Income Loss and Financial Distress during COVID-19: The Protective Role of Liquid Assets

Nearly a quarter of U.S. households have experienced job or income losses related to the COVID-19 pandemic. Liquid assets mitigate financial distress in the face of financial shocks such as job loss, yet this relationship in the midst of the COVID-19 pandemic is unknown. Using a nationally representative sample of U.S. households (N = 4,383) who completed a survey in the early days of the pandemic, we examined pre-pandemic liquid assets as a moderator of the relationship between job and income loss and difficulty meeting financial obligations and use of high-cost financial resources. Estimates from propensity score-weighted linear probability models indicated that greater liquid assets lessened the probability of experiencing all eight measures of financial distress and most measures of distress among households experiencing job or income losses. Policy efforts to help households build emergency savings can help households better prepare for future pandemics while also supporting public health responses

DEMOCRATIZING THE ECONOMY OR INTRODUCING ECONOMIC RISK? GIG WORK DURING THE COVID-19 PANDEMIC

Though the growth of the gig economy has coincided with increased economic precarity in the new economy, we know less about the extent to which gig work (compared with other self-employment arrangements and non-gig work) may fuel economic insecurity among American households. We fill this gap in the literature drawing on a sample of 4,756 workers from a unique national survey capturing economic hardships among non-standard workers like app-and platform-based gig and other self-employed workers during the COVID-19 pandemic. Results from generalized boosted regression modeling, utilizing machine learning to account for potential endogeneity, demonstrated that gig workers experienced significantly greater economic hardship than non-gig and other self-employed workers during the pandemic. For example, gig workers were more likely to experience food insecurity, eviction, and skipped-medical treatment compared with non-gig and other self-employed workers during the pandemic. While household liquid assets endowment prior to the pandemic reduced the effect of gig work on experiencing economic hardships, having dependent children in the household increased this effect. Thus, contrary to democratizing entrepreneurship opportunities, these findings suggest that the expansion of the gig economy may exacerbate labor market inequality, with wealth-endowed families being protected against adverse economic consequences of the gig economy. We discuss the implications of these findings for inequality reducing labor market policies, including policies that account for the interconnectedness of family and the labor market

Expanded Child Tax Credit payments have not reduced employment

Approximately 60 million American children living in 35 million households are now receiving monthly payments from the federal government as part of the temporary Child Tax Credit (CTC) expansion. Recently, a debate has emerged over whether or not the expanded CTC will cause parents to leave the workforce. On one side of the debate, a large number of economists have argued that the CTC will not cause a reduction in employment. However, a recent study used a simulation approach to estimate that 2.6% of parents will exit the labor force as a result of the CTC. The reports below address the question of whether the CTC is affecting parents’ employment by using data from the Census Household Pulse to compare employment trends among parents and non-parents before and after the CTC payments began

How are families in the U.S. using their Child Tax Credit payments? A 50 state analysis

The temporary expansion of the Child Tax Credit (CTC) is projected to cut American child poverty by more than half. The CTC expansion provides families with $3,600 for every child in the household under the age of six and$3,000 for every child between the ages of six and 17. The vast majority of U.S. families with children are eligible for the CTC. In this brief, we use data from the Census Household Pulse survey to examine how a representative sample of CTC-eligible families making less than $150,000 a year report using their payments. This survey was administered between July 21st and August 16th, covering the period in which the first two CTC payments were deposited in families’ bank account. These fact sheets include key data on CTC receipt, payment usage, and changes in families’ food security after the payments went out. This report is currently composed of one national overview brief, 50 state briefs and a Washington D.C. brief. Puerto Rico and other territories are not included because while they are eligible for the expanded CTC, there is no provision for them to file for or receive advance payments. Additionally, the territories are not included in the Household Pulse Surveys so updated data about household impacts are not available for analysis. To access these briefs as separate pages you can find the full list of states here. For more information and any media requests you can email us a

