Pandemic Stimulus Checks Softened the Blow of Rising US Poverty Rates

Caucasian Mature woman posing with her son, very sad looking through window worried about loss of her job due Covid-19 pandemic.
Juanmonino / Getty Images

As U.S. household income fell amidst the pandemic, poverty rates have risen from a 60-year low. The official poverty rate in 2020 was 11.4% with 37.2 million people in poverty, up from 10.5% in 2019, making it the first increase in poverty after five consecutive annual declines, according to data released Tuesday from the U.S. Census Bureau.

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The Census Bureau considers a two-parent, two-child household making less than $26,246 in income to be living in poverty, noted Bloomberg; the measure also differs by size of the household.

Despite the increase in poverty, rates would have been much higher without intervention from the government, according to an analysis of data by James Sullivan at the University of Notre Dame’s Department of Economics and Bruce Meyer at the University of Chicago’s Harris School of Public Policy, as reported by Bloomberg.

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“For example, expanded unemployment insurance and the first round of stimulus checks prevented 12 million individuals from falling into poverty in the first few months of the pandemic,” they said.

Bloomberg also noted that the Supplemental Poverty Measure, which takes government assistance programs into account, declined by 2.6 points to 9.1% in 2020, the lowest since it started in 2009. This rate is lower than the official rate because of economic relief payments, moving 11.7 million people above the poverty line after the first two disbursements.

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David Johnson, a research professor at the Institute for Social Research and Ford School of Public Policy at the University of Michigan, told Bloomberg that data shows that the official poverty measure is outdated and “can’t be used to examine public policy.”

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

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