“My whole body really ached with stress, from my head to my toes,” she said.
Then $7,600 suddenly arrived for eight weeks of back benefits, including a $600 weekly bonus. Counting a stimulus payment, Ms. Bedico’s income, $15,500 for three months, is nearly 60 percent more than she would have earned at the hotel.
“I was so happy — I really needed that money,” she said.
The peril has not passed. Though the aid will lift Ms. Bedico’s annual income above the poverty line, she does not know when she will return to work. After the bonus ends next month, her benefits will plummet, leaving her with an income 40 percent lower than normal but facing the same bills. “I’m worried I could lose my house,” she said.
The CARES Act contained three major provisions to bolster incomes. It offered most households one-time payments (up to $1,200 per adult and $500 per child). It broadened unemployment insurance to include millions of gig workers and other nontraditional employees. And it added $600 to weekly unemployment checks through July — a bonus of nearly $11,000 on top of regular payments, for those who qualify all four months.
The effect has been significant. The economist Peter Ganong and two colleagues at the University of Chicago found that among workers eligible for unemployment, two-thirds can collect sums that exceed their earnings. Until the $600 bonus expires, the poorest fifth can at least double their lost pay. While state benefits vary, the median worker is eligible to receive 134 percent of his or her pay.
While few who get the enhanced benefits will fall into poverty, Mr. Ganong warned that some jobless workers were ineligible and that bonuses would expire long before the economy recovered. “This is a strong start but only the first chapter of a long story,” he said.
Poverty rates are based on annual incomes, so families losing aid may suffer new hardship even though the earlier assistance leaves them above the formal poverty line.
Some analysts warn that hardship has grown, even if poverty rates have not. Diane Schanzenbach, an economist at Northwestern University, notes that food insecurity is twice its prepandemic rate and child hunger has risen even more. Part of the hardship may stem from the growth in income volatility — needy families generally lack credit or savings to sustain them through delays.
This Post was originally published on nytimes.com