Use of Public Benefits Over the First Year of Pandemic

In response to the economic crisis caused by the COVID-19 pandemic, the U.S. federal government enacted initiatives designed to help households weather the pandemic’s effects. These initiatives included expansions of existing programs, such as unemployment insurance, as well as new programs like the economic impact payments. In this brief, we investigate the extent to which households relied on an array of public benefit programs over the course of the pandemic, how they used their economic impact payments, and the extent to which the unemployment insurance expansion was effective in insulating recipients from hardship during the pandemic. We find that, in general, households were much more likely to report using their economic impact payments for essential purchases and savings than for other reported purposes. We also find while higher income households were more likely to save their economic impact payments, lower-income households were still able to save at least a portion of these funds. Evidence suggests enrollment in four different public benefits—SNAP, TANF, unemployment insurance, and social security payments—increased over the course of the pandemic. Yet, large percentages of unemployment recipients had to wait in excess of two weeks to receive their unemployment payments and relatedly, high rates of hardship among unemployment insurance recipients increased starkly over the first year of the pandemic. These results speak both to the importance of current and future policy responses to the pandemic in helping households maintain a measure of financial security, as well as to the potential gaps in this response

“Take my word for it”: Group Texts and Testimonials Enhance State and Federal Student Aid Applications\u27

As the cost of college continues to rise, it has become increasingly important for students to apply for financial aid. However, many students are unaware of the benefits of FAFSA. We launched a field experiment with a non-profit organization to explore the impact of text message interventions on FAFSA application rates. 2,236 potential students were randomized into three groups: a control group that focused on reminders for upcoming deadlines, a treatment group that focused on benefits-framed messaging, and a second treatment group that added social proofing and norming. Each group received 8 text messages from late September 2020 to early March 2021. Treatment group two was 87% more likely to make a FAFSA appointment than the control group. We end with policy and practice implications

Cut Me Some Slack! Slack Resources and Technology-Mediated Human Capital Investments in Entrepreneurship

In this paper, we explore the impact that slack resources and technology can have on individuals\u27 entrepreneurial aspirations. Focusing on human capital investments that individuals make through education and work that involve both slack resources and technology, we explore the relationship among formal online learning opportunities, informal skill development in the gig economy, and entrepreneurial aspirations. Leveraging a novel dataset that merges administrative tax data with a survey of over 8,528 low and moderate-income households, we use machine learning and propensity score weighting to examine the likelihood that individuals who make these technology-mediated human capital investments will have increased odds of entrepreneurial aspirations when compared to similar individuals who do not make these investments. We find that both partaking in online learning and working in the gig economy are significantly associated with increased odds of entrepreneurial aspirations. Furthermore, through a variety of robustness and mechanism checks, we find that technology-mediation is an important factor in these relationships and that informal skill development and career preparation is one way in which gig employment influences entrepreneurial aspirations. We discuss these findings with implications for both policies and practices around online learning and gig employment

Experimental Evidence on Consumption, Saving, and Family Formation Responses to Student Debt Forgiveness

As policy-makers grapple with whether or not to forgive student debt, for who, and how much, it is important to explore how student debt forgiveness would relate to intended household decisions and behaviors. We conducted a survey experiment that asked participants with student debt to imagine a scenario in which the federal government forgave a certain amount of student debt. We then had these participants report on how this would affect their decisions and behaviors. 1,053 participants were randomly assigned to one of four conditions that offered $5,000,$10,000, $20,000, and complete debt forgiveness. Our results indicate that student debt is strongly influencing intended decisions and behaviors that can have large implications for household economic stability (e.g., emergency savings) and mobility (e.g., saving for a down payment on a home). These results also demonstrate that the amount of student debt forgiveness matters, with larger amounts of forgiveness more effectively motivating both short- and long-term saving and investment intentions. Finally, we also observe that the proportion of student debt forgiven and the income of the borrower alter the relationships between the amount of debt forgiven and intended behaviors

The Socioeconomic Impacts of COVID-19 Study: Survey Methodology Report

The Socioeconomic Impacts of COVID-19 Survey uniquely documents the social and economic impacts of a global pandemic as people experienced the global pandemic. These findings can inform social, economic and health policies now and in the future. Though the data from the survey are not publicly available, they are freely available on a limited basis to interested researchers. If you or your organization are interested in accessing the cleaned and coded survey data, or would like more information about the survey, please reach out to the Social Policy Institute at

The Impact of Tax Refund Delays on the Experience of Hardship and Unsecured Debt

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, we investigate how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. We find that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay