“Poverty Is a Policy Choice”: Stimulus, Unemployment Aid Slashed Poverty in 2020
Accounting for government aid programs, poverty fell in 2020 to the lowest rate on record since the Census Bureau began keeping records in 2009. The dip, which happened in spite of declining median household incomes last year, shows that the direct aid from the stimulus packages was incredibly effective at reducing poverty.
While the official poverty rate rose due in part to a 2.9 percent decrease in median household incomes, the supplemental poverty rate fell from 11.8 percent in 2019 to 9.1 percent in 2020. The supplemental poverty rate takes into account more government aid than the official rate, including things like food stamps, housing assistance and the stimulus checks.
The stimulus packages passed in 2020 helped significantly in the overall poverty reduction, the Census found. The $1,200 stimulus checks alone lifted 11.7 million people out of poverty. Supplemental unemployment aid — $600 a week for much of 2020, thanks in large part to Sen. Bernie Sanders (I-Vermont) — protected an additional 5.5 million people from experiencing poverty.
Without the stimulus payments, the Census Bureau wrote, the poverty rate would have been 12.7 percent rather than 9.1 percent. While the additional government aid helped lift millions out of poverty, Social Security still had the largest impact in 2020, lifting 26.5 million out of poverty.
The government aid worked in reducing poverty across the board: People of all ages, races, ethnicities and education levels saw a reduction, The Washington Post reports. Households headed by single moms and Black and Latinx people saw the largest declines.
The data shows the powerful impact of direct aid from the government, which was able to reverse some of the harmful effects of the pandemic on the economy, such as mass layoffs.
“What the data tells us is clear: when government responds to the needs of the working class, millions of families are lifted out of poverty,” Sanders wrote on Twitter in response to the Census report. “We must not stop here. We must pass the $3.5T reconciliation bill and invest in working families.”
To many progressives, reports such as these showing that aid in stimulus packages like last years’ bills and this year’s American Rescue Plan reduce poverty are proof positive that lawmakers should implement further direct aid measures.
“For the record, poverty dropped last year despite the pandemic — because of government aid. Lesson: Poverty is a policy choice,” former Labor Secretary Robert Reich wrote on Twitter.
Experts at the Economic Policy Institute (EPI) echoed Reich’s tweet, writing “The poverty rate reduction highlights how much poverty the nation and its policymakers tolerate is a choice.” EPI recommended immediately reinstating the supplemental unemployment checks, which ended nationally on Labor Day but were cut off prematurely by 26 states, nearly all of them with Republican governors.
Republicans piled onto the unemployment checks this year, blaming them for a so-called “worker shortage” that didn’t actually exist. But states that cut off the unemployment checks early didn’t find a significant increase in employment — in fact, data from the Department of Labor found that the states that stopped the unemployment checks had slightly slower job growth.
Data from Tuesday’s Census Bureau suggests that employment can have a limited effect on reducing poverty in comparison to direct relief programs. However, Republicans and conservative Democrats, have shown little interest in pursuing poverty reduction as a goal.