Single Mothers' Employment, the Safety Net, and Economic Wellbeing: A Comparative Study of the Great Recession and COVID-19 Recessions

Background & Purpose: The Great Recession (GR) and the COVID-19 pandemic recession (PR) were the most significant economic downturns since the turn of the century. While both led to high rates of unemployment and declines in economic well-being among low-income and single-mother families, the U.S. social policy response was markedly different. Compared to the GR, in the PR, the social safety net expanded to a greater extent and more rapidly. Further, benefits were more universal and included more cash transfers. These different policy responses raise the question of how low-income, single parents’ economic wellbeing fared during each recession. This paper leverages a unique panel dataset from the Wisconsin Administrative Data Core to assess how the U.S. social policy response differed between these two recessionary periods.

Methods: Our sample consists of all custodial mothers in Wisconsin who were ordered to receive child support for one or more children born of a nonmarital union between 2006-2022. We constructed an event-study dataset centered around the quarter when unemployment was highest in Wisconsin (Q2 of 2020 and Q2 of 2009). Outcomes include income from each of the following sources: earnings, child support, and benefits from the Supplemental Nutrition Assistance Program, Supplemental Security Income, Social Security and Disability Insurance, Unemployment Insurance, Temporary Assistance for Needy Families, and estimated tax benefits (including the Covid-19 economic impact payments). We also examine total income and income relative to the federal poverty line as measures of economic wellbeing. We use a within-person fixed effects approach to estimate changes in mothers’ income sources and total income (from all sources) in each quarter for two years following peak unemployment relative to a one-year pre-recession baseline period.

Results: Our preliminary results suggest that single mothers’ wages recovered quickly (within 2 quarters) after the PR, while wages remained lower than baseline for 2 years following the GR. The safety net response was also stronger in the PR, leaving many mothers better off than they were at baseline; single mothers experienced increases in SNAP and tax credits that persisted for 2 years after the onset of the pandemic. Benefit increases were more modest during the Great Recession; SNAP, UI, and Social Security benefits increased modestly and remained elevated throughout the follow-up period. In both periods, poverty rates after counting near-cash benefits were lower than rates at baseline, but the reductions were substantially smaller in the GR than in the PR.

Conclusions & Implications: Our findings suggest that the rapid policy response to the COVID-19 pandemic resulted in policies that improved single mothers’ economic well-being. Tax credits, Unemployment Insurance, and SNAP were critical to supporting mothers in both recessions, but the increased generosity and responsiveness of benefits during the PR reduced economic hardship by a larger margin. This comparison provides novel insight into how the timing and generosity of social policies can mitigate economic hardship among low-income single mothers in future economic downturns.