Study Shows 2 More Stimulus Checks Could Keep 12 Million People Out of Poverty

April
23, 2021

3 min read

A report from the Economic Security Project, a nonprofit that advocates for guaranteed income, suggests that sending a fourth and fifth stimulus check could keep at least 12 million Americans out of poverty. 

Published this month, the study said that previous distributions of stimulus checks have been proven to help families cover basic needs and boost small business revenue.

“Direct payments to households are broad enough to help most people who need it, filling the holes in other aid programs like unemployment insurance, while flexible enough to allow people to solve their own unique challenge,” the report’s authors wrote. “Cash has been the leading force in reducing poverty during one of the deepest recessions in modern history, and is one of the only policies that can narrow persistent imbalances in poverty, income, and wealth between Americans of color and white Americans.”

Related: How Does the New Stimulus Package Affect You?

In the past year, the government has distributed approximately $850 billion in direct cash to Americans in the form of a $1,200 check, a $600 check and, more recently, a $1,400 check. According to the nonprofit, that money has translated into a 20% income boost for low-income households. More specifically, the stimulus checks have added $250 billion to people of color and $480 billion to households in the bottom 60% of incomes. 

“A year of research on the stimulus checks shows that cash is one of the best policy interventions available in a crisis,” the authors wrote. “Cash gets the most help to the most people who need it, stimulating the economy and shortening the recession.”

In arguing for fourth and fifth stimulus checks, the nonprofit said that direct payments would not only boost consumer spending and increase small business revenue but also grow local and state revenue. The Economic Security Project also cited President Joe Biden’s American Rescue Plan — which included a third round of stimulus checks and lifted nearly 16 million Americans out of poverty — as further proof that direct payments have been beneficial. Currently, the poverty line for an American household of three people is $21,960. 

“Cash has been a lifeline for Americans during this crisis, and will continue to be as long as the crisis continues,” the nonprofit wrote. “But the work ahead is ensuring that the most unequal recession in modern history isn’t followed by the most unequal recovery.”