Last year the coronavirus pandemic put millions out of work and set off the worst economic contraction since the Great Depression. Yet the share of people living in poverty in the United States fell to a record low due to the government’s massive relief efforts.
About 9.1 percent of Americans were poor last year, according to the Census Bureau reported on Tuesday, down from 11.8 percent in 2019. The figure – the lowest since records began in 1967, according to calculations by Columbia University researchers – is based on a measure that accounts for the impact of government aid programs that raised millions of lives last year. out of poverty. The government’s official measure of poverty, which excludes some major aid programs, rose to 11.4 percent in 2019 from a record low of 10.5 percent.
The fact that poverty did not increase much during such a major economic disruption reflects an equally overwhelming response from the government. Congress expanded unemployment benefits and food aid, gave hundreds of billions of dollars to small businesses and sent checks directly to most American households. The Census Bureau estimated that direct screening alone lifted 11.7 million people out of poverty last year, and unemployment benefits prevented 5.5 million people from falling into poverty.
Separate figures released by the Agriculture Department last week show that hunger did not increase even last year.
Poverty rose much more rapidly after the last recession, peaking at 15.1 percent in 2010 and then gradually improving.
Christopher Wimmer, co-director of the Center on Poverty and Social, said, “This all points to the historic income support that was given in response to the pandemic and that could have led to a historic increase in poverty.” Policy at Columbia University School of Social Work. “I think the momentum from 2020 will continue into 2021.”
Despite that progress, median household income fell 2.9 percent last year, adjusted for inflation, to nearly $68,000, a figure that includes unemployment benefits but not nonprofit benefits like stimulus checks or food stamps. The decline reflects the huge job losses caused by the pandemic: nearly three million fewer people worked in 2020 than in 2019, and 13.7 million fewer people worked throughout the year. However, among those keeping their jobs, 2020 was a good year financially: Median income for full-time employees rose 6.9 percent, adjusted for inflation.
The government defines poverty as an income of less than about $13,000 for an individual or about $26,000 for a family of four. Poverty measures that take into account the effect of greater government benefits set varying limits not only on family size but also on home ownership status and regional housing costs.
Still, government aid programs excluded some groups, such as undocumented immigrants and their families, and failed to reach others. Poverty, with or without government aid, was significantly higher than the overall average for Black and Hispanic Americans, foreign-born residents and those without a college education. Millions faced delays of weeks or months before receiving benefits, forcing many to seek help from food banks or other charities.
“We measure poverty annually when the reality of poverty is faced on a day-to-day basis,” said Hilary Hoynes, an economist at the University of California, Berkeley, who has studied the government’s response to the pandemic. .
According to the government’s official definition, the number of people living in poverty rose from 3.3 million to 37.2 million in 2020, the largest annual increase on record. But economists have long criticized that definition, which dates back to the 1960s, saying it did a particularly poor job of reflecting reality last year.
The official measure ignores the impact of many government programs, such as food and housing assistance and tax credits. This year it also ignored direct checks sent to households, which were officially considered tax exempt. In recent years, the Census Bureau has produced an alternative poverty rate, known as the Supplemental Poverty Measure, that incorporates programs and factors in regional differences in housing costs, medical expenses, and other costs. which are not included in the official measure. In general, the complementary measure is greater than the official remedy; 2020 was the first year in which there was less of a complementary measure.
Many programs that helped save people out of poverty have ended in the past year, even as the pandemic continues. An estimated 7.5 million people lost unemployment benefits this month after Congress allowed the pandemic-era expansion of the program to end.
The data could feed into the efforts of President Biden and congressional leaders to implement a more permanent expansion of the safety net. Democrats’ $3.5 trillion plan, which is still taking shape, could include paid family and medical leave, government-backed child care and a permanent expansion of the child tax credit. Liberals said the success of relief programs last year showed that such policies should be continued and expanded.
“Importantly, we see the extremely powerful anti-poverty and middle-class income impacts of the government’s response,” said Jared Bernstein, a member of the White House Council of Economic Advisors. He argued that the success should encourage lawmakers to implement Mr Biden’s long-term agenda for the economy.
“It’s one thing to get people out of poverty temporarily – extremely important – but you can’t stop there,” Mr Bernstein said. “We have to make sure people don’t fall back into poverty once these temporary measures end.”
But many conservatives argue that although some expansion of government aid during the pandemic was justified, those programs should be curtailed once the economy recovers.
“Policy makers did a remarkable job last March enforcing CARES and other laws, lending to businesses, providing debt forbearance, expanding the safety net,” said Scott Winship, a senior fellow at the American Enterprise Institute, a The director of poverty studies at the conservative group, wrote in response to the data, referring to an initial pandemic aid bill that included nearly $2 trillion in spending. “But we should have looked at other priorities after that.”
jason de parle Contributed reporting.