What is Giving Compass?
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Giving Compass' Take:
• Federal assistance for utility costs would be helpful and necessary for families struggling to pay their bills during the pandemic.
• The author suggests that long-term solutions for building safety nets that meet low-income families' basic needs are necessary. How can donors work with governments to help develop these solutions?
• Understand more about what the U.S. can learn about the COVID-19 pandemic.
From the onset of the novel coronavirus pandemic, we were told to vigorously and more frequently wash our hands. But what happens when you don’t have water in your home? What do you do if you’ve been told to work from home but don’t have electricity? Or what if you’ve lost your job and are forced to decide between paying for utilities, rent, or food?
Congress provided $900 million in additional funding for the Low Income Home Energy Assistance Program (LIHEAP) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Based on LIHEAP’s previous benefit rates, we estimate these new funds will help approximately 1.71 million new households—or almost 28 percent more families than the 6 million families the program served annually in recent years—pay their energy bills.
But with no supplemental federal assistance for water and sewage bills, and with no additional funding to cover the increasing number of people who will need help paying energy bills during the COVID-19 crisis—LIHEAP financial relief isn’t enough to cover all families’ utility expenses. This could result in many families left with unpaid bills and tough decisions heading into summer.
Housing (including rent and mortgage payments), transportation, and food costs consume the biggest shares of the average household’s monthly budget, per the most recent Consumer Expenditure Survey data. But utility costs make up 6.6 percent of household expenses, almost on par with average health care costs.
Utility rates are the same for all consumers, so lower-income households’ utility costs account for a larger share of their incomes than for higher-income households. Although electric and water bills combined account for an average 3.1 percent of the average US household’s net income, they account for an average 20.6 percent of net income among households in the lowest income decile. This cost disparity between households with different income levels holds true even though lower-income households use less energy (PDF) per household and per household member.
Read the full article about funding for utility costs during COVID-19 by Carlos Martín at Urban Institute.