Stimulus Payment 19% Less Likely to Go to Adults With Income Below Federal Poverty Level: Study

Adults with incomes below the federal poverty level (FPL) are nearly 19 percent less likely to receive stimulus payments, according to a new study from the Urban Institute.

Using data from the institute's Coronavirus Tracking Survey, the Washington, D.C.–based think tank found that nearly seven in 10 American adults received federal funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

However, the study found a disparity in payment receipt when evaluating the incomes of adults. Only 58.6 percent of adults with incomes at or below the FPL received the one-time payments from the IRS, compared with 77.5 percent other eligible adults with incomes between 100 and 600 percent of FPL.

Janet Holtzblatt and Michael Karpman, the authors of the study, wrote that the disparity may be the result of several systemic barriers.

First, many of the nonrecipients did not have bank accounts, meaning they had to wait for the Treasury Department to issue checks. More than half of nonrecipients living in poverty do not have bank accounts so the majority had to wait for the paper process, which was started later than direct deposits.

Moreover, lack of access to the internet created a barrier to receiving stimulus payments. One in five nonrecipients with income below 600 percent FPL who neither filed an income tax return nor received Social Security benefits did not have internet access in their home, preventing them from applying through the IRS web portal.

Because of the new coronavirus pandemic, many places with free computers and internet access, such as libraries and tax assistance centers, were closed during lockdowns. The IRS was also unable to open mail due to the closures and faced a backlog when the agency reopened in June.

The biggest barrier identified was reaching those who do not file income tax returns. Due to their minimal or lack of contact with the IRS, these adults may not have known about the stimulus payments or if they were eligible to receive payments.

Seven percent of those under the FPL did not know if they received government money as compared to 3 percent of those between 100 and 250 percent of FPL. Less than 1 percent of those with incomes at or above 600 percent of the FPL did not know if they received the payment.

Race and ethnicity also influenced who received stimulus checks as a result of the CARES Act. Nearly three-quarters of white Americans reported receiving the $1,200, compared with 68.8 percent of Blacks and 63.7 percent of Hispanics.

Holtzblatt and Karpman recommended that the federal government should not rely on the IRS as the sole agency to access stimulus payments.

The first stimulus package, which was approved back in March, was worth $3 trillion.

While Washington has not announced the exact figures of the second stimulus package, White House economic adviser Larry Kudlow has hinted individuals should be expecting less than the initial $1,200 from the first payments.

Last week Kudlow told Fox Business the next round of payments would be targeted to individuals in lower-income brackets and without jobs.