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How did the stimulus checks impact everyday Americans?

The COVID-19 relief bill provided emergency aid to tens of millions of Americans facing financial insecurity due to the pandemic. Despite ongoing debate over safety net policy, a new analysis of U.S. Census Bureau “household pulse” surveys looks at how the stimulus aid impacted Americans. H. Luke Shaefer, co-author of the study and Director of Poverty Solutions at the University of Michigan, joins.

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  • Hari Sreenivasan:

    Tens of millions of Americans received checks as part of the COVID-19 relief bill, providing emergency financial aid to individuals and families facing financial insecurity due to the pandemic. While there is ongoing debate over safety net policy, new analysis of U.S. Census bureau "household pulse" surveys offers a look at how the stimulus aid benefited Americans.

    I spoke with H. Luke Shaefer who co-authored the study. He's a professor of public policy and director of poverty solutions at the University of Michigan.

    Professor Schaefer, what were you able to look at in the context of the money that the government gave and what kind of impact it had on people?

  • Luke Shaefer:

    Well, after COVID hit the federal government, the Census Bureau started a monthly survey where they'd just ask Americans how they're doing with things like putting food on the table and paying their essential expenses. And so we were curious after we had the COVID relief bill and the end of December and then the American rescue plan that included the stimulus payments included provisions around food assistance and unemployment insurance.

    What happened on these hardship numbers? So when we look at the share of Americans reporting that they don't have enough food in the last week between December of 2020 and the end of April 2021 that falls by 40 percent. Were you able to cover your usual household bills? That also fell by 45 percent. Are you behind on your rent? That also fell by about the same amount. And then some of the questions on mental health really improved too reduced levels of anxiety, reduced levels of depression that follow sort of the same trend line of dropping as soon as these cash transfers go out.

  • Hari Sreenivasan:

    Do we have any data from this period to try to make any policy prescriptions or suggestions that says that government can have a positive impact if it was to add money to people's wallets?

  • Luke Shaefer:

    So what we did have done during the COVID era has been in many ways different from the safety net response of previous generations. So we did more with cash transfers and cash transfers, had the impact of allowing families the flexibility to meet the needs that they find most pressing in their lives. And another big difference, it was also much more broad based. So the stimulus payments went out to middle class families and low income families. And you see the biggest change in food hardship among the lowest income families, but you see a lot of action among middle class families too. It really points to the fact that they were struggling with a lot of these sort of core necessities as well. So I think we can know now that the government can act right in a cash transfer policy that can make an immense difference in the lives of families who are struggling to make ends meet.

  • Hari Sreenivasan:

    One of the critiques to interventions like this has always been that it would serve as a disincentive for people to find employment again.

  • Luke Shaefer:

    Yeah, I think a lot more research is needed on this particular question. There's a lot of reasons why businesses that have jobs that put people into direct contact with lots of other people, why they might have trouble finding workers. And in fact, many of the industries that are having a lot of trouble right now, were having trouble before the recession struck as well, I would say. And this is a place where we need more research, but a lot of the reason why the economy has come back so strong, right, and that employers are looking for folks for jobs is because of this intervention to begin with, that we we put money into the economy when things were going bad. We were, we were headed off a cliff last spring and the government acted and acted fairly quickly and things improved. And now we're back to a place where we want to see more jobs.

    People are going back to work. It's going to take a little bit of time. But I think totally understanding how all of these factors play together is going to be really important for us going forward. What I can say for sure is that our results are are very strong in terms of understanding that people's lives are made better off when they receive these cash benefits.

  • Hari Sreenivasan:

    What about the concern that we've essentially kicked the can down the road. That evictions are likely to spike when the moratoriums against evictions expire or that people will find themselves hungry again when these payments stop?

  • Luke Shaefer:

    Well, I think that's where a lot of the national debate should go next. So I would say one of the most exciting provisions that was in the American rescue plan with the expansion of the child tax credit. So starting this summer we'll see that low income and middle class families will start to receive a payment of $250 per child, $300 per young child a month, and that's going to provide a more stable source of support, right? It's not just a one time shot in the arm, so to speak. With a lot of the welfare benefits that we've had in the past, they phased out as you went to work, right? There was actually a work disincentive built into their structure with these benefits, they're stable and they stay with you up until the highest levels of income. We have to think about, just broadly speaking, how do we take some of the lessons from this period and into the future rather than sort of one time transfer like we've had?

  • Hari Sreenivasan:

    Luke Shaefer, a professor of public policy from the University of Michigan.

  • H. Luke Shaefer:

    Thanks so much. My pleasure. Thanks for having me.

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