Opinion: Detroit needs another stimulus check

In the past five months, the COVID-19 pandemic and economic crisis have hit Detroit hard, as revealed by recent data from the University of Michigan’s Detroit Metro Area Communities Study. Beyond the nearly 12,000 coronavirus cases and 1,500 deaths in the city, the unemployment rate in Detroit has increased to 45% from 9% prior to the pandemic. This is twice the state unemployment rate and three times the national unemployment rate.

The consequences of mass unemployment are clear: 44% of Detroiters say they are concerned about facing one or more hardships in the coming months, such as being evicted, having their utilities shut off, or going bankrupt. One-in-five Detroit households report skipping at least one household bill in the past month, and more than half say they are uncertain they will be able to afford sufficient food next month.

While the situation is bad, it could have been far worse. In late March, the federal government passed the CARES Act, which contained a number of relief efforts, including expanded unemployment insurance and the stimulus checks. In our recent analysis, we find that roughly three-quarters of Detroiters received a stimulus check from the federal government, while 12% say they are still waiting for a check, and 12% say they do not expect a stimulus check. Those who have received stimulus checks are more likely to report stable financial situations.

The conditions are bleak for the estimated 160,800 Detroiters who have not received stimulus payments, which disproportionately includes residents with lower levels of education, young adults, Black and Hispanic Detroiters, those without a bank account, and households with children. Residents who have not received stimulus checks are three times as likely to report current housing challenges, and many are concerned about either being evicted or foreclosed upon in the coming months. These same residents are twice as likely to say their household has not had sufficient food in the past week and are less likely to feel confident about being able to afford food in the coming month compared to those who received a stimulus check.

Additionally, stimulus checks appear to be providing a financial lifeline for many unemployed Detroiters, especially those ineligible for or who have yet to receive unemployment insurance. Among all unemployed Detroiters, roughly half have received both unemployment insurance and a stimulus check, while 28% have received only a stimulus check. Three-quarters of residents who have applied for but not yet received unemployment benefits have received a stimulus check. 

The available evidence suggests that stimulus payments offered necessary, if modest, relief to American households. As the economic crisis enters its fifth month, and Congress and the Trump Administration consider additional economic relief legislation, policymakers should pass additional stimulus payments for at least four reasons. First, with the looming expiration of moratoria on evictions, foreclosures, and utility shut-offs, additional stimulus payments may be vital aid to households that have fallen behind on their bills. 

Second, anticipated state and local government budget shortfalls will likely mean higher unemployment among public servants and cuts to important services. Additional stimulus checks could soften the blow to the poor and city workers who will bear the brunt of the budget crisis. 

Third, receipt of a stimulus check is correlated with higher trust in government. At a time when broad compliance with vital public health efforts is needed, diminished trust in government should worry policymakers. 

Finally, an additional round of stimulus is needed because the primary way households meet their basic needs—paid work—remains in alarmingly short supply. 

Any new relief efforts should improve upon, not just replicate, the stimulus check program. The original program contained critical gaps that disadvantaged non-citizen taxpayers, mixed-citizenship families, many young adults, and hard-to-reach populations. Policymakers should broaden subsequent rounds of stimulus payments by focusing on expanded eligibility to all citizens and taxpayers, an improved disbursement process that helps people get non-predatory banking accounts and targets the most marginalized groups, and increased generosity of payments. Payments should also be made recurring until key targets, such as a return to pre-COVID unemployment rates, are met. 

Detroit has been hit hard by all aspects of the current crisis and the stimulus checks have served a critical role in helping Detroiters get by. All available evidence suggests additional stimulus payments, made as universal, timely, and generous as possible, will be essential to Detroiters as they struggle to meet their basic material needs.

Richard Rodems is a postdoctoral research fellow with Poverty Solutions at the University of Michigan who studies material hardship and poverty measurement. Lydia Wileden is a Ph.D. candidate in sociology and public policy at the Gerald R. Ford School for Public Policy at U-M and a research associate for the Detroit Metro Area Communities Study.