Coronavirus pandemic: Cash transfer delivery methods matter for low-income families
Amidst the onset of the novel coronavirus pandemic, layoffs and financial hardship have swept the United States at unprecedented rates in recent weeks. In response, Congress passed relief legislation that includes stimulus checks for individuals in an attempt to support Americans and buoy the economy. In a recently-published EconoFact piece, Center Investigator Lisa Gennetian explores the importance of the delivery system for getting cash transfers into the hands of the Americans who need this relief the most. Several key challenges to equitable disbursement of money highlighted in the article are particularly important when considering the low-income Hispanic population:
- Distributing funds through the tax system. Many low-income families do not file taxes, so these families would not receive funds sent through the tax system.
- Sending checks in the mail. Low-income families are highly mobile, so sending checks through the mail could make it difficult to ensure the money makes it into the right hands. This approach would also overlook individuals in the United States experiencing homelessness.
- Direct deposits. Direct deposits to bank accounts are not a perfect solution because they would miss the approximately 6.5 percent of households with no checking or savings account. In 2017, 14 percent of Hispanic households were unbanked.
While the long-term economic benefits of cash transfers may be limited, cash transfers can help people afford essential expenses like groceries, utility bills, and rent in the short term. Without an equitable disbursal system, however, this relief could miss members of the nation’s most vulnerable groups.