Poorest Americans Have the Most Difficulty Accessing Stimulus Checks

When I first spoke with Barry Samuel of Detroit, he thought he wouldn’t be getting his $1,200 stimulus check—formally called the Economic Impact Payment—that the federal government is sending out as part of a $2.2 trillion legislative package of pandemic relief.

Samuel could really use it. He’s currently living at a shelter, completing a program that should help him find stable housing. The payments, meant to cushion people during the greatest financial crisis in recent history as well as stimulate the economy, are ideal for someone like Samuel. He needs the help—and he’d spend the check.

The problem for Samuel was the way the government has chosen to issue stimulus checks. Like many ways people experience government bureaucracy, the process is pretty simple and streamlined if you have money and ridden with obstacles if you don’t. By attaching the payments to the Internal Revenue Service, the federal government can make direct deposits for approximately half of the population. The rest must rely on paper checks, sent to addresses linked to a person’s 2018 or 2019 tax return.

Millions of people, however, aren’t required to file tax returns, including some people who receive Social Security, Supplemental Security Income, Social Security Disability Insurance, or if a person makes less than $12,200 a year. Federal officials eventually fixed the problem for recipients of benefit programs—they should get their money automatically, deposited in the same accounts through which they receive their benefits.

As many as 10 million low-income people who aren’t required to file tax returns, however, must fill out a form online with basic information, which will then be used to automatically create a simplified Form 1040 tax return. The IRS claims “the process is simple and only takes a few minutes”—which is true for some people.

While that burden may seem quick and easy for someone with a computer and stable housing, it can and will be the difference of $1,200 for many. “Someone who is familiar [with the process], who has a computer, internet service, a home, resources, and time to do these things is in a much better situation to actually receive a stimulus payment,” says

Tracey Gronniger, directing attorney for the economic security team at Justice in Aging, a senior advocacy organization.

Of course, the people without these resources need the money most.

 The realities of poverty

When there’s not a pandemic, the NOAH Project in Detroit operates two floors of a day-use center for the homeless. They serve lunch four days a week, and there’s a large gathering space for events. Caseworkers are available, and there’s also a computer lab and mailboxes so that homeless people can use NOAH as their mailing address.

As of the COVID-19 outbreak, there have been changes. They only use one floor now, mainly to serve meals. The ability of caseworkers to meet with clients is severely limited.

Samuel often goes to the NOAH Project for lunch. NOAH is also a great resource, he says, just for learning about things that are going on that he should know about, like the stimulus payments.

Matt Gatti, NOAH’s community center manager, tells me that “a lot of people were in the dark” on how they could get their checks, as the IRS didn’t immediately have a plan for people who don’t file taxes. In lieu of options like reimbursing state governments for distributing benefits through systems like the Supplemental Nutrition Assistance Program (food stamps), the IRS chose to place the burden on beneficiaries themselves and created the online form. Once the IRS introduced the online portal, local nonprofits like NOAH needed to raise awareness about what people needed to do to access their funds, as well as provide assistance with filling out the form.

Samuel doesn’t own a computer, so when he found out that NOAH was helping people apply for their checks, it was natural that he’d go to “the church,” as he refers to NOAH. It’s fortunate that NOAH can keep its doors open to help, but many libraries, where people without computers often go when they need one, are closed across the country.

But even with help, there are numerous roadblocks keeping people from the stimulus money—and most of these roadblocks arise because of the realities of poverty.

If a person filed a tax return in 2018, the non-filer form requires them to know their exact adjusted gross income from that return—no estimates allowed. But for people who are homeless, that information might not be readily available. “If you’ve got a home, you’ve probably got a filing cabinet” containing all these necessary documents, says Amy Brown, executive director of the NOAH Project.

Then there’s the problem of needing an email address to create an account to complete the form. Some people have email addresses—others don’t, and they need help creating one. That sometimes creates another obstacle—for popular email platforms like Gmail, one often needs a cell phone in order to get texted a security code to complete account setup. That’s another pricy resource out of the grasp of many people with low income.

