APRIL 9, 2021
There’s no denying that getting a fourth stimulus check to the American people will be an uphill battle. Still, there are plenty in Congress pushing for it. Here are three reasons why.
1. Unexpectedly high jobless rate
Despite signs that businesses have begun to rehire, last week’s jobless claims jumped to 744,000. While the Department of Labor expected numbers around 680,000 (later revised to 728,000), the actual number of claims came as a surprise. The total number of people receiving jobless benefits continues to hover over 18 million.
Many of those impacted are from hard-hit and low-wage industries like food services and hospitality. Although millions of Americans are in the process of being vaccinated against COVID-19, demand for these services continues to lag.
In addition, millions of jobless Americans do not receive unemployment benefits. Some did not believe they were eligible, and others have given up out of frustration.
According to a March 30 letter from 21 Democratic senators to President Joe Biden, the most recent direct stimulus payments batch will not last long. In their letter, the Senators wrote, “Almost 6 in 10 people say the $1,400 payments set to be included in the rescue package will last them less than three months.”
2. For many, it’s “paycheck to paycheck”
Having a job is no guarantee that things are back on track. According to a recent survey from TransUnion, about 4 in 10 people say that their income is less than before the pandemic hit. That means that the income they once counted on to pay bills has been reduced, and the situation does not appear to be improving.
Last year, as the pandemic raged on, more than 150 top economists signed a letter calling for more direct aid to Americans. While their input appeared to go largely unnoticed, it may become more powerful as others join their voices. This includes newly fired up Congressional Democrats and a public showing widespread support for stimulus assistance.
According to an Urban-Brookings Tax Policy Center analysis, another direct stimulus payment could lift more than 7 million people out of poverty. The current round of stimulus checks reduced the number of people living in poverty by 11.4 million.
3. The need may be greater than anticipated
The first two rounds of direct stimulus payments were based on 2019 tax returns, before the pandemic, and before millions of Americans unexpectedly found themselves in financial straits. Because the third stimulus checks were sent during tax season, they could have either been based on 2019 or 2020 tax information, depending on whether a 2020 return had been filed yet.
What will be made clear as tax season winds down and most 2020 tax returns have been received is the number of people who experienced a loss of income last year. The reality of the numbers may be enough to inspire lawmakers to take action to help American families until the economy is back on solid ground.
As we wait to see if a fourth stimulus check is in the offing, families with dependents up to 24 years old can expect monthly Child Tax Credit payments. Each payment will be $300 per child under six and $250 for children six and older. Payments are slated to begin as early as July. In a change from the traditional annual tax rebate, these monthly payments are designed to help families with children pay rent, buy food, and cover other necessities on an ongoing basis.
If your family is still struggling during these trying times, check out our coronavirus resources page to learn more about other relief options that might be available to you.
Courtesy/Source: Motely Fool