Who Did Not Receive U.S. Pandemic Stimulus Payments? Implications for Financial Inclusion and Universal Basic Income

Background. The COVID-19 pandemic has caused global economic turmoil with job losses and financial hardship. To ameliorate negative effects, the U.S. government made three rounds of stimulus payments between 2020 and 2021. Whereas these stimulus payments were helpful for families to mitigate financial hardship, many eligible individuals and families did not receive the payment or experienced delays. Universal Basic Income (UBI) is a welfare concept aimed at improving household consumption and material well-being, and while it has been implemented in the US and worldwide, the federal stimulus payments could serve as a precursor to a UBI.

Financial capability – the combination of financial literacy and financial access – has become more important than ever as American families struggle for financial security in a time of economic upheaval. A deeper understanding of financial capability of those who did not receive the stimulus payment could inform policy implications to improve financial inclusion and implementation of UBI, particularly for those who may be eligible but did not receive the payment. This study investigates who and why some did not receive pandemic stimulus payments in 2021 and assesses their financial capability profiles. We first assessed the prevalence and correlates of not receiving pandemic-related stimulus payment in 2021. We then identified financial capability profiles of those who did not receive the payment in 2021.

Methods. Data were drawn from the National Financial Capability Study 2021 (N= 27,118). Univariate and bivariate analyses were used to assess prevalence and sociodemographic correlates of not receiving pandemic-related stimulus payment in 2021. Latent class analysis (LCA) was employed to identify heterogenous classes among stimulus payment non-receivers. Financial capability was measured by financial education, objective and subjective assessment of financial literacy, and financial access (checking, saving, investment, retirement, credit card, digital financial access, access to $2,000 in an emergency, and 3-month of rainy-day funds).

Results. Weighted analyses show that 21.1% (N = 5,509) of Americans did not receive the stimulus payment in 2021. For those who received it, 58.9% reported they used the money for food and rent, 33.2% paid debt, 38.4% used for savings, and 6.4% used for investment, and 6.6% donated the payment. Age, race, marital status, homeownership, employment, education, were associated with not receiving the stimulus payment.

Three classes were identified using LCA: Financially prosperous (30.1%; reference group), Financially vulnerable (34.7%), and financially average digital finance users (35.2%). LCA regression results showed that age, gender, marital status, education, and employment were associated with latent classes. Those who were younger, female, non-white, employed, and with lower income were more likely to be financially vulnerable and financially average than financially prosperous.

Conclusions. This study provides insights into the demographics and financial capability profiles of individuals who did not receive pandemic-related stimulus payments in 2021. Analyses reveals distinct classes of individuals, especially the financially vulnerable group, who may require targeted support to address their financial needs. Findings have implications for financial inclusion policies, as well as delivery modalities of UBI policy to promote financial inclusion and economic stability for all.