FILE PHOTO: A U.S. five dollar note is seen in this illustration photo June 1, 2017. REUTERS/Thomas White/Illustration
July 6, 2021
By Jonnelle Marte
(Reuters) – Federal aid distributed as part of the CARES Act boosted U.S. households’ ability to pay their bills after becoming unemployed, with lower-income households seeing the biggest gains, according to research from the Federal Reserve Bank of San Francisco released on Monday.
The median household would have been able to maintain spending for an additional 15 weeks after losing employment income with help from enhanced unemployment benefits and the direct cash payments delivered as part of the relief bill, passed in March 2020 to support the economy through the COVID-19 pandemic.
Low-income households were able to maintain their spending for 43 weeks longer after losing their jobs than they could have without the support, the study found. For higher-income households, the benefits added a median of seven weeks of spending.
Enhanced jobless benefits had the biggest impact on what researchers called “household resilience,” or the ability for people to keep paying their bills after losing employment income. The supplement, which tacked on $600 a week to state unemployment benefits from mid-April through July 2020, accounted for 85% of the change for lower-income households, they found.
Black and Hispanic households gained 19 weeks of resilience from the unemployment benefits, receiving a larger boost than white and Asian households.
Households in the South and the Midwest were less financially prepared to deal with job loss than those in the Northeast and the West, but the CARES Act narrowed some of those disparities.
The analysis focused on a sample of 10,613 heads of household and their spouses, using census bureau data. It did not factor in the aid provided after the CARES Act lapsed, which included more direct cash payments and an extension of enhanced jobless benefits.
(Reporting by Jonnelle Marte; Editing by Kevin Liffey)