Whether or not there is a need for more stimulus checks is a matter of debate, but a recent piece of data suggests that the coronavirus stimulus checks have helped in reducing poverty. A report on Tuesday from the U.S. Census Bureau noted that the poverty rate dropped last year following massive federal aid enacted by the federal government due to the coronavirus pandemic.
Reputed short-seller Spruce Point Capital Management released its latest short report this week. The firm is shorting Canadian dairy and grocery manufacturer Saputo. Spruce Point chief Ben Axler believes the company is entering a phase of declining growth and highlights the financial stress and growing challenges he sees it facing, not only in Canada but Read More
The data from the U.S. Census Bureau noted that the supplemental poverty rate dropped from 11.8% in 2019 to 9.1% last year. This is the lowest recorded number since this data was first published in 2009.
In 2020, the poverty threshold income for a family of four was less than $26,496. The calculation of the supplemental poverty rate includes any government aid.
“The SPM provides an alternative way of measuring poverty in the United States and serves as an additional indicator of economic well-being,” the Census Bureau report said.
On the other hand, the official poverty rate, which doesn’t include any government aid, increased marginally to 11.4% from a record low of 10.5% in 2019.
This is the first time the supplemental rate has been less than the official poverty rate. The drop in the supplemental poverty rate speaks well of the government aid. The government aid, including the stimulus checks and unemployment benefits, helped lift millions out of poverty during the pandemic-induced recession.
The supplemental poverty rate may have dropped last year, but the median household income dropped last year as well. In 2020, the median household income dropped by 2.9% from $69,560 in 2019 to $67,521.
Further, the data noted an 11.5% drop in the full-time, year-round workers between 2019 and 2020. Also, the data found that most of the full-time, year-round job losses were at the lower end of the income scale.
Which Programs Benefited The Most?
Talking about the programs that made a significant impact on poverty, the Census Bureau estimates that the first two rounds of stimulus payments moved 11.7 million people from poverty.
Also, the unemployment benefits prevented 5.5 million people from falling into poverty, while the refundable tax credits prevented 5.3 million people from falling into poverty. Moreover, SNAP (Supplemental Nutrition Assistance Program), as well as free school lunches also made a positive impact on the lives of people living at or below the poverty line last year.
These gains on poverty could be a temporary thing as most relief measures have either expired or are expiring soon. However, more relief money is on the way in the form of the expanded child tax credit. Additionally, many states are also sending relief payments to their citizens.
Apart from these, Congressional Democrats are also working on a $3.5 trillion package that, if passed, would help to expand the social safety net.