With unemployment jumping from 1.4 million to 7.1 million in March, according to the Bureau of Labor Statistics, the U.S. government will be sending stimulus checks to citizens and small businesses, but they excluded one massive sector of the population — adults claimed as dependents.
According to the New York Times, the federal government will send $1,200 plus an additional $500 per dependent under 17 to most adults. Some adults will get less or nothing depending on the adult’s marital status and the number of dependents they claim on taxes.
However, an adult can still claim someone as a dependent on their taxes up until the dependent turns 24. This means college students who have parents or guardians that claim them as dependents on taxes won’t be getting a check. The individuals who claim them on taxes won’t even get an additional $500 unless the college student is somehow under 17.
Caroline Medica, a math major at the University of Louisiana at Lafayette, ordinarily works as a tutor and a bartender to pay her bills, but the coronavirus outbreak cost her both her jobs. While Medica doesn’t get money from her parents, her mom claims her as a dependent for tax reasons.
While she’s filed for unemployment, it’s not nearly enough to support her.
“My unemployment is only $100 a week. So that’s not even enough to cover rent,” she said.
Medica said she felt the package should have made an exception for dependents who have their own lease.
“I have my own address and it’s in a completely separate area from where I’m considered a dependent,” she said. “Maybe that would be a good indicator that I should probably get money.”
According to UL Lafayette Economics Professor Brian Bolton, Ph.D., the stimulus package is likely to mitigate much of the economic damage caused by the coronavirus outbreak in the short run, but if social distancing policies stay in place for several months longer the results could be catastrophic.
“If the social disruption and shutdown lasts for 6 months or more, then it may take several years for the economy to return to normal, whatever that normal will be,” Bolton said.
Bolton said if the economy continues to decline, credit and debit cards might stop working, but this is a long way away.
The economic ramifications of COVID-19 go beyond unemployment, areas that rely heavily on tourism, such as New Orleans, are likely going to take a bigger hit especially if the shutdown continues well into the year, Bolton said.
“Will we be comparing this impact to that of Katrina? That's difficult to imagine at this point, but that comparison might become apt if this emergency lasts deep into 2020,” he said.
Lafayette is not immune to dips in the economy due to a lack of tourism either. On March 16 at 5:18 p.m., Scott Feehan, the executive director for Festival International de Louisiane, announced on the organization’s Facebook page the festival won’t be occurring this spring. Feehan announced the festival could possibly be rescheduled for fall, but he admitted this may not be possible.
“There are, of course, major challenges in pursuing this and we are not sure of the feasibility at this time. We will be working over the coming days to evaluate and analyze what our options are and will communicate as we know more,” he said in the Facebook post.
UL Lafayette Economics Professor Tony Greco, Ph.D., said the nation has overreacted to the virus and caused more strain on the economy than necessary.
“Churches, universities, restaurants, movie theaters, small shops, shopping centers, etc. should be reopened. Let the market process work. Let business firms decide if they want to resume operations and how they wish to do so. Let consumers decide if, where and how they want to shop. People will make adjustments to changed conditions,” Greco said. “As many people have said, the cure has been worse than the problem.”
Bolton disagrees and thinks continuing social distancing will mitigate economic damage in the long run.
“In these times, 'less bad' is progress. We need to keep isolating and social distancing through the rest of the month — and into May — so we can (a) flatten the curve as much as possible and (b) avoid another outbreak that wreaks even more havoc across the state,” he said.