Poverty went down in 2020 thanks to government help

As the pandemic raged throughout 2020, poverty declined in the United States thanks to massive amounts of federal aid, according to a report released Tuesday.

The U.S. Census Bureau indicated that 11.7 million Americans were lifted out of poverty by government stimulus checks, increased food-stamp benefits, augmented unemployment insurance, tax credits, and other federal interventions.

As a result, around 9.1% of Americans were living in poverty in 2020, down from 11.8% in 2019, according to the Supplemental Poverty Measure (SPM).

At the same time, however, the report also showed that the U.S. median household income decreased in 2020 to $67,521, a drop of 2.9% from $69,560 in 2019. This is the first statistically significant decline in median household income since 2011.

“This is a unique economic moment,” said Ashley Putnam, director of the Economic Growth & Mobility Project at the Federal Reserve Bank of Philadelphia. “We’re seeing income go down, but we’re also seeing the positive effects of safety-net programs. While people have been struggling, they experienced a little bit of security.”

Because the SPM is designed to take into account benefits people receive, it differs from the official poverty measure, which the Census Bureau also calculated.

That rate in 2020 was 11.4%, an increase of one percentage point over 2019.

Under that measure, this is the first increase in poverty after five consecutive years of declining rates, according to the Census Bureau. In 2020, the annual U.S. poverty rate for a family of four was $26,496.

These findings were contained in two Census Bureau reports: Income and Poverty in the United States: 2020 and Health Insurance Coverage in the United States: 2020.

Assessing how bipartisan government intervention helped millions during the wreckage of the 2020 COVID-19 year, Luke Shaefer, director of Poverty Solutions at the University of Michigan, said it was “miraculous how effective the approach was in the face of economic crisis. I don’t think people appreciate how effective the safety-net response was. I’m really stunned by it.

“It’s remarkable. I would say historic.”

Expanded unemployment insurance alone prevented 5.5 million Americans from falling into poverty in 2020, Census figures show.

That the pandemic “did a big number on the economy” is reflected in fallen median household incomes, noted Mark Zandi, chief economist at Moody’s Analytics in West Chester. However, the damage that decrease has inflicted on millions of households was mitigated in part by the $3 trillion doled out in 2020 by both sides of the political aisle “showing government really had our backs,” Zandi said. “Most Americans received some benefit from the federal government during the pandemic.”

The influx of government aid during the pandemic in 2020 reminded Janet Currie, professor of economics and public affairs at Princeton University, of the 1980s, when concern for the poverty among older Americans engendered an increase in Social Security money “that greatly reduced poverty of the elderly.”

She added: “With COVID, we’ve seen a similar massive experiment to help families. Give people income supports, and they’re better off.”

Maria Kefalas, a sociologist at St. Joseph’s University, agreed.

“I tell my students that poverty is not a complicated issue like climate change,” she said. “In 2020 during the pandemic, we took a nice dramatic chunk out of poverty with government money when people needed it. Invest in families and children, and you’ll make them healthier.”

Statistics in the Census report weren’t local. But, said Temple University sociologist Judith Levine, director of the school’s Public Policy Lab, in every Census report, Philadelphia “looks much worse than the nation as a whole, with extremely high rates of deep poverty,” which refers to people living below half the poverty line.

“We can assume that Philadelphians are suffering much more on average than people nationally,” she said, “particularly the children.”

Recent figures show that nearly one-third of Philadelphia children live in poverty.

In 2019, the Census reported that Philadelphia’s poverty rate was 23.3%. Though it had fallen from previous years, it was still the highest among the 10 most populous U.S. cities. Its median household income, which had risen slightly over the previous year, was $47,474.

Nationwide, the Supplemental Poverty Measure showed that 14.6% of Black Americans lived in poverty in 2020, more than double the white figure of 6.5%, according to Alejandra Montoya-Boyer, policy director at Prosperity Now, a Washington-based advocacy group dedicated to advancing equity.

“We are still seeing massive racial wealth inequality,” she said. “The way we approach helping Black communities in poverty is not working.”

Recently released U.S. Department of Agriculture data showed there was a 9% increase in food insecurity among Americans from 2019 to 2020. After Tuesday’s Census report was released, Hunger Free America, a New York-based nonprofit, claimed hunger would have been much higher “if the federal government had not stepped in and provided necessary assistance to families in need.”

On Tuesday, the Census Bureau also reported that the percentage of people with health insurance coverage for all or part of 2020 was 91.4%. An estimated 8.6% of people, or 28.0 million, did not have health insurance at any point during 2020. That’s up from 26.1 million in 2019.

It’s important to remember that the pandemic “impacted people already living on the edge,” noted Renee Koubiadis, antipoverty program director at New Jersey Citizen Action, a statewide nonprofit in Middlesex County.

So, while government intervention helped those people immensely, advocates say, the decisions to halt increased unemployment benefits, sunset the boost in food stamps, and end the moratorium on evictions can wreck the progress the Census report highlights.

“The major lesson I’m taking from this report is that things would have been so much worse for people had it not been the action of Congress to provide people with help,” said Deborah Weinstein, executive director of the Coalition on Human Needs, a Washington-based nonprofit that helps low-income Americans. “Congress had better continue these investments, because we’re not out of the woods yet.”

Kefalas concurred, adding: “Sometimes I believe it’s not that we can’t solve poverty. It’s that many people simply don’t want to.”