Government aid helped reduce poverty in 2020, Census data shows

By Jonnelle Marte

Direct cash payments to households and generous unemployment benefits helped to keep millions of Americans out of poverty after the coronavirus pandemic severely disrupted the U.S. economy and pushed people out of work, according to a government survey released on Tuesday.

The stimulus payments the federal government sent out to most U.S. households in the middle of the pandemic helped to lift 11.7 million people out of poverty last year, the U.S. Census Bureau said. Support offered through jobless benefits, which were enhanced with federal funds, also helped as unemployment soared because of the crisis, the report showed.

“I think this really shows the importance of the social safety net,” said Liana Fox, chief of the Census Bureau’s poverty statistics branch.

The poverty rate dropped to 9.1% in 2020 from 11.8% in 2019, according to a measure that takes into account government support offered through programs such as food assistance and the stimulus checks.

In contrast, the official U.S. poverty rate, which does not include the stimulus checks or some other government programs, rose to 11.4% from 10.5% in 2019, the first increase after five years of declines. And real median household income, a measure that includes unemployment benefits but not the pandemic relief checks, decreased to about $67,500 in 2020, down 2.9% from 2019.

The report comes days after enhanced unemployment benefits expired across the country, a shift that threatens to slow economic growth after leaving millions of job seekers with smaller payouts or no benefits at all.

Some businesses and lawmakers hoped reducing benefits would lead to an uptick in job applicants, but economists say obstacles securing childcare and fears of the virus may still be keeping some people out of work.

President Joe Biden and other Democrats are pushing for more investments in programs that could subsidize childcare costs, permanently expand tax credits for parents and provide other support to households. But some of those efforts could face resistance from Republicans who say the support is needed less as the economy rebounds.

The Census report illustrated the economic effects of the pandemic, which disproportionately affected women, minorities and low-wage workers.

The total number of people who worked at all in 2020 decreased by about 3 million from 2019. The number of people who worked full time for the entire year dropped by 13.7 million, the largest annual decrease since the Census began tracking that figure in 1967.

Earnings for working women dropped by 1.2% in 2020 from the year before, while men did not see a statistically significant change in income. And households in every region except for the Northeast saw notable declines in real median income from 2019, with the Midwest experiencing the biggest drop.

Reuters