US poverty fell in 2020 as government support offset pandemic damage

US poverty fell in 2020 as government support offset pandemic damage

Figures released by Census Bureau showing drop in poverty rate to 9.1% bolster arguments about effectiveness of state intervention

A family's stimulus check from the US Treasury for the coronavirus aid.

in New York

Last modified on Tue 14 Sep 2021 13.44 EDT

US poverty fell in 2020, evidence that government aid can lift millions of Americans out of poverty – even in a global health and economic crisis.

The first months of 2020 were marked by unemployment levels unseen since the Great Depression, but the US supplemental poverty rate fell to 9.1% in 2020 from 11.7% the year before, according to Census Bureau estimates released on Tuesday.

The Census Bureau produces two estimates on poverty: the official rate which only looks at cash resources, and the supplemental poverty measure (SPM), which includes benefits such as pandemic relief aid.

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The official estimate rose slightly in 2020 to 11.4%, up from a record low of 10.5% the year before. In 2020, more than 37 million Americans lived below the poverty line.

The supplemental measure, however, showed that two rounds of stimulus checks lifted 11.7 million people out of poverty in 2020. Expanded unemployment benefits also lifted 5.5 million people out of poverty and decreased poverty across all racial groups and all age groups, according to the census.

Liana Fox, chief of the poverty statistics branch, social, economic and housing statistics division of the Census Bureau, told reporters: “This really shows the importance of the social safety net.”

Most US adults qualified for the first two economic stimulus checks, collecting up to $1,800 each.

The federal government also provided $600 a week in unemployment benefits, roughly equivalent to $15 per hour, for four months in 2020 and expanded who was eligible to collect them. Now, out-of-work adults can collect unemployment benefits only from their state government, where caps can be as low as $235 a week.

Elise Gould, a senior economist at the Economic Policy Institute, said the losses to income and poverty would have been far worse without government intervention.

“Hopefully we’ve learned that unemployment insurance is vital and we shouldn’t have to rely on ad-hoc passage of these programs, we should be shoring them up so they are ready to react when needed and aren’t turned off based on political whim,” Gould said.

Several studies have pointed to the positive effects government programs, including a child tax credit implemented this summer, had during the pandemic, but mainstream politicians from the two dominant US political parties have for decades scorned government aid.

Joe Biden is leading the Democrats’ attempt to reverse this trend and strengthen the US social safety net with a $3.5tn spending bill that could include required paid parental leave and lower the costs of childcare for families.

“This release is an important reminder of the essential role of the government safety net in alleviating the economic impacts of the coronavirus pandemic on economically vulnerable households in 2020,” said the White House council of economic advisers.

The Census Bureau on Tuesday also released reports on household income and health insurance coverage in 2020.

Household incomes declined by 2.9% to $67,500 – the first statistically significant decline since 2011.

Health insurance coverage rates stayed steady – with 91.4% of people covered by health insurance for all or part of 2020 – despite concerns earlier in the pandemic that job losses would translate to a disastrous drop in coverage because nearly half of Americans have health insurance through their employer.

Still, 28 million Americans did not have health insurance at any point last year. During that period, some of the country’s largest health insurers, including UnitedHealth Group and Anthem, doubled their profits.

Though there was no significant shift in overall coverage, there was a 0.8% percentage-point decrease in people covered by private insurance between early 2019 and early 2021.

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