Poverty rate fell as federal aid made up for lost jobs
Census data may fuel debate over Biden effort to extend safety net
The share of people living in poverty in the United States fell to a record low last year as an enormous government relief effort helped offset the worst economic contraction since the Great Depression.
In the latest and most conclusive evidence that poverty fell because of the aid, the Census Bureau reported Tuesday that 9.1 percent of Americans were living below the poverty line last year, down from 11.8 percent in 2019. That figure — the lowest since records began in 1967, according to calculations from researchers at Columbia University — is based on a measure that accounts for the impact of government programs. The official measure of poverty, which leaves out some major aid programs, rose to 11.4 percent of the population.
The new data will almost surely feed into a debate in Washington about efforts by President Joe Biden and congressional leaders to enact a more lasting expansion of the safety net that would extend well beyond the pandemic. Democrats’ $3.5 trillion plan, which is still taking shape, could include paid family and medical leave, government-supported child care and a permanent expansion of the Child Tax Credit.
Liberals cited the success of relief programs, which were also highlighted in an Agriculture Department report last week that showed that
hunger did not rise in 2020, to argue that such policies ought to be expanded. But conservatives argue that higher federal spending is not needed and would increase the federal debt while discouraging people from working.
The fact that poverty did not rise more during an enormous economic disruption reflects the equally enormous response. Congress expanded unemployment benefits and food aid, doled out hundreds of billions of dollars to small businesses and sent direct checks to most Americans.
The Census Bureau estimated that the direct checks alone lifted 11.7 million people out of poverty last year; unemployment benefits and nutrition assistance prevented an additional 10.3 million people from falling into poverty, according to an analysis of the data by the New York Times.
“It all points toward the historic income support that was delivered in response to the pandemic and how successful it was at blunting what could have been a historic rise in poverty,” said Christopher Wimer, a co-director of the Center on Poverty and Social Policy at the Columbia University School of Social Work. “I imagine the momentum from 2020 will continue into 2021.”
Poverty rose much more after the previous recession, peaking at 16.1 percent in 2011, by the measure that takes fuller account of government assistance, and improving only slowly after that. Many economists have argued that the federal government did not do enough back then and pulled back aid too quickly.
Despite the more aggressive response this time, however, median household income last year fell 2.9 percent, adjusted for inflation, to about $68,000. That figure includes unemployment benefits but not relief checks or noncash benefits such as food stamps. The decline reflects the pandemic’s toll on jobs: About 13.7 million fewer people worked full time year-round compared with 2019.
Among those who kept their jobs, however, median earnings rose 6.9 percent.
The share of Americans without health insurance was virtually unchanged, according to the census report, a sign that pandemic measures and the Affordable Care Act may have helped people who would have otherwise lost coverage. But it is difficult to assess changes in health coverage last year. Census estimates conflicted with other government counts, and officials acknowledged problems with data collection during the pandemic.
The government defines poverty, under the more comprehensive definition, as an income level below about $30,000 for a family of four, although the exact threshold varies depending on family size, homeownership status and regional housing costs.
The decline in poverty last year was broad-based. It fell among all racial and ethnic groups, among all family types, and among Americans at every age and education level.
But government programs excluded some groups, such as immigrants without legal status and their families, and failed to reach others. Poverty was significantly higher than the overall average for Black and Hispanic Americans, foreign-born residents and those without college educations. Millions of people waited weeks or months to receive benefits, forcing many to turn to charities.
“We measure poverty annually, when the reality of poverty is faced on a day-to-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.
Nakitta Long, a single mother of two who was laid off from a North Carolina automotive plant at the start of the pandemic, said government aid helped her get back on her feet.
The first relief check helped cover rent and a car payment, and enhanced unemployment benefits helped sustain her family until she was called back to work in October.
“The stimulus relief, it has been a blessing for my family because there was so much uncertainty there financially,” said Long, 46.
Still, Long waited weeks to start receiving unemployment benefits. Then in July 2020, the $600-a-week federal supplement to state unemployment benefits lapsed.
She fell behind on bills, setting in motion events that ultimately left her family homeless for two months this year.
New aid programs adopted this year, including the expanded Child Tax Credit, helped Long, who moved into a new home last month. She said she had noticed improvements in her children, particularly her 5-year-old son.
“It was bad, but it could have been so much worse, and we have come out the other side once again unbroken,” Long said.
Many of the programs that helped people avert poverty last year have expired, even as the pandemic continues. An estimated 7.5 million people lost unemployment benefits this month after Congress allowed expansions of the program to lapse.