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In Brief

• Governmental relief programs related to the COVID-19 pandemic for individuals and families will be more effective if the definition of family is based in contemporary data-driven definitions of families.
• To identify and serve families who are truly in need, targeted criteria for distribution of relief would be more equitable and efficient.
• Policy based on faulty understanding of family composition and functioning perpetuates socioeconomic divisions in our communities.

Stimulus payments and other economic incentive programs created to blunt the initial impact of the COVID-19 pandemic in the United States relied heavily on traditional definitions of a family. When the government determined that stimulus checks were necessary to support the economy, the question of who should receive that money was somewhat arbitrary, and the money generally was heralded as relief for struggling families. The rush to create these programs prevented a lengthy analysis of contemporary families, and although the decision to base eligibility on income tax data instead of engaging Family Science professionals and tapping the plethora of data available on U.S. households sufficed but was not equitable or efficient.

The Intent of COVID-19 Relief Payments

The primary intent of the stimulus payments was to mitigate the negative impact of the shutdown on the national economy (Baker et al., 2020). The impact of the pandemic on families’ financial situations was a secondary consideration. Recipients of relief checks were taxpayers with valid Social Security numbers. There was additional money for children of those recipients who qualified as dependents under tax definitions. The word family is not actually part of the bill’s explanation of qualifications (Coronavirus Aid, Relief and Economic Security [CARES] Act of 2020); however, families was in the title of Division B of the bill. The word family may have been one of the most common terms used by politicians sponsoring and promoting both that bill and the subsequent payment programs. It is reasonable to say that the public believed the money was intended to help individuals and families in need.

Actual Impact on Economy

Taherian (2020) reported that the first round of $1,200 checks had very little impact on the economy. Spending on food, bills, and rent had no impact on demand for durable goods, so manufacturing and retail saw little benefit. Baker et al. (2020) found that recipients who had established savings accounts spent less on things that would stimulate the economy, increasing savings and paying down debt. Recipients without savings spent their checks quickly and mostly on food and rent. The second round of $600 checks had a greater impact, especially in retail sales—electronics and furniture (Bieber, 2021). Impact of the third round of payments is yet to be determined, but the overall goal of protecting the economy was addressed.

Actual Impact on Families

As already noted, families with little to no liquidity did benefit from the first checks in terms of being able to meet their basic needs of food and housing (Taherian, 2020). Eligibility for these payments, however, created a disparity related to multiple family characteristics. For example, the eligibility cutoff for the first round of checks was based on income tax data. Individuals who reported earning less than $75,000 in adjusted gross income in the previous year would get $1,200; this was less for those who made more money and phased out for those who made more than $80,000 (CARES Act, 2020). Approximately 80% of households had incomes of $150,000 and below (Statista Research Department, 2021). Although that percentage was used to justify the cutoff, the qualifying criteria to receive a check was reported as maximum income of an individual and a two-adult household, suggesting that these two household configurations were representative of the U.S. population. Several variables that could have been considered were not, such as location, single heads of households, citizens living in congregate care, and socioeconomic status.

The impact of geographic location created a distinct disparity in spending power (Moore & Asay, 2021). According to the Cost-of-Living Index by the Council for Community and Economic Development (2020), median rent for a two-bedroom apartment in San Francisco is $4,128. A comparable apartment in Omaha costs $1,061 and in Miami, $2,134. That first payment of $1,200 could cover an entire month’s rent for one family but just half for another.

An underlying assumption that families have two adults per household was also a faulty justification for payment criteria. Two parents with one child could receive $2,900 ($1,200 per parent and $500 per child) (CARES Act, 2020). A single parent with one child would receive just $1,700, although living expenses aside from housing are likely to be very similar in both family configurations. In 2017, less than half of U.S. households were married couples and just 19% were married couples with children (Vanorman & Jacobsen, 2020). Single residents and single parents with children ultimately received significantly lower payments than married parents, yet they faced many of the same living expenses as their married or cohabitating counterparts.

Another misconception is that older people either live in congregate centers or live with spouses. Nearly half of householders over age 65 are single—divorced, widowed, or never married and living on their own (Vanorman & Jacobsen, 2020). These individuals received $1,200 yet were maintaining a household with all related expenses.

The Bureau of Labor Statistics (2021) identified socioeconomic differences among families in a survey. Families of color were more likely to use the stimulus money for expenses, as they were hit harder by job loss. As reported by Baker et al. (2020), those who had savings available before the pandemic (mostly White, middle class) had more in savings as the crisis subsided. Those who needed the stimulus money to pay living expenses (e.g., families of color, families living below the poverty line) moved forward without gains in savings, facing higher rates of unemployment for an extended period.

Implications for Future Policy and Programming

To understand the effectiveness and equity of programs like the 2020 stimulus payments, the program goals must be clear and defensible. If the goal is merely to stimulate the economy, money should be distributed as far and wide as possible. If the goal is to provide assistance to individuals and families who are struggling to meet basic needs, targeted criteria must be implemented at a deeper level than just that of income tax status, such as participation in public and private assistance programming at local, state, and federal levels. Data needed for that targeting is available and accessible from multidisciplinary fields, Family Science included. The hurdle is gathering, analyzing, and reporting data from multiple sources, and Family Science professionals are best suited to that task.

When the COVID-19 crisis eventually comes to a close, the impact of stimulus payments on families and children will be more fully understood. But what is known now is that, going forward, it is essential that policy creation be completed by those most qualified to define family and to predict impact on families. Policy and programming intended to improve the life situations of families and children should be crafted with Family Science professionals at the table.

Complete References

Baker, S. R., Farrokhnia, R. A., Meyer, S., Pagel, M., & Yannelis, C. (2020). How does household spending respond to an epidemic? Consumption during the 2020 COVID-19 pandemic. National Bureau of Economic Research. https://ideas.repec.org/p/nbr/nberwo/26949.html

Bieber, C. (2021, March). The last stimulus check had a major economic impact. The Ascent.  www.fool.com/the-ascent/personal-finance/articles/the-last-stimulus-check-had-a-major-economic-impact/

Coronavirus Aid, Relief and Economic Security (CARES) Act, P. L. 116–136, 116^th U. S. Congress (2020).

Council for Community and Economic Development. (2020). Cost-of living index. https://www.coli.org

Moore, T. J., & Asay, S. (2021). Family resource management (4th ed.). Sage.

U.S. Bureau of Labor Statistics. (2021). Receipt and use of stimulus payments in the time of the COVID-19 pandemic. www.bls.gov/opub/btn/volume-9/receipt-and-use-of-stimulus-payments-in-the-time-of-the-covid-19-pandemic.htm

Statista Research Department. (2021). Percentage distribution of households income in the U.S. in 2019. www.statista.com/statistics/203183/percentage-distribution-of-household-income-in-the-us/

Taherian, S. (2020, May 15). New stimulus needed: $1,200 check had little impact on economy. Forbes. www.forbes.com/sites/suzytaherian/2020/05/15/new-stimulus-needed-1200-check-had-little-impact-on-economy/?sh=78e5f1e3ce17

Vanorman, A., & Jacobsen, L. S. (2020, February). U.S. household composition shifts as the population grows older. Population Reference Bureau. www.prb.org/u-s-household-composition-shifts