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

Taking into account government benefits, a smaller share of the population was living in poverty in 2020 even as the pandemic eliminated millions of jobs.,

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Poverty in U.S. declined last year as government aid made up for lost jobs.

Direct stimulus checks and other government programs kept economic fallout from the pandemic from being worse.
Direct stimulus checks and other government programs kept economic fallout from the pandemic from being worse.Credit…Spencer Platt/Getty Images
  • Sept. 14, 2021Updated 10:59 a.m. ET

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 last year actually declined by at least one measure 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 of poverty that accounts for the impact of government aid programs, which last year lifted millions of people out of poverty. The government’s official measure, 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.

“Despite the pandemic, the unemployment, the recession, poverty did not increase,” said Irwin Garfinkel, a co-director of the Center on Poverty and Social Policy at the Columbia University School of Social Work, referring to the alternative measure. “If it hadn’t been for the government benefits, poverty would have skyrocketed.”

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. 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.

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.

“It tells us it works to go big,” said Arloc Sherman, a poverty researcher at the Center on Budget and Policy Priorities, a progressive research group. “We had the answer all along. These policies are extremely effective when they’re actually used.”

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.

“We needed to balance concerns about poverty, which is at an all-time low, with concerns about the federal debt,” said Scott Winship, a senior fellow and the director of poverty studies at the American Enterprise Institute, a conservative group.

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