NEW YORK — As the coronavirus crisis took hold, Akeil Smith’s employer slashed her work as a home health aide to 25 hours per week. Her $15-an-hour salary no longer provided enough to pay her $700 monthly rent, and she had to visit food pantries for groceries.
While millions of U.S. workers have already received a quick relief payment from the federal treasury through direct deposit, Smith is among millions of others without traditional bank accounts who must wait weeks for paper checks. When the checks finally arrive, this disproportionately black and Hispanic population often has little choice but to use expensive check-cashing services to access the money.
“I live check to check, and right now I need more groceries,” Smith, 35, told The Associated Press as she stood inside Payomatic, a small check-cashing store in a predominantly black Brooklyn neighborhood.
In the six weeks since the pandemic shut down much of the U.S. economy, more than 30 million American workers have filed for unemployment insurance. Congress passed a $2.2 trillion economic rescue package.
The government in April began sending $1,200 for each individual, $2,400 for each married couple and another $500 for each dependent child to poor and middle-class families across the United States. Wealthier families get either a reduced payout or nothing depending on their income.
To help smooth the delivery of the payments, the government launched an online portal for people to provide their banking information for direct deposit. But that system offered nothing to people without savings or checking accounts.
A House Ways and Means Committee memo obtained by AP estimated about 5 million paper checks will be issued each week, meaning those most in need could wait many weeks for their payments.
In Houston, Ta’Mar Bethune, a 41-year-old mother who is raising a grandchild, is likely to wait a while. As a younger woman, she struggled for years with affording bank account fees until her account was closed. In the 1990s, she also was a victim of identity theft and never fully recovered.
More than 20 years later, Bethune still cannot pass a standard background check to open a checking account because the banking system views her as too risky, she said. To get by, she transfers the money she makes as a professional hairdresser and babysitter onto a non-bank debit card.
“They charge you an arm and a leg,” she said, citing a monthly fee and a charge for every swipe or withdrawal. “You never get your full money. It’s bad, but I have no other choice.”
Bethune receives financial coaching from the Houston Area Urban League, a nonprofit organization helping low- to moderate-income families examine their behaviors around spending and saving. The organization says many families are reluctant to open bank accounts, especially if they have been burned by the system.
“Nobody wants to be exploited,” said Carmela Walker, a financial coach for the group.
Approximately 8.4 million U.S. households were considered “unbanked” in 2017, meaning that no one in the household had an account, according to the Federal Deposit Insurance Corp.