Ongoing stimulus for low-income residents can save WA communities

Inequities in our society have been laid bare by the pandemic. Bold action is required.

Shuttered businesses line Ballard Ave., April 12, 2020. As King Country enters Phase 2, some businesses have reopened, but many more are struggling to re-hire and re-open, leaving many workers with continuing gaps in income. (Sarah Hoffman/Crosscut)

As we try to imagine a just and effective economic recovery in Washington state, we know we are facing enormous challenges. This financial crisis has completely changed the lives of hundreds of thousands of working people and small-business owners — especially those already making low wages or getting by on razor-thin profit margins. 

But the reality is that many of our systems were already rife with inequities before the pandemic and its resulting economic shock hit the region. 

Now the economic inequities are getting worse. Employers are laying off people who already struggled to make ends meet. People who previously experienced food insecurity are now relying almost entirely on food banks. And many people of color who already face systemic barriers to wealth and opportunity are now even less likely to have the resources to address unexpected costs arising from the COVID-19 pandemic.  

Washington state lawmakers must prioritize bold and equitable policy solutions for our communities and economy. We are calling on state lawmakers to enact a broad-based cash stimulus to people with low incomes in the form of an immediate Recovery Rebate that lays the foundation for a permanent, annual rebate —because we know the economic crisis will last years and continued, annual support will be critical to the recovery of Washington communities.

We know cash stimulus works. Flexible, direct financial support is critical to the health and well-being of our communities and small businesses. With direct cash assistance, people can use the funds how they need. They can buy necessities, pay for utilities or purchase supplies to allow their small businesses to operate safely upon reopening.

Cash assistance is imperative for people with low incomes. Initial analysis of the first round of federal stimulus payments, for example, shows that families with less than $500 in liquid savings spent almost half of their payments within 10 days to cover essentials like groceries. 

By spurring this kind of spending on essentials, cash stimulus also generates local economic activity. This economic boost supports the small business owners who have been impacted by the economic crisis. We’ve all seen the headlines about how local businesses are struggling to pay workers or making the difficult decision to close their doors forever. Economic stimulus is even more critical for businesses in under-resourced communities and communities of color, where many entrepreneurs are newer to business-ownership, less affluent and more vulnerable to financial instability. 

A state Recovery Rebate would further help address some of the racial inequities that COVID-19 is worsening. Because of racist practices like redlining and hiring discrimination, many people of color are more likely to live on lower incomes and are being harder hit by this economic crisis. This rebate, geared toward people with low wages, would have outsized positive impacts on communities of color, especially Black, Latinx and Indigenous communities. 

Additionally, by including people filing a tax return with an Individual Taxpayer Identification Number (ITIN) — many of whom are undocumented immigrants — the Recovery Rebate would support the tens of thousands of Washingtonians who have seen no benefit from recent federal stimulus bills. Congress unjustly excluded ITIN tax filers from expansions to unemployment insurance and federal stimulus payments. This rebate is a small but important way for state lawmakers to address that exclusion. 

As someone who was previously undocumented myself, I (Beto) know firsthand how much these workers contribute to our state. It is critical that undocumented workers have the same access to public support that other taxpayers receive. And state policymakers need to recognize the essential work so many undocumented immigrants are doing to provide us all with food and critical services during this time.

Washington can fund the Recovery Rebate by leveraging a portion of the money from the Coronavirus Relief Fund created by the federal Coronavirus Aid, Relief and Economic Security (CARES) Act, as well as by enacting much-needed progressive state revenue. They can do this by passing a state capital gains tax for the ultrawealthy and removing unnecessary tax breaks for big corporations.

The immediate Recovery Rebate payment would provide a minimum of $350 to qualifying individuals. The annual rebate could be modeled after the proposed Washington state Working Families Tax Credit, our state version of the highly successful federal Earned Income Tax Credit. 

As directors of organizations that serve people who desperately need cash right now, we cannot emphasize enough how important it is that the state Legislature invest in Washington’s people and communities. 

We know some are calling for slashes to the state budget during this time. This is a mistake. The massive cuts that policymakers made to our budget during the last recession are part of the reason so many people, businesses and government agencies are struggling now. Lawmakers have for too long been underfunding the programs most needed to help Washingtonians thrive.

We have the wealth in this state to pay for investments that will support our communities. It’s time for legislators to consider visionary solutions to advance an equitable recovery. They should enact cash stimulus in the form of a Recovery Rebate program.

About the Authors & Contributors

Marcy Bowers

Marcy Bowers

Marcy Bowers is the executive director of Statewide Poverty Action Network, a nonprofit anti-poverty advocacy organization.

Beto Yarce

Beto Yarce

Beto Yarce is the executive director of Ventures Nonprofit, an organization that empowers aspiring entrepreneurs with limited resources.