The Pandemic Upside: Decline in Poverty
Life changed in March 2020 when schools shut down and millions were fired from their jobs, all from an under the radar disease. With 34 million people in the U.S. already in poverty going into the pandemic, the U.S. government had an increased responsibility for the new poverty population and those now in a more vulnerable situation. Since the mid-1900s, poverty has been on a gradual decline in the United States, with an unexpected drop just over the last year.
The basics of dealing with poverty, at first, seem quite simple. The U.S. Census Bureau sets the poverty line using estimated costs for families, relative to each family’s size, and comparing it to family income. Anyone who falls under it receives financial aid from the government with programs like SNAP (food stamps), Medicaid, and more. This simple math, however, does not take into account the unique situations for each and every individual family residing in the United States. During the pandemic, the U.S. government was forced to take these unique circumstances into account.
Photo Courtesy: Reuters
Through stimulus checks, eviction moratoriums, and extensions of pre-existing programs like food stamps and unemployment insurance, poverty has declined by nearly 45% over the course of the pandemic. Vox reported that with 93% of Americans receiving the first round of stimulus checks, 12.4 million people were able to escape poverty, and it is now up to the government to decide whether these 12.4 million will maintain this new economic status. With food stamp benefits expanding, another 7.9 million people came out on top of the poverty line. Lastly, unemployment insurance removed, potentially temporarily, another 6.7 million people from poverty. These numbers were drastically larger than the U.S. government had predicted, considering the poverty line for 2020, which was $26,200 for a family of four.
Spending on these specific programs reportedly amounted to $1 trillion. Although this extra aid proved to set poverty rates at record lows, the government could soon revert back to its original extent as its increased spending will be difficult to sustain. The increased monetary allocations directly dropped poverty rates in all demographic groups, according to The New York Times. Poverty rates significantly shrunk for all ages, races, and for residents in every state. Although this increased funding seems like the obvious solution to reduce poverty rates, Robert Rector, a Senior Research Fellow of the Heritage Foundation researching poverty, explains why it is not that simple. He stated “there’s no doubt that by shoveling trillions of dollars to the poor, you can reduce poverty, but that’s not efficient and it’s not good for the poor because it produces social marginalization. You want policies that encourage work and marriage, not undermine it.”
PBS reports that an estimated 12 million people will be cut out of federal funding when programs expire, mostly in December 2021. Many fear that the increased subsidies over the pandemic has encouraged unmotivated Americans to essentially give up on their job hunts, and therefore the economy will most likely sustain a negative shock when the end of 2021 comes around. Even when most Americans wish for secure jobs over stimulus checks. Many Americans had to completely change their decision making when it came to grocery shopping, health spending, educational spending, etc. American families were forced to prioritize even the essentials to their everyday lives. This will inevitably shift back to normalcy, which will probably put those American families in a place where they would need the government’s monetary assistance the most.
Although most will need this marginal assistance, the pandemic has affected different states in varying magnitudes. States such as Utah and Nebraska are interesting case studies, where their primary industries of agriculture, mining, etc. were not affected nearly as much as other states’ and industries. Through this, unemployment rates have been maintained at a super low percentage of 2.3%. However, New York is currently ranked #48 for their unemployment rates. There are many factors that explain the differences in state economies, but one of New York’s biggest issues due to the pandemic was, and still is, housing and rentals. With the suffering of one of the biggest industries in New York, it represents a possible correlation to its unemployment rates. This represents how it is not only every family’s unique situation that must be considered, but also the states’.
The alarming drops in poverty rates have proved to vastly aid millions of American families in the short term. With 2021 coming to an end, these families turn their attention to the U.S. government to see if they could lose it all in the blink of an eye or if the government will continue to assist them through the ongoing pandemic.