US hunger rates hit pandemic low following two rounds of direct stimulus

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Caroline Brady, director of Friends of the Aquarium, carries food to a car.

  • Hunger rates in the US have significantly dropped following increased federal aid in recent months.
  • Census data found the percentage of adults facing food insecurity dropped from 11% in March to 8% last month.
  • “Money helps,” one economist told Politico: “We’re continuing to see improvement.”
  • See more stories on Insider’s business page.

The percentage of Americans facing hunger reached its lowest level yet last week since the pandemic began last March, suggesting direct federal aid has meaningfully helped families survive the coronavirus crisis, bolstering Democrats’ push for another expensive spending package on the horizon.

Data from the US Census Bureau released last week shows the percentage of US adults living in households that sometimes or often did not have enough to eat shrunk from 11% in March to around 8% late last month.

Census data from April also showed a decline in food insecurity rates right around the time millions of Americans began receiving direct stimulus checks from the federal government in mid-March. In just two weeks, hunger rates in the country dropped nearly 18%.

Last week’s data suggests that the downward trend in food insecurity is holding, following two rounds of federal stimulus in the last six months.

In December, Congress passed a $900 billion spending package that included $600 stimulus checks and $300 in added weekly unemployment benefits. Then, in March, the government passed the $1.9 trillion American Rescue Plan, which authorized $1,400 stimulus payments for most taxpayers and an expansion of several federal aid programs.

“Money helps,” Diane Whitmore Schanzenbach, an economist and director of the Institute for Policy Research at Northwestern University, told Politico. “We’re continuing to see signs of progress. That’s exciting. That’s good news,” Whitmore Schanzenbach, who has been tracking hunger rates over the past year said.

Since the pandemic began, the Census Bureau has been conducting surveys to track how Americans are faring when it comes to issues like debt, rent payments, and hunger. It is likely still too early to know how much of the decline in hunger rates have been caused by federal aid versus a bettering economy, but economists have said previous stimulus checks also resulted in less hunger, according to Politico.

In its 2020 Household Pulse Survey, the Census Bureau found that 80% of Americans who had received a stimulus check last spring spent it on food.

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Millions of Americans have struggled to get access to their stimulus checks. The government needs a better system so getting cash to people isn’t so painfully slow.

Biden stimulus
President Joe Biden speaks about the COVID-19 relief package in the State Dining Room of the White House, Monday, March 15, 2021, in Washington

With President Biden’s signature now sealing the $1.9 trillion American Rescue Plan, most households nationwide are set to receive their third stimulus check in a year. This relief is urgently needed as new unemployment insurance filings continue to surpass one million on a weekly basis a year into the pandemic. However, for the third time, policymakers will rely on an inefficient, patchwork system to deliver this relief – a system that previously excluded millions, and left others waiting months for support.

The lesson is clear: our policies are only as good as the plumbing that delivers them. To better respond to this crisis and those to come, Congress needs to scrap the current fragmented system and build a direct and seamless infrastructure capable of sending cash quickly and automatically when families – and the economy – need it. In short, Congress needs to create a “cash button.”

Cash flow

Direct cash payments are a time-tested economic relief and recovery strategy. In the 2001 and 2008 recessions, and as economic stimulus tax credits in 2009 and 2011, cash was a standard feature. But despite their demonstrated value as a countercyclical measure, the government has not invested in the infrastructure to ensure that cash payments can be efficiently and equitably distributed. A strong foundation for cash relief will also be necessary for the new income support program provided within the expanded child tax credit.

This first attempt last year to get aid to struggling families suffered a number of setbacks. Despite the CARES Act passing in late March, by October, around 12 million people, disproportionately Black and Latinx households, had yet to receive their Economic Impact Payments. Even state unemployment insurance systems, a longstanding source of income support, were unable to distribute cash quickly. The Century Foundation estimated that by the end of May 2020 less than 60 percent of the 33 million UI claims made since the start of the pandemic had been paid – leaving millions of families experiencing or on the brink of financial hardship.

To be sure, the federal and state governments patched up issues throughout the months-long rollout of CARES Act checks, as well as the December stimulus. They included the creation of systems for low-income families who do not file taxes to receive the payments, and used the federal Direct Express debit cards and state EBT systems to speed disbursement. Yet problems remain: due to the inefficient and incomplete infrastructure, many people in need still haven’t received their benefits.

How to get cash in hands

A more responsive and efficient payment system will require three major steps, as outlined in a recent report by Jain Family Institute experts.

First, using records maintained by the Social Security Administration (SSA) and the IRS, the government can build an integrated database of individuals who would receive cash, similar to what was proposed by Rep. Rashida Tlaib in her BOOST Act, to ensure minimal coverage gaps. The SSA could then administer payments automatically to those in need, in particular because the SSA is already tasked with sending out tens of millions of payments through direct deposit and Direct Express debit cards each month.

Second, to reach those not covered by federal records, the government can allow individuals to apply for cash support and qualify through any existing state-administered benefits systems, such as the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps.

Lastly, the federal government should establish public bank accounts to provide a secure endpoint for cash assistance and ensure that the millions of households currently unbanked and underbanked could receive aid without having to rely on check cashers or paid tax preparers as they currently do. Two options for public banking are postal banking and private federal reserve accounts. A no-cost checking account through the USPS would allow anyone with an address to receive electronic transfers, from the Treasury, the Social Security Administration or the Federal Reserve.

Fed accounts, free, personal, no-cost bank accounts set up through the Federal Reserve system, would allow instantaneous cash transfers to account holders and could be linked to existing accounts at commercial banks or set up as part of postal banking, creating a seamless pipeline for disbursement. Since the USPS operates ubiquitous local branches, including in rural and low-income areas where commercial banks do not maintain a presence, postal banking could serve as a platform for a host of other financial services and help foster financial inclusion.

These three steps will create a safety net for the 21st century. As we saw with the CARES Act, poverty rates decreased nationwide and an estimated 12 million people were saved from falling into poverty. While delays and missteps blunted its impact, we have an opportunity to do better and we must take it.

There is extensive evidence that cash works, and with the federal government now tasked with distributing the American Rescue Plan’s child allowance (which is likely to become a permanent part of the safety net), it is time for policymakers to establish the plumbing required to provide cash relief nimbly and efficiently when crises occur. We need to build a cash button, and legislators have the options at hand to make that a reality.

Stephen Nuñez has over a decade of experience in research and program evaluation related to welfare policies and economic inequality. He holds a PhD in sociology from Stanford University, and in his current role, leads JFI’s research on guaranteed income in the US and internationally.

Rachel Black is an Associate Director of the Aspen Institute’s Financial Security Program (FSP). She previously served as Director of New America’s Family-Centered Policy program. Her work has been featured in a diverse set of outlets, including The Washington Post, The New York Times, The Atlantic, Slate, and Essence.

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