Legislators in the 2022 Legislature are considering a proposal to substantially increase their pay. (Ron Cooper/Oregon Capital Chronicle)
The experience of the current pandemic has taught us some valuable public policy lessons. One of those is that cash payments work.
Providing cash directly to low-wage families struggling to make ends meet eases economic hardship and improves well-being.
The Oregon Legislature now has an opportunity to apply this lesson and lift up underpaid Oregonians. House Bill 4157 proposes making one-time payments to Oregonians who are paid low wages.
Such workers were having a hard time before the Covid emergency, which brought on new challenges. The economic disruptions caused by the pandemic have triggered a rise in the cost of many goods. Inflation means that dollars don’t stretch as far as before, which is especially problematic for families surviving on low wages. It puts basic necessities such as food and housing further out of reach.
Direct cash payments are a proven way to alleviate economic hardship. Studies of the recent federal stimulus payments – similar to those proposed in HB 4157 – show that lower-wage Oregonians used the cash primarily to pay for essentials such as food and housing.
With more money, households experienced reduced levels of anxiety and depression — an outcome with long-term benefits, especially for children.
Oregon’s economy is likely to benefit, as well, from the proposed legislation. These one-time payments will go to households who took advantage of the federal earned income tax credit. Eligible families tend to spend their tax refunds quickly at local businesses, as they make purchases to meet their basic needs. This spending generates more economic activity.
Researchers estimate that each federal tax refund dollar results in $1.40 to $1.58 in activity in the economy, as local businesses in turn use these refund dollars to purchase goods and services needed to run their operations and to pay employees, who in turn spend their earnings.
HB 4157 proposes an efficient way to disburse the payments, piggybacking on the federal tax credit, already well targeted to those in need. The legislation directs the Oregon Department of Revenue to issue payments of $600 for individuals and $1,200 for couples who received the earned income credit for the tax year 2020. Because the Department of Revenue already knows who claimed the credit that year, it can issue the payments without anyone needing to file additional forms.
There is an omission in the legislation that bears pointing out. Because eligibility is based on tax forms filed for tax year 2020, the bill leaves out a group of Oregon workers who would qualify for the payment if tax year 2022 were used instead.
Last year, the legislature rightly extended the state earned income tax credit to immigrant workers who would otherwise qualify but for the fact that they file their taxes using an Individual Taxpayer Identification Number (ITIN), rather than a Social Security number.
These immigrant workers also struggle to support their families on low wages, while performing some of the most arduous – and often essential – jobs in our state. Basic fairness requires that these families not be left behind.
Fortunately, there is a solution. During the pandemic, the legislature helped set up the Oregon Worker Relief Fund to deliver assistance to immigrant workers excluded from federal relief programs. That structure remains in place.
The legislature can and should use it to reach workers who would otherwise qualify for the one-time payment through the Department of Revenue. At the same time, the legislature should ensure that the Oregon Worker Relief Fund receives the resources it needs to continue its important work.
If implemented, HB 4157 will yield valuable information for policymakers in terms of how ongoing cash payments can benefit today’s families. Because as good a policy as HB 4157 is, a one-time payment is insufficient to ensure that Oregonians avoid chronic economic hardship and its enduring harms.
HB 4157 will improve the well-being of Oregon’s low-wage workers today, while at the same time pointing to a future where all Oregonians experience economic security. Lawmakers should waste no time in approving it.
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