Reach and Impact of Federal Stimulus Checks in Detroit
By Lydia Wileden and Richard Rodems
In late March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), an aid package designed in part to assist households in the current economic crisis through a variety of measures, including a stimulus check. The stimulus check program offered up to $1,200 for each eligible adult and $500 per child to eligible families. While this policy was intended to be as universal as possible, experts raised concerns over key gaps in eligibility, especially among non-resident aliens—which includes non-citizens and undocumented immigrants—as well as economically vulnerable Americans. Due to the mechanism through which payments were disbursed, people who do not file taxes, the unbanked, and recent movers were at risk of missing or encountering a delay in receiving stimulus payments, a concern raised by lawmakers and policy advocates as the legislation was implemented.
Four months later, the COVID-19 pandemic persists, marked by rising numbers of coronavirus cases and an economic recession. In response to the continued economic dislocation, there is growing reported interest in Congress and within the Trump Administration in a second round of stimulus payments. In May, the U.S. House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES Act), authorizing an expanded, second round of stimulus payments for most U.S. households. Though that legislation has not been taken up by the Senate, recently President Trump has stated that he supports additional stimulus check payments, and the Treasury Secretary and White House Chief of Staff both have confirmed that another round of direct stimulus payments are being considered.
This brief draws on data from Detroit Metro Area Communities Study’s Spring and Summer 2020 COVID-19 Rapid Response surveys to examine the reach and impact of the CARES Act’s stimulus payments on Detroit residents including: How widespread was the receipt of stimulus payments in the city? Who has not yet received a stimulus check? How widespread is perceived ineligibility? And do those who received a stimulus payment report being better able to weather the financial crisis than other residents? Based on these findings we discuss the benefits of another stimulus payment for Detroiters and offer recommendations for how to deliver much needed cash to vulnerable populations.
71% of Detroit residents say they have received a stimulus payment. While the majority of residents report having already received their check, 12% of residents—equivalent to roughly 80,400 Detroiters— say they are still waiting to receive a payment.
Nearly 1-in-9 Detroiters believe they are not eligible for a stimulus check, including more than one-third of Hispanic residents and one-quarter of non-native born residents. Despite the reality that many immigrants are taxpayers, immigrants without green cards and families with non-citizen heads of households are excluded from stimulus check payments.
Residents who have not received a stimulus payment report greater financial uncertainty. More than one-quarter of households that have not received a stimulus check are concerned about either being evicted or foreclosed upon in the coming months, while 1-in-6 say they had difficulty accessing food and household supplies in the past month.
Based on our findings, we recommend policymakers pursue additional relief efforts including, but not limited to, additional stimulus payments. Subsequent rounds of stimulus payments should be broadened by focusing on expanded eligibility, an improved disbursement processes, and increased generosity.
At least three main gaps in eligibility could be closed in subsequent rounds of stimulus payments. First, the CARES Act excluded all household members from eligibility, including citizen children and spouses, if the household head or tax filer was a non-citizen without a green card. Future stimulus check receipt should be expanded to ensure that all income-eligible citizens, regardless of the status of the tax filer or household head, receive a stimulus payment. Second, as proposed in the HEROES Act passed by the U.S. House of Representatives, eligibility for the stimulus payment should drop the complete exclusion of non-citizen immigrants and be expanded to all income-eligible taxpayers. These residents are important to the economic vitality and social fabric of our communities and face the same dismal labor market and material needs as citizens. Third, under the CARES Act young adults claimed as a dependent by their parents—for example, many college students—were not eligible for the stimulus program, meaning neither the young adult nor their family received a stimulus payment for that individual. Lawmakers should close this gap, or at a minimum make young adults eligible for the same benefits as other dependents. Expanding eligibility in these ways could significantly reduce age and racial disparities in stimulus check receipt.
Improve disbursement processes
Beyond expanding eligibility, stimulus payments could have swifter impacts with improvements to how payments are disbursed. To maximize the speed and reach of future disbursements, governments could coordinate with local non-profits to promote bank accounts deemed safe by groups such as BankOn and to canvas key communities to ensure that harder-to-reach populations, such as the homeless and unbanked, are receiving stimulus payments.
Increase payment amounts
Finally, given the duration and depth of the economic impacts of the COVID-19 pandemic, payments themselves could increase. For example, rather than replicate the different payment levels for adults and children, the HEROES Act proposes $1,200 for all eligible individuals regardless of age. Payments could also be made recurring until key targets, such as a return to pre-COVID unemployment rates, are met.