February 23rd, 2023
Patrice Berry is the Chief Impact Officer of EPIC.
Editor’s Note: This article is adapted from Ending Poverty in California: A Blueprint for a Just and Inclusive Economy, a roadmap for eliminating poverty in California developed by the Stanford Center on Poverty and Inequality (lead author, David Grusky).
California’s safety net is intended to help individuals and families striving for economic mobility through programs that include unemployment benefits and assistance with basic needs like food, housing, healthcare, childcare, and more.
There are three main areas in which California’s safety net is failing to provide the support it needs to:
In this article, we’ll review the “transaction costs.” We’ll examine excluded groups and workplace benefits in future articles.
Unfortunately, in 2023, taking advantage of California’s safety net means jumping through a lot of hoops.
Receiving benefits (and renewing them) can cost quite a lot in terms of time, money, anxiety, and dignity.
The applications can be long and confusing. They may include intrusive or even demeaning questions. There are also duplicative reporting, verification, and other unnecessary requirements. And on top of it all, there can be monetary costs for things like tax preparation assistance or software.
These types of barriers—the hidden “transaction costs”—all reduce program participation and are summarized here:
As important as eligibility is, safety net scholars tell us that it is only half the battle. Californians who are eligible for benefits don’t always apply. And sometimes they stop receiving benefits even when they remain eligible. The above factors shed light on why.
The transaction costs outlined above reduce participation in safety net programs. In fact, bureaucratic systems have historically been designed in this fashion to discourage anyone seen as “undeserving”—particularly people of color—from securing benefits.
The participation problem has historically been misunderstood as simply one of “excessive paperwork,” an interpretation that ignores the regressive systemic design and problematic transaction costs that cannot be overcome simply by removing paperwork or building an app.
There are five structural changes that need to be undertaken:
Eliminate all program rules that require clients to jump through hoops rather than engage in activities that will actually improve their lives. These hoops include:
Californians must challenge the punitive impacts of unnecessary federal requirements—such as “make work” program requirements—while still meeting all federal mandates. It must also challenge status quo practices—for example, by converting in-person interviews to telephone or online meetings.
Requirements should be coordinated across programs. This means providing automatic referrals and unifying caseworker training. Any single meeting with a caseworker should provide an opportunity to ensure that an individual’s eligibility can be determined for all available programs.
Federal, state, and local government must work to align and share data between programs. In the absence of a common application, this means pre-filling application forms, enabling automatic documentation of income and calculation of benefits, and automatically triggering referrals for Californians who are likely eligible for support. For example, when a low-wage worker files for unemployment benefits we should automate an application for CalFresh.
If our data systems for employment, social services, and tax administration were integrated in ways like this, we could more easily identify gaps, reduce barriers to enrollment, and alleviate burdensome administrative processes.
We can show respect and preserve Californians’ dignity by delivering benefits through a single integrated system focused on inclusion and repairing harm. This unified benefit system would eliminate a false distinction between a tax system that provides benefits to high-income households and a safety net that provides benefits to lower-income households. Fully aligning and integrating data makes this unified system possible
Removing financial barriers might include providing free tax preparation assistance, free ITIN application assistance, and ensuring affordable internet access.
We have an unparalleled opportunity to build a unified safety net that fully eliminates the long-standing “administrative burden” problem. In short, it involves:
Although some of these changes can only happen at the federal level, much of the work can be done right here in California (statewide and at the local level).