Recovery from the ground up
At Policy Matters, we believe government works best when it works for all of us, not just the wealthy few and corporations. So, we were encouraged when President Joseph Biden signed the American Rescue Plan (ARP), which approaches recovery from the bottom up instead of the top down. The ARP will help families pay the rent, feed their kids, fix the car and resume their lives. It will allow local governments, schools, colleges, transit agencies and other public employers to rehire laid-off workers, bringing income back into homes, re-opening recreation centers, putting buses back on the streets and teachers in the classroom.
The American Rescue Plan will help all Ohioans and provide targeted relief to those who have been hurt most by the pandemic, and those who have been harmed by years of policies that prioritize the wealthy, mostly white few at everyone else’s expense.
Below we outline some of the key provisions of the ARP and what they will mean for Ohioans.
The ARP will help Ohioans meet their basic needs. Many Ohioans need a lifeline as the recession and pandemic drag on. There are 9.5 million fewer jobs nationally and 307,000 fewer Ohio jobs than before the pandemic. The pandemic hit Black and brown people particularly hard, in part because employment discrimination concentrated many people of color in jobs with employers who pay even “essential workers” poorly. In Ohio, there were still 20% fewer jobs in low wage sectors in January than there were before the pandemic began. Black and Latinx people are also more likely than white people to have been laid off, with unemployment rates of 9.9%, 8.5% and 5.6% respectively. The ARP will help people who have been laid off and people paid too little to get by with:
- Stimulus checks: Families earning up to $150,000 will get checks of $1,400 for each member of the family. This will allow families to get caught up on bills, get the car fixed, buy groceries and household supplies.
- Unemployment insurance: As of January, Ohio had lost more than 300,000 jobs. Unemployment insurance payments, which are no more than 50% of a person’s prior wage, are critical to helping people make ends meet. The American Rescue Plan ensures those who lost their jobs due to COVID-19 but don’t ordinarily qualify for benefits will get them, and that jobless workers will continue to get the federal boost of $300 a week until September.
- Federal food aid will help 1.5 million Ohioans still struggling to put food on the table with an additional $28 per person per month, pumping an estimated $122 million over three months into grocery stores and shops across the state, as people buy a few more cartons of eggs, jugs of milk, bags of potatoes and loaves of bread. Two-thirds of the funds help families with children.
- Housing aid: In February, 485,000 Ohioans were behind on rent. The American Rescue Plan will provide an anticipated $700 million to help them keep a roof over their heads. It will help landlords as well.
- The earned income tax credit expansion will help an estimated 691,000 low-paid working Ohioans who don’t have children in the home.
The ARP will improve the lives of millions of children and young people. The American Rescue Plan provides funds to help Ohio children and families get their lives back to normal in work, school and community life.
- The child tax credit will help the families of 92% of Ohio’s children— an estimated 2.4 million children —with an annual tax credit of $3,000 per child, with an additional $600 for children under 6 years of age. It is taken against federal tax liability, but if the credit exceeds liability, the balance flows through to the family, allowing families with the lowest income to benefit.
- Child care: An additional $500 million will expand child care for Ohio’s working parents; $800 million will help make sure child care providers — many of them small businesses hit hard by the recession — can start back up and provide essential services.
- K-12 education: The American Rescue Plan’s $4.47 billion for Ohio’s schools will last until October, 2024. It ensures continuity of service, provides resources to address learning loss, and helps schools offer in-person learning safely. It allows schools in struggling communities to prevent layoffs and rehire laid-off staff and teachers.
- Support for college students: Ohio has a goal of raising the number of working age adults with a post-secondary degree or certification to 65%. The American Rescue Plan provides an estimated $860 million for Ohio’s public colleges and universities, just over $243 million for private nonprofit schools, and $28 million for adult career and vocational centers; half of these totals must go to student grants. All of an estimated $10.4 million for private for-profit schools across the state must go to student grants.
The ARP provides support for state and local governments. The state and local governments provide many of the services Ohioans depend on every day. The pandemic recession has added major costs for public services and exposed the unmet needs of Ohio communities. At the same time, it has sapped local governments of tax revenue they need to pick up the trash and respond to emergencies.
Many local governments gave federal CARES Act funding to community groups to help people make sure they could keep the water turned on, utilities paid and a roof over their heads. But as the recession drags on, and as public sector layoffs mount, state and local governments need more federal aid. ARP sends $11 billion to our state government ($5.7 billion) and local governments ($5.4 billion) to recover, rehire and rebuild for a better future.
Cleveland — the poorest big city in the nation — is eligible to receive more than $541 million. Smaller cities, towns and townships will get relief as well. In Ohio, counties provide an unusual share of the funds for essential services like child welfare and developmental disabilities and administer the human resource programs that have been so critical during the pandemic recession: Medicaid, SNAP food aid, and others.
State and local governments must spend ARP funds by December 31, 2024. The money may be used to:
- Respond to the COVID-19 emergency and address its economic effects by sending aid to households, small businesses, nonprofits, and industries such as tourism and hospitality.
- Provide “premium” pay to essential employees or grants to their employers. Emergency premiums are often included in union contracts: These funds would allow employers to honor contractual obligations. Premium pay couldn’t exceed $13 per hour or $25,000 per worker.
- Fill budget gaps: These funds would allow continuity of services in communities that have lost tax and other revenues because of COVID-19.
- Invest in water, sewer and broadband infrastructure.
The American Rescue Plan shows that we’ve learned from the mistakes made after the last recession, when certain politicians cut stimulus spending too early, slowing the return of jobs and consumer spending. This time, by directing significant resources to families, working people and communities, we’re starting our recovery from the ground up, and making sure we’re all in, no exceptions.