- Poverty rates fell from December to January with a new round of stimulus checks and unemployment benefits.
- However, Black Americans and those with a high school education or less still see greater rates.
- If more assistance isn’t put into place, poverty rates could rise again.
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Economists from the University of Chicago, University of Notre Dame, and Zhejiang University found that American poverty rates dropped when the most recent stimulus payments and unemployment benefits were enacted.
From December 2020 to January 2021, the poverty rate fell from 11.8% to 11.5%, in contrast with an increase from 9.3% last June. When the previous aid had expired, more than 8 million Americans fell into poverty.
Before the pandemic, the poverty rate had stood at 10.8% in January 2020. The first round of stimulus payments, along with the beefed up $US600 ($772) in weekly unemployment insurance, led to a declining poverty rate earlier in the pandemic.
The climb back up began after these extra benefits ended in July. Black Americans, children, and those with a high school education or less were particularly hard hit as poverty climbed in the second half of 2020.
Poverty fall “sharply” for those groups in January, but they still remain disproportionately impacted: Black Americans have more than double the poverty rate of white Americans, and those with a high school education or less have triple that of their more educated peers.
University of Chicago economist Bruce Meyer, one of the report’s co-authors, told Insider that poverty has risen “more for those who have historically and recently, as well, had much worse job prospects and have had a more difficult time earning the income that they need to support themselves and their families.”
“It’s really been a bit of a rollercoaster for poverty – not surprisingly, because we’ve had policy that’s been a roller coaster,” Meyer said.
Meyer said that at the peak of paying out those initial additional benefits, we were “paying out about $US100 ($129) billion a month in unemployment insurance. To give you an idea how to scale those numbers, at the peak of the Great Recession, we were paying out about $US100 ($129) billion a year in unemployment insurance.”
The report comes as House and Senate Democrats work to pass President Joe Biden’s $US1.9 ($2) trillion stimulus relief package, called the American Rescue Plan. The House is set to vote on the package on Friday.
It contains $US1,400 ($1,802) stimulus checks and an extra $US400 ($515) a week in unemployment benefits. But, as Insider’s Joseph Zeballos-Roig reported, Democrats are working with a thin margin of error. They want to enact those beefed-up unemployment benefits before the current ones expire on March 14.
Meyer said he thinks that benefits could be better targeted in terms of who they to go to and the amount paid, but millions do still remain unemployed.
“Unless we extend unemployment insurance and provide additional support beyond March when benefits end, I think we can expect poverty to rise again in the coming months,” he said. “Because we still have a lot of people out of work.”