A Tsunami of Volatility

The Impact of the Design and Implementation of CARES Act Supplemental Unemployment Benefits on Lower-Income Households

Commonwealth
Categories: COVID-19Emergency SavingsIncome Volatility

In June, Commonwealth began following 56 families from across the US (households in 24 states with amedian annual income of $50,000) as they navigate life during a pandemic. In our biweekly interviews, we follow households’ changes in income, as well as theirfinancial resiliency strategies: how they are using savings, increasing side jobs, decreasing expenses, borrowing and postponing payment on bills. This study enables us to observe the real-time impact of the supplemental unemployment payments that many households have come to rely on.

In this brief, we discuss that while the benefits themselves have been critical to households, their design and implementation have led to more uncertainty and volatility for lower-income households. We also share how the families themselves used—and continue to use—key financial resiliency strategies to manage gaps before these benefits arrived. Finally, we offer recommendations for how these benefits can be better designed in the future to fit the financial lives of lower-income households; as well as how financial services institutions can support these households right now with little additional effort.