Family Finances

Weathering the Storms: Modernizing the U.S. Benefits System to Support Household Financial Resilience

January 4, 2023  • Sarika Abbi, Jason Ewas & Tim Shaw

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For most households in America, financial shocks are inevitable. The car will break down. The house will need a repair. A key earner for a household will be laid off. These shocks can be devastating to household finances. And while the COVID-19 pandemic, which we are still recovering from, was a once-in-a-generation economic and health shock for households and our economy, we also know that it is just one example of the uncertainty and volatility of the world we now live in. When public and private benefits—such as unemployment insurance and paid sick leave—are not accessible and not designed or delivered in a timely manner to effectively support families in weathering financial shocks, families suffer. 

To effectively modernize our benefits system to help people weather financial shocks—both small and large— requires an evidence-based framework focused on what households need to be financially resilient and on opportunities for benefit leaders to address those needs. This paper lays out the framework by: 

  1. Providing the evidence for how households experience financial shocks and how financial resilience can mitigate the hardship caused by those shocks;
  2. Sharing a framework of the four functions benefits play to support resilience and the role of specific public and private benefits, to demonstrate to benefit leaders how their work contributes to household financial resilience; and
  3. Highlighting opportunities for action to improve the accessibility, sufficiency, interoperability, and delivery of benefits, including examples of how benefit leaders are already modernizing benefits to support resilience. 

As economic uncertainty rises and becomes a part of our everyday lives, it is clear that supporting household financial resilience is both important and necessary so all households can stabilize and thrive. Supporting households also strengthens our economy and society, making us all more resilient. This paper is intended to help set a foundation for the critical action and innovation needed to create an inclusive and equitable system of benefits that ensures the financial resilience of all households.

This report was developed with support from JPMorgan Chase & Co., Lafayette Square, MetLife Foundation, Prudential Financial, and W.K. Kellogg Foundation.