Stimulus Payments Offer Much-Needed Help for Struggling Families

By Anthony P. Carnevale and Artem Gulish

The COVID-19 pandemic and related business disruptions have dealt a tough economic blow to many American families, with nearly half of adults experiencing a loss of employment income in their households since March 2020. Individuals without postsecondary education, those from low-income households, Latino and Black workers, and young adults have been particularly vulnerable to these impacts. To help American families weather the substantial downturn, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included a provision for one-time direct stimulus payments to individuals and households. New information about how Americans have been using these direct stimulus payments shows that the payments have played an important role in helping Americans cover their household expenses.

According to new data released by the Census Bureau, the majority (61%) of people used or plan to use their stimulus payments primarily to cover their expenses (Figure 1). Other primary uses of the money included paying off debt (13%) and adding to savings (12%). In addition, 14 percent of adults did not receive or do not expect to receive stimulus payments.

Figure 1. A majority of people used their stimulus payments to cover expenses.

Source: Georgetown University Center on Education and the Workforce analysis of data from US Census Bureau, Household Pulse Survey, June 18–23, 2020.

Adults who experienced a loss of employment income in their households since March were more likely than those who did not to have used their stimulus payments mostly to cover expenses (Figure 2). Among adults who experienced a loss of employment income in their households, 73 percent used the stimulus payments mostly to pay for expenses, compared to 50 percent of adults who did not experience a loss of employment income in their households.

Figure 2. Individuals who experienced a loss of employment income in their households were more likely to use their stimulus payments to cover expenses.

Source: Georgetown University Center on Education and the Workforce analysis of data from US Census Bureau, Household Pulse Survey, June 18–23, 2020.

Food was the top expense that adults who experienced a loss of employment income used their stimulus payments to cover. Among respondents who experienced a loss of employment income, 61 percent indicated that they had used at least some of their stimulus payments to buy food (Figure 3). This group also commonly spent their stimulus payments on rent or mortgages (52%), utilities and telecommunications (49%), and household supplies and personal care products (45%).

Figure 3. Food was the top expense covered by stimulus funds among household that experienced a loss of employment income.

Source: Georgetown University Center on Education and the Workforce analysis of data from US Census Bureau, Household Pulse Survey, June 18–23, 2020.

In addition to adults who experienced a loss of employment income, another group that has substantially used their stimulus payments to cover expenses is adults from low-income households. Among adults from households with incomes of less than $25,000 or $25,000 to $34,999, 77 percent used their stimulus payments to cover expenses, compared to less than half of adults with household incomes of $100,000 or more (Figure 4).

Figure 4. Individuals from low-income households were more likely to use their stimulus payments primarily to cover their expenses.

Source: Georgetown University Center on Education and the Workforce analysis of data from US Census Bureau, Household Pulse Survey, June 18–23, 2020.

Women were more likely than men to have spent their stimulus payments mostly to cover expenses, with 63 percent of women using their stimulus payments for this purpose, compared to 59 percent of men (Table 1). Men, on the other hand, were slightly more likely than women either to not have received a stimulus payment (15% v. 13%) or to have used their stimulus payments mostly to add to their savings (13% v. 11%).

Table 1. Women were more likely to have used their stimulus payments to pay for expenses, while men were slightly more likely either to not have received a payment or to use it for savings.

Source: Georgetown University Center on Education and the Workforce analysis of data from US Census Bureau, Household Pulse Survey, June 18–23, 2020.

Among racial and ethnic groups, Blacks and Latinos were most likely to have spent their stimulus payments to cover expenses, with 73 percent and 67 percent, respectively, using their stimulus payments mostly for this purpose (Table 2). Asians were most likely to not have received a stimulus payment, with 21 percent of Asian respondents indicating that they have not and do not expect to receive a stimulus payment, compared to 16 percent of Latino respondents, 14 percent of White respondents, 10 percent of Black respondents, and 11 percent of respondent of other races or ethnicities. White respondents were most likely compared to other racial/ethnic groups to use their stimulus payments to bolster their savings (15%).

Table 2. Black and Latino adults, as well as adults of other races or ethnicities, were more likely to have used their stimulus payments to cover expenses than White and Asian adults.

Source: Georgetown University Center on Education and the Workforce analysis of data from US Census Bureau, Household Pulse Survey, June 18–23, 2020.

Note: Percentages may not sum to 100 due to rounding.

Another trend that comes across in the use of stimulus payments is the educational divide. Adults without a bachelor’s degree were more likely to use their stimulus payments to cover their expenses than adults with a bachelor’s degree or higher (Table 3). Adults with a high school diploma or less were especially likely to spend their stimulus payments on expenses, with 70 percent of respondents with a high school diploma or less using their stimulus payments mostly to pay expenses. In contrast, adults with a master’s degree or higher were more likely than other groups either to not receive a stimulus payment (26%) or to use their payments to bolster their savings (19%).

Table 3. Adults with a high school diploma or less were most likely to use their stimulus payments to pay expenses, while those with a master’s degree or higher were least likely to do so.

Source: Georgetown University Center on Education and the Workforce analysis of data from US Census Bureau, Household Pulse Survey, June 18–23, 2020.

These direct stimulus payments have been an important part of the policy response to the current economic downturn, helping many families avert economic disaster, especially among groups that have been most severely affected. Yet it is becoming clear that these one-time payments will not be sufficient to keep the most economically vulnerable Americans afloat as the pandemic persists. As Congress maps out its next steps in response to this crisis, it will need to consider further actions to address the ongoing hardships that Americans are facing, and additional direct stimulus payments offer one promising option.

Dr. Carnevale is the director and research professor and Artem Gulish is the senior policy strategist at the Georgetown University Center on Education and the Workforce. CEW is an independent, nonprofit research and policy institute affiliated with the Georgetown McCourt School of Public Policy that studies the link between education, career qualifications, and workforce demands.

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