One interesting outcome from the ongoing pandemic is that, at least according to the federal government, the share of people living in poverty in the United States fell to a record low last year.
The cause: Government aid through relief programs, unemployment benefits and stimulus money.
In the latest and most conclusive evidence that poverty fell because of government aid, the Census Bureau reported that median household income in 2020 decreased 2.9% between 2019 and 2020, and the official poverty rate increased 1 percentage point. Median household income was $67,521 in 2020, a decrease of 2.9% from the 2019 median of $69,560. This is the first statistically significant decline in median household income since 2011.
Between 2019 and 2020, the real median earnings of all workers decreased by 1.2%, while the real median earnings of full-time, year-round workers increased 6.9%. The total number of people with earnings decreased by about 3 million, while the number of full-time, year-round workers decreased by approximately 13.7 million.
The official poverty rate in 2020 was 11.4%, up 1% from 2019. This is the first increase in poverty after five consecutive annual declines. In 2020, there were 37.2 million people in poverty, approximately 3.3 million more than in 2019.
Meanwhile the percentage of people with health insurance coverage for all or part of 2020 was 91.4%. An estimated 8.6% of people, or 28.0 million, did not have health insurance at any point during 2020, according to the 2021 Current Population Survey Annual Social and Economic Supplement. Private health insurance coverage continued to be more prevalent than public coverage, at 66.5% and 34.8%, respectively. Some people may have more than one coverage type during the calendar year. Of the subtypes of health insurance, employment-based insurance was the most common subtype, covering 54.4% of the population for some or all of the calendar year.
According to a report on the New York Times website Tuesday afternoon, “The new data will almost surely feed into a debate in Washington about efforts by President Joe Biden and congressional leaders to enact a more lasting expansion of the safety net. Democrats’ $3.5 trillion plan, which is still taking shape, could include paid family and medical leave, government-supported child care and a permanent expansion of the Child Tax Credit.”
The report goes on to state, “Liberals cited the success of relief programs last year, which were also highlighted in an Agriculture Department report last week that showed that hunger did not rise in 2020, to argue that such policies ought to be continued and expanded. But conservatives argue that higher federal spending is not needed and would increase the federal debt while discouraging people from working.”
The report in the Times indicates the fact that poverty did not rise more during an enormous economic disruption reflects the equally enormous government response. Congress expanded unemployment benefits and food aid, doled out hundreds of billions of dollars to small businesses and sent direct checks to most American families. The Census Bureau estimated that the direct checks alone lifted 11.7 million people out of poverty last year, and that unemployment benefits prevented 5.5 million people from falling into poverty.
It is an appreciable shift, there is no question.
According to the census data, among those who kept their jobs, 2020 was a good year financially: Median earnings for full-time year-round workers rose 6.9 percent, adjusted for inflation. The government defines poverty as an income below about $13,000 for an individual, or about $26,000 for a family of four.
That is all good news, statistically.
But the broader question for Vermont — and, frankly, every state — is how does it translate into the broader economic picture. We all understand it is the fulcrum on which an extremist political debate will continue to ensue. But now we have to be looking for more permanent solutions to the tough issues of poverty in this nation — not the ones that can be fixed through handouts and printing more money.
It goes without saying that organizations that provide support for these vulnerable citizens and communities have been trying to advocate for and come up with long-term solutions long before this week’s report. Now, the work to lift individuals out of poverty really begins.
Visit www.census.gov/library/publications/2021/demo/p60-273.html to read the findings in two census reports: “Income and Poverty in the United States: 2020” and “Health Insurance Coverage in the United States: 2020.”