The most effective way to provide economic stimulus is to get financial resources to low- and middle-income households, who are more likely to spend those dollars and shore up demand in the economy. This can happen by boosting payments through existing support systems such as SNAP, MFIP, and Unemployment Insurance, as well as targeted tax provisions. 

Provide federal aid to states. The federal government has an important role to play in helping states respond to emerging issues and economic shortfalls. That’s because states have to balance their budgets, but when faced with public health or economic challenges, states have higher costs at the same time that their financial resources take a hit. One thing the federal government should do right away is increase their matching rate for Medicaid funding. This should be followed by further measures to boost Medicaid funding and provide additional aid to states. This would allow states to maintain services and prevent state budget cuts that would only be a further drag on the economy.  

Respond flexibly to maintain the infrastructure of service delivery. Public services are often delivered through partnerships with nonprofit and for-profit providers, such as child care centers and social workers. Some providers may see a greater demand for their services because of increased need, others may have reduced ability to provide services because of economic disruption. Governments need to show flexibility around meeting contract benchmarks and deliverables, and other conditions of these partnerships so that providers can best respond to the changing environment and stay in business. 

All of us must continue to counter discrimination. There is no place for discrimination and racism against Asian folks in our communities. No group of people is responsible for this outbreak or is more likely to have the virus. People who believe they have been discriminated against should contact the Minnesota Department of Human Rights at 651-539-1133.