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Financial Access and Capability

Material hardship and the CARES Act: experiences of American families

Emily Ryder Perlmeter

How did families fare with the income supports provided by the CARES Act? In the initial months of the COVID-19 economic crisis, the Coronavirus Aid, Relief, and Economic Security Act brought economic impact payments and expanded unemployment insurance to millions of households. In the aggregate, data indicate this assistance mitigated what would have otherwise been a drastic rise in poverty rates. But for many families, particularly those already living on the financial edge before the pandemic, interviews across the country reveal a more nuanced picture.

How did households use the aid? Who had trouble accessing benefits? And in a polarized political climate, what did Americans think about the way the expanded safety net was offered—for themselves and their communities?

In a new qualitative research brief I co-authored with colleagues from the Boston Fed and the Stanford Center on Poverty and Inequality, we explore these questions.

Three distinct outcomes for households

 “It Took a Pandemic: Expanded Assistance, Material Hardship, and Helping Others during the Covid-19 Crisis” analyzes 190 in-depth interviews conducted by the American Voices Project from July to October 2020. We find that experiences with CARES income supports fall into three distinct categories:

  • Households able to make ends meet.
  • Households better off than before the pandemic.
  • Households unable to access the aid.

Making ends meet

The first group includes households who used the economic impact payments and unemployment benefits to scrape by when they otherwise would have been in significant economic distress. Many interviewees described catching up on delinquent bills or putting money in savings for the first time in years.

Some individuals leveraged their stimulus checks to reduce ongoing expenses. The money allowed them to pay down debt or continue paying bills during the first months of the pandemic, softening the blow of the increased financial hardships they faced.

Better Off

While people in the first group used the CARES Act income to tread water, for another group the benefits created noticeable improvement. The direct payments put these households in a stronger financial position relative to their pre-pandemic circumstances. In some instances, the expanded unemployment benefits propelled people with job losses from barely getting by to having a small surplus of income.

Importantly, households in this second group did not experience a sustained increase in wages. Rather, they saw a temporary boost in income resulting from the replacement of lower-wage work with a reliance on larger unemployment support.

For some people who found themselves doing better financially, the experience was accompanied by feelings of guilt or recognition of privilege. This sense of being in an advantageous position relative to others was a common theme in the interviews.

Some interviewees discussed donating their extra funds and expressed support for government intervention that was more tailored to need.

Left behind

The final category we identify includes individuals living on the financial edge who were unable to access economic impact payments or unemployment benefits.

For some, immigration status left them ineligible for the CARES Act economic aid because a Social Security Number (SSN) was required. This excluded both undocumented immigrants and a substantial portion of documented ones. Legal residents and American citizens living in mixed-status households were deemed ineligible if they filed taxes with an Individual Taxpayer Identification Number rather than an SSN. An estimated 15 million income-eligible individuals did not receive economic relief due to this SSN requirement.

For others, bureaucratic difficulties or technical malfunctions created barriers and delays that left them unable to receive benefits for which they qualified. Some individuals spent hours on the phone with government agencies attempting to rectify the problems but, at the time of their interview, had not yet been successful.

Finally, some people did not qualify for either CARES Act benefit because they did not lose their job or their income was deemed too high. While these individuals did not meet the thresholds for income assistance, they often were financially far worse off than before the pandemic and struggled to pay bills.

Households who were “left behind” in these ways relied on credit cards or family, friends and neighbors to help make ends meet. Still, for people in this category, the inability to access extra supports meant material hardship continued to grow.

Views on expanding the safety net

Despite an increasingly polarized political climate in the U.S., respondents were mostly supportive of the expanded safety net, regardless of political affiliation. Some expressed frustration that increased public assistance happened only because of a pandemic, or that aid had been overly widespread, rather than targeted more directly toward those in greatest need.

Consistent with prior research on perceptions of public assistance during this recession, interviewees were largely positive about government help. This finding may indicate increased openness to an expanded safety net in the longer term.

The American Voices Project

For additional key findings, illustrative quotes and policy implications, see our full research brief. Our work is part of the Monitoring the Crisis series co-sponsored by the Stanford Center of Poverty and Inequality and the Federal Reserve Banks of Atlanta and Boston. The series is an offshoot of the larger American Voices Project led by Stanford and Princeton universities.

The American Voices Project relies on immersive, in-depth interviews to create a comprehensive portrait of life across the country. In March 2020, interview questions were added on the pandemic, health and health care, race and systemic racism, employment and earnings, schooling and child care, and new types of safety net usage.

The goal of Monitoring the Crisis is to provide timely reports on what’s happening throughout the country as the pandemic and recession play out. Visit the website to read previous briefs focused on experiences with health, labor and adolescence. Additional reports are forthcoming.

Learn more about the American Voices Project and its methodology.


Emily Ryder Perlmeter

Emily Ryder Perlmeter

Perlmeter is a senior outreach advisor at the Federal Reserve Bank of Dallas.

The views expressed are those of the author and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System.