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

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

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Notes: The supplemental poverty measure includes noncash and after-tax government aid; estimates for 2019 and 2020 reflect revised methodology.

Sources: Census Bureau; Columbia University

By The New York Times

Sept. 14, 2021Updated 5:53 p.m. ET

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 on 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 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 stimulus 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.

Median household income

$70

thousand

60

50

2020:

$67,521

40

Down 2.9%

30

20

10

Adjusted for inflation

0

’70

’80

’90

’00

’10

’20

Median household income

$70

thousand

60

50

2020:

$67,521

40

Down 2.9%

30

20

10

Adjusted for inflation

0

’70

’80

’90

’00

’10

’20

Source: Census Bureau

By The New York Times

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 Bureau 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 undocumented immigrants 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 stimulus 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,” Ms. Long, 46, said.

Still, Ms. 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 Ms. 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,” Ms. Long said.

By the government’s official definition, the number of people living in poverty jumped by 3.3 million in 2020, to 37.2 million, among the biggest annual increases on record. But economists have long criticized that definition, which dates to the 1960s, and said it did a particularly poor job of reflecting reality last year.

ImageMillions of people endured delays of weeks or months before receiving benefits, forcing many to seek help from food banks or other charities.
Millions of people endured delays of weeks or months before receiving benefits, forcing many to seek help from food banks or other charities.Credit…Gabby Jones for The New York Times

The official measure ignores the impact of many government programs, such as food and housing assistance and tax credits. This year, it also ignored the direct checks sent to households.

In recent years, the Census Bureau has produced an alternative poverty rate, known as the Supplemental Poverty Measure, which includes those programs and also factors in regional differences in housing costs, medical expenses and other costs.

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.

Jen Dessinger, a photographer who lives in New York City and Los Angeles, said work dried up abruptly at the start of the pandemic. A freelancer, she didn’t qualify for traditional unemployment benefits but eventually received help under a federal program created last year to help people who fell outside the regular system.

Now that program has ended in the middle of another surge in coronavirus cases. Ms. Dessinger said a single positive coronavirus case could shut down a photo shoot. “It’s made it a more desperate situation,” she said.

Democrats on Tuesday said experiences like Ms. Dessinger’s showed both the potential for government aid to protect people from financial ruin, and the need for a more expansive, permanent safety net that can support people in bad and good times.

A White House economist, Jared Bernstein, said on Tuesday that the new poverty data should encourage lawmakers to enact the $3.5 trillion Democratic measure that includes much of Mr. Biden’s economic agenda, which the administration argues will create more and better-paying jobs.

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

But even as Democrats cheered the Tuesday report, most Republican lawmakers, who were in control of the Senate and the White House last year, did not issue statements promoting the poverty numbers. That may be a reflection of the party’s unified opposition to the Democratic push for more social programs, which the Senate minority leader, Mitch McConnell, described on Monday as a “reckless taxing and spending spree.”

Conservative policy experts said that although some expansion of government aid was appropriate during the pandemic, those programs should be wound down, not expanded, as the economy healed.

“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 around $2 trillion in spending. “But we should have pivoted to other priorities thereafter.”

Jason DeParle and Margot Sanger-Katz contributed reporting.

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