Poverty in the U.S. Declined Thanks to Government Aid, Census Report Shows

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Poverty in the U.S. Declined Thanks to Government Aid, Census Report Shows

The coronavirus pandemic last year left millions of people 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 actually declined because of the government’s enormous relief effort.

About 9.1 percent of Americans were poor last year, the Census Bureau reported Tuesday, down from 11.8 percent in 2019. That is based on a measure that accounts for the impact of government aid programs, which last year lifted millions of people out of poverty. The government’s official measure of poverty, which leaves out some major aid programs, rose to 11.4 percent, from a record low 10.5 percent in 2019.

The fact that poverty did not rise more during such an enormous economic disruption reflects the equally enormous government response. Congress expanded unemployment benefits and food aid, doled out hundreds of billions of dollars to small businesses and sent direct checks to most American households. The Census Bureau estimated that the direct checks alone lifted 11.7 million people out of poverty last year, and that unemployment benefits prevented 5.5 million people from falling into poverty.

“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 drastically after the last recession, peaking at 15.1 percent in 2010 and improving only slowly after that.

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 taken into account, was significantly higher than the overall average for Black and Hispanic Americans, foreign-born residents and those without college educations. Millions of people endured 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-to-day basis,” said Hilary Hoynes, an economist at the University of California, Berkeley, who has studied the government’s response to the pandemic.

Median household income last year fell 2.9 percent, adjusted for inflation, to about $68,000, a figure that includes unemployment benefits but not stimulus checks or noncash benefits such as food stamps. The decline reflects the huge job losses caused by the pandemic: Some three million fewer people worked at all in 2020 than in 2019, and 13.7 million fewer people worked full-time year-round. Among those who kept their jobs, however, 2020 was a good year financially: Median earnings for full-time year-round workers rose 6.9 percent, adjusted for inflation.

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 pandemic-era expansions of the program to lapse.

The new data could feed into efforts by President Biden and congressional leaders to enact a more lasting expansion of the safety net. 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 said the success of relief programs last year showed that such policies ought to be continued and expanded.

“The key thing is that we see the extremely powerful anti-poverty and pro-middle class income impacts of the government response,” said Jared Bernstein, a member of the White House Council of Economic Advisers. He argued that the success should encourage lawmakers to enact Mr. Biden’s longer-term agenda for the economy.

“It’s one thing to temporarily lift people out of poverty — hugely important — but you can’t stop there,” Mr. Bernstein said. “We have to make sure that people don’t fall back into poverty after these temporary measures abate.”

But many conservatives contend that although some expansion of government aid was appropriate during the pandemic, those programs should be wound down as the economy recovers.

“Policymakers did a remarkable job last March enacting CARES and other legislation, lending to businesses, providing loan forbearance, expanding the safety net,” Scott Winship, a senior fellow and the director of poverty studies at the American Enterprise Institute, a conservative group, wrote in reaction to the data, referring to an early pandemic aid bill, which included $2 trillion in spending. “But we should have pivoted to other priorities thereafter.”

Source: New York Times

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