Building household financial resilience requires a new approach to safety-net programs

Millions of American households don’t have the ability to absorb a financial shock; nearly a third couldn’t cover an unexpected $400 expense. While one tired refrain is that individuals should be more responsible when managing their finances, it’s time to acknowledge that even what we call a “living wage” isn’t large enough for a household to self-insure against the unexpected. So public benefits are there to fill the gap. Or at least they should be.

The reality is that the benefits Americans depend on to weather the worst of times are often delivered through a fractured and difficult-to-navigate system, by dozens of siloed programs that vary from state to state.

“The most critical work we do in government,” says Neera Tanden, senior advisor and staff secretary to President Biden, “is to help people who are in most need at the moment they are facing a crisis.” She was speaking on Feb. 2, as the Aspen Institute and the White House Office of Management and Budget hosted the Financial Resilience Summit. More than 90 federal, state, philanthropic, and non-government leaders gathered at The General Services Administration headquarters to do cross-sector work with the programs that help Americans through times of crisis.

Tanden understands the need all too well. Her mother, an immigrant who found herself suddenly single, needed safety net programs to provide for her children. The family relied on food stamps, sent the kids to school with paper lunch vouchers, and waited in seemingly infinite lines at the welfare office. Though navigating the support wasn’t easy, it helped her mother stabilize her finances, which led to finding a job and buying a house just a few years later.

In D.C., Tanden was speaking to a room of people dedicated to modernizing public benefits systems from the bottom up, rather than from the top down. While this may seem unremarkable in our consumer-centric economy, it is a transformative change. Officials from eight different agencies (OMB, HHS, HUD, USDA, GSA, SSA, Treasury, and Labor) have committed to transforming the customer experience of those whose benefits they administer, driven by the White House’s Facing Financial Shocks (FFS) initiative.

If the federal government is driving, the states are where the rubber meets the road. In Oklahoma, employees of the state Department of Human Services were issued laptops and hotspot-enabled cellphones. The intent, says department Secretary Justin Brown, is “to meet people where they are, with strategic interventions necessary to support their families.”

Terri Ricks, secretary of Louisiana Department of Children and Family Services, explained that the state began using an automated text service to check in on foster children during emergencies. Shortly thereafter, Code for America helped the state map the users for its services, and the state can now send texts to inform people in one program about services in another—reminding them to check in Medicaid case workers, to apply for federal rental assistance, and to look into child tax credit opportunities, for instance. They’ve now sent more than 60 million of these helpful texts. The technologies and distribution models that these states have developed, many in response to the pandemic, are being made permanent to transform government service delivery.

At the national level, the Department of Health and Human Services is leading a new phase of cross-agency work to coordinate between agencies involved in the Facing Financial Shocks charter. This will make it easier for states to adopt transformations in public benefits delivery modeled by other states, make it easier to work across departments when those improvements require multi-agency coordination, and build tools and policy guidance to make it easier for new states to adopt evidence-backed changes.

Similarly, the United States Digital Service will be leading a workstream to partner with states to create ways to securely share data between departments. This will allow people to apply for and be approved for benefits in multiple programs at the same time, an approach which will cut down the “time tax” created by multiple application processes.

“We’ve got to put the customer at the center,” says Chike Aguh, Chief Innovation Officer of the U.S. Department of Labor. “The day someone files for employment insurance is the worst day of their lives. They’re thinking about how they’re going to go home and talk to their spouse, about how they’re going to take care of the groceries and the rent. That is the wrong time to give them a very complicated form and say, figure it out.”

Actually, it’s time for America to figure this out. From the White House and the halls of Congress, to the regional offices of state agencies, down to the counties, cities, and community organizations working with people directly, we must seize this moment to modernize public benefits delivery. Federal funds from the pandemic are still available for this purpose, making this a unique opportunity to collaborate and innovate.

We have the recent trial-by-fire of the pandemic. We have a populace that understands and expects a digital-first, consumer-friendly experience. We have a group of leaders across sectors and across parties who are committed to bolstering the financial resilience of American households.

Now, we need more leaders, more planners, more technologists, and more engaged citizens to recognize this as a priority. Recently, hundreds of thousands of workers have been laid off, often by companies regarded as models of high-paying, secure employment. In short, an unexpected financial shock can happen to anyone. The need is urgent, and the time to end this crisis is now.

Tim Shaw is the Policy Director for the Aspen Institute Financial Security Program. He previously serviced as a tax, retirement, and paid family leave expert at the Bipartisan Policy Center and a tax and budget staffer for the U.S. Government Accountability Office.