Odds are, you’re probably wondering when the direct cash assistance passed by Congress last week as part of the CARES Act is going to hit your mailbox or bank account. Issuing direct cash payments was without a doubt the right move, but it won’t fill the yawning financial hole facing many families and it leaves some serious questions unanswered. Cash payments won’t meet families’ needs for long Direct cash payments are the single fastest way for government to support families in a time of crisis, whether that be a pandemic, illness, job loss or other unforeseen event. The CARES Act creates a $1,200 one-time payment for all U.S. residents or $2,400 for married couples, with an additional $500 per child dependent, which phase out for high income people.
That’s certainly nothing to sneeze at, but it won’t address the long-term economic fallout of the COVID-19 outbreak — particularly given that roughly 2 out of every 5 households in North Carolina can’t survive above the poverty line for three months without income, and many of those families are the low-income workers first to lose their jobs to the COVID-19 crisis.
Based on our most recent Living Income Standard report, the direct aid provided by the CARES Act will pay for the basic necessities for roughly two to four weeks. As can be seen here, families will burn through the aid faster in the more expensive urban parts of North Carolina, and it also depends on family size and how travel and child-care costs change during this time. Regardless of the details, many families will certainly use up the cash aid and need additional support before this crisis is over.
Direct payments to people in need are the best economic stimulus, but these checks won’t pull us out of the COVID-19 recession
Putting money in people’s pockets is the best way to stabilize a quaking economy. As we saw during the Great Recession, direct payments to individuals had a significantly larger economic return on investment than tax cuts. Thankfully, these cash payments are not the only provision of the CARES Act that puts money in the pockets of people and families. The package boosts the amount and duration of Unemployment Insurance payments for people who lose jobs or hours due to the outbreak. Particularly in states like North Carolina where existing UI benefits are grossly inadequate, the UI provisions will prove far more important than one-time checks for many families.
That said, we are confronted with a sobering reality. The CARES Act will not pull us out of a downturn that is getting worse by the day and will almost certainly end up being one of the most severe economic collapses in American history. More than 300,000 North Carolinians have filed for unemployment since March 16, the fastest spike in job losses on record, and that’s just the first wave of impacts, which is mostly concentrated in customer services.
The rebate aid is really about immediate financial survival, so leaders from the federal to the local level need to be setting up the economic stimulus we need to actually recover and avert a prolonged recession. Read more