More than 8 million people fell into poverty in the U.S. in the second half of 2020, according to a group of economists who say they have developed a new way to provide “near-real-time” estimates using Census data.
In an analysis released last week, the economists – Jeehoon Han of Zhejiang University, Bruce D. Meyer of the University of Chicago, and James X. Sullivan of the University of Notre Dame – said that the poverty rate fell in the first six months of 2020, dropping from 10.8% in January to 9.3% in June, driven lower by the generous unemployment and relief payments provided by the federal government.
But the expiration of those benefits, along with new waves of Covid-related layoffs, have pushed the poverty rate up again:
“Poverty has risen sharply, however, in recent months as some of the benefits that were part of the government relief package have expired. Poverty rose by 2.4 percentage points (after rounding) from 9.3 percent in June to 11.8 percent in December, adding 8.1 million people to the ranks of the poor. Poverty has risen each month since June, even though the unemployment rate has fallen by 40 percent (from 11.1 percent to 6.7 percent) over this period. This disconnect between poverty and unemployment is not surprising given that some government benefits have expired, unemployment insurance benefits are typically only about half of pre-job loss earnings, and five million people have left the labor force in the past year and therefore are not counted as unemployed. Despite the decline early in the pandemic, poverty is now higher than it was at the start of the year.”