Poverty Rate Soared in 2022 as Pandemic Programs Came to an End

Poverty Rate Soared in 2022 as Pandemic Programs Came to an End

© Carlos Barria / Reuters

A key measure of poverty in the U.S. jumped by 4.6 percentage points in 2022, according to new data released Tuesday by the U.S. Census Bureau. The big jump in poverty, which translates to an additional 15.3 million people falling below the poverty line, occurred as aid programs that had provided a financial cushion to millions of households during the Covid-19 pandemic came to an end, even as another legacy of the pandemic era, inflation, raised the cost of living.

Although the official poverty rate in 2022 was 11.5%, slightly lower than the 11.6% rate recorded a year earlier, a more comprehensive gauge known as the Supplemental Poverty Measure showed a poverty rate of 12.4% in 2022, up from 7.8% in 2021. The SPM includes the effects of a wide range of government programs on poverty and is widely seen as providing a more accurate picture of poverty in the U.S. than the standard measure.

The increase in poverty among children was particularly pronounced, rising from a record low of 5.2% in 2021 to 12.4% in 2022, as measured by the SPM. The end of the enhanced Child Tax Credit, which temporarily provided direct cash payments to millions of households with young children, played a significant role in that increase.

A focus on policy: The White House highlighted the role of policymaking in the well-being of American citizens. “Today’s data tell an important story about consequential impacts of public policy for low-income Americans’ living standards,” the Council of Economic Advisers said in a blog post. “The Biden-Harris Administration has shown that, with targeted tax policies, we can substantially lower the rate of poverty, in general, and child poverty, in particular. Today’s release unequivocally shows the flip side of that insight: allowing these policies to lapse sharply raises poverty.”

Calling the year-over-year change in poverty “stunning,” Sharon Parrott, president of the liberal Center on Budget and Policy Priorities, also focused on the importance of public policy. “The rise in the poverty rate, the largest on record in over 50 years both overall and for children, underscores the critical role that policy choices play in the level of poverty and hardship in the country," Parrot said in a statement.  “If Congress had continued the American Rescue Plan’s Child Tax Credit increase in 2022, about 3 million additional children would have been kept out of poverty, preventing more than half of the 5.2 million increase in the number of children in poverty last year … [and] the child poverty rate would have been about 8.4 percent rather than 12.4 percent,” she added.

Writing at The Washington Post, columnist Catherine Rampell focused on the capricious nature of the largest increase in child poverty on record. “For the most part, these kids didn’t become poor because the economy is lousy, or their parents were fired, or they were newly orphaned,” she wrote. “Most fell below the poverty threshold because, as a country, we chose to make them poor. Specifically, we chose to make them poor again, by snatching a short-lived safety-net program away.”

And at Politico, reporter Adam Cancryn underlined the shifting political landscape that serves as a background for the report. “President Joe Biden’s war on poverty is unraveling fast,” he wrote. “Just two years after orchestrating the largest expansion of the U.S. safety net in a half-century, Biden’s $2 trillion bet that big-government policies could vastly improve life for the poorest Americans is coming to a close. The historic injection of pandemic-era aid was, by many measures, a clear success. And it may never happen again.”

Median income drops again: The Census also reported that median income of U.S. households fell by 2.3% in 2022, to $74,580, as inflation ate away at nominal gains. Median income has fallen by 4.7% since 2019, when it reached a peak of $78,250.

More recently, however, incomes have seen positive growth in real terms as the labor market remains resilient and inflation eases. “Shifting into the present and into the future, the prospects are better for wages to make up for some of the ground lost during the last couple of years,” Bill Adams, chief economist at Comerica Bank, told The Wall Street Journal.

The White House said the latest income data only confirms the importance of specific policy choices. “While high inflation contributed to the decline in real median household income in 2022, our pursuit of tight labor markets and lower price pressures have helped to deliver rising real incomes and wages since 2022,” the Council of Economic Advisers said.