Poverty increased in 2020, but stimulus checks and tightened unemployment benefits have been a lifeline for millions of Americans

• The official poverty rate increased by around one percentage point, from 10.5% in 2019 to 11.4% in 2020.
• It could have been much worse – increased unemployment benefits and stimulus checks helped lift millions out of poverty in 2020.
• The supplementary poverty measure, which includes items such as tax credits and stimulus checks, shows that the poverty measure fell to 9.1% in 2020.

In 2020, poverty in America increased. But it could have been a lot worse.

Over the past 18 months, Americans have been laid off or put on leave en masse. Some families struggled to get enough to eat for the day. first time, or experienced food insecurity, in the midst of the pandemic. The unemployment rate hit an all-time high in April 2020 and millions of Americans relied on unemployment benefits. By the end of 2020, about 4 million Americans were considered long-term unemployed.

Because of all of this, the official poverty rate increased by 1.0 percentage point, as measured by the Census Bureau. However, another measure, which includes income like stimulus checks and government programs and is called the Supplementary measure of poverty (SPM), shows that these benefits helped reduce the number of Americans living in poverty in 2020 by 2.6 percentage points.

Stimulus payments, expansions of government programs and other programs used by Americans have helped lift millions out of poverty, as the following graph shows:

Social Security has had a big impact on lifting Americans out of poverty. According to census data, Social Security lifted 26.5 million people out of poverty in 2020. Stimulus checks lifted 11.7 million people out of poverty. Unemployment insurance did not have as big an effect as the first two stimulus payments, but the increase in unemployment benefits lifted 5.5 million people out of poverty.

Unlike the supplementary poverty measure, the official poverty rate increased last year.

There were 37.2 million people in poverty in 2020, 3.3 million more than in 2019. The official poverty rate has increased for the first time in five consecutive years, according to the latest Census Bureau report . report and as underlined in the following table. The rate fell from a low of 10.5% in 2019 to 11.4% in 2020.

Bruce Meyer, a professor at the Harris School of Public Policy at the University of Chicago whose research area includes poverty, called the annual increase a percentage point while the SPM found a “striking” decrease in poverty. an email to Insider.

The official rate uses pre-tax cash income and does not include items like stimulus checks, tax credits, or perks like SNAP like the SPM does. So that doesn’t take into account all the government expansions and incentives given to Americans during the pandemic.

“The SPM is a measure of poverty after taxes and transfers, so it takes into account the expansion of UI (like the official measure of poverty), but also includes stimulus payments and SNAP expansions. that are not included in the official definition of poverty “, the census bureau wrote.

SPM shows how expanded programs and aid during pandemic helped Americans lift themselves out of poverty

The additional poverty measure fell from 11.8% in 2019 to 9.1% in 2020. The Census Bureau notes that this is the lowest rate since 2009, the first year the government agency released these rates.

Additionally, Zach Parolin, a senior researcher at the Center on Poverty and Social Policy at Columbia University and an assistant professor at Bocconi University told Insider in an email that the Center’s research on poverty and policy social show that “this is the lowest PMS poverty rate since at least 1967, the first year for which we have The data. “

“The SPM has been more successful in capturing poverty reduction thanks to the government’s unprecedented rescue effort, although the survey on which it relies heavily underestimates the effect of UI, so the true poverty reduction was probably more than 2.6 percent, ”Meyer said. Insider said in an email.

Parolin called today’s report the additional poverty measure “remarkable”.

“In a year of high unemployment, a global health crisis and great uncertainty, the US welfare state has risen to the challenge and led to a record high SPM poverty rate,” Parolin told Insider in an email.

Parolin told Insider in an email that a permanent extension of the child tax credit, which is only temporarily extended for one year, would be one way to help keep poverty rates low at the future. Research from Columbia’s Center on Poverty and Social Policy shows that the child tax credit helped lift 3 million children out of poverty after just the first monthly advance payment.

“Today’s numbers demonstrate the incredible capacity of the US welfare state when properly funded and enforced,” Parolin wrote. “During a turbulent year, the CARES law and other income transfers brought food difficulties under control and led to a record PMS poverty rate. It is a great success.