But much of what the NOAH Project is able to provide is help with digital literacy. The form isn’t all that easy to understand if one doesn’t have or didn’t grow up with computers. For example, there’s a space to put bank account information if you have an account, but it might not be immediately apparent that inputting that information is optional.

NOAH has currently helped 55 people successfully apply for their stimulus checks. But there has been disappointing news as well. One person’s check was mailed to a previous address they no longer have access to—a consequence of dealing with another aspect of poverty, housing instability.

Samuel’s application was initially rejected due to errors in reporting his adjusted gross income.

He “kinda gave up” at that point, though he was still hopeful that he’d get something by September. He knew what he would have spent the money on: groceries, maybe some clothes—or washing some clothes. Plus, he’d like to have a little money saved. It would have given him a nice “starter kit,” he says, as he looks for employment—which has been incredibly difficult while many businesses weren’t operating or were laying off employees, though Michigan has since vacated its stay-home order.

He repeats to me, three times, that he has his “fingers crossed.”

He didn’t need to cross them for long. A few days after we first spoke, Samuel learned about the errors in his reported income, and NOAH helped him correct his form.

“This is the best news I’ve heard in a long time,” he told me. “This might be a jumpstart for me.”

He should receive his check, sent to his mailbox at NOAH, in late June.

 When you can’t afford to wait

But that’s a long time to wait when you really need the money. Even for those who will get their stimulus checks in the mail, there’s another hurdle in the way for people who need the money immediately: when you deposit a check to your bank account, it doesn’t clear right away. You have to wait.

I spoke with Aaron Klein, a fellow in economic studies at the Brookings Institution, on a Friday morning before a bank holiday. Because of the time it takes to post checks to a bank account, he points out “If your check arrives today in the mail, it’s not going to be in your bank account until Wednesday.”

Some people—like the millions of Americans currently out of work—can’t afford to wait that long. They may end up going to check cashers to get their money immediately, losing a portion of their check. They may also take small-dollar loans from payday lenders, which can trap people in cycles of debt, planning on paying the lender back with part of their stimulus check. Or they may end up paying huge bank fees in overdrafts. Though the non-filer form raises difficulties for the most marginalized people to receive their checks, millions of people who automatically get their stimulus payments will still deal with the fallout of living paycheck to paycheck.

“The government doesn’t know how to [get] people money in real time,” says Klein. “The Fed has failed America in not building a real-time payment system.” It’s private technology—that comes with a fee—that can get checks posted to accounts immediately. The U.S. Federal Reserve, unlike many other countries around the world that provide real-time payments, hasn’t updated its outdated regulations and technology in decades.

Klein adds that what the government also needs to make immediate payments is bank information—and 93 percent of Americans had bank accounts in 2017, according to the Federal Deposit Insurance Commission. This should be a fixable problem on the government’s radar, given that it’s sent stimulus payments out three times since 2000.

Of course, even for people like Samuel without bank accounts, a real-time payment system would help tremendously. There’s legislative interest surrounding getting unbanked people their money faster: Senator Sherrod Brown (D-OH) recently introduced the Banking for All Act, which would allow people to set up free bank accounts available at local banks and post offices, and would be a way for them to receive stimulus payments.

Even as we work to solve the problems of getting people their payments faster, we should also note that many marginalized people aren’t eligible for stimulus checks in the first place. People without social security numbers, people who are imprisoned, adults with disabilities who are claimed as dependents, and many young people are simply not eligible for the boost.

It’s clear that people need this assistance—whether they have bank accounts or not and whether they are in extreme poverty or just on the cusp of economic precarity.

But not everyone is actually getting it.

Kalena Thomhave is a Michigan-based writer. Magazines publishing her work include The American Prospect, The Progressive, and The Week.