Poverty in the U.S. Declined Thanks to Government Aid, Census Report Shows
“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.
By the government’s official definition, the number of people living in poverty jumped by 3.3 million in 2020, to 37.2 million, the biggest annual increase on record. But economists have long criticized that definition, which dates back to the 1960s, and said it did a particularly poor job of reflecting reality last year.
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, which were officially considered tax rebates. 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 not captured in the official measure. Normally, the supplemental measure is higher than the official measure; 2020 was the first year in which the supplemental measure was lower.
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.
“The key thing is that we see the extremely powerful anti-poverty and pro-middle class income impacts of the government response,” said Jared Bernstein, a member of the White House Council of Economic Advisers. He argued that the success should encourage lawmakers to enact Mr. Biden’s longer-term agenda for the economy.
“It’s one thing to temporarily lift people out of poverty — hugely important — but you can’t stop there,” Mr. Bernstein said. “We have to make sure that people don’t fall back into poverty after these temporary measures abate.”