The coronavirus pandemic severely damaged the US economy and more than 8 million Americans have tumbled into poverty during a 6-month period of the coronavirus pandemic. New research says the US poverty rate in November jumped to 11.7%, up 2.4 percentage points from 9.6% in June. It was the biggest one-year increase in the last 60 years that the government has been keeping numbers. A professor of economics at Notre Dame, James X. Sullivan and an expert in poverty and inequality, and professor at the University of Chicago’s Harris School of Public Policy, Bruce D. Meyer are tracking the nearly real-time data on a dashboard that registers the economic impact of COVID-19. Their work shows the poverty actually decreased in the first few months after the virus first hit US soil this spring.
It was because of the federal stimulus payments, enhanced unemployment benefits, small-business loans, and other aid. But, it has shown a significant amount of increase since June. Millions of people were being pushed below the official poverty line of $26,200 for a family of four, even as the economy was beginning to recover when unemployment peaked at 14.7% in April. The official poverty estimates are typically available in September for the previous calendar year. The professors used Census data, including a question about monthly household income, to come up with their estimates. Sullivan informed CBS and said, “We realized when the pandemic hit there was all of a sudden urgency to what’s happening to poverty right now, and there was a pretty reasonable way to measure that”.
Sullivan added, “The patterns tell a pretty straightforward and striking story. At first, we saw a decline in poverty even though unemployment rates were rising sharply. The reason for that the expanded benefits through the CARES (Coronavirus Aid, Relief, and Economic Security) Act and from economic impact payments and more generous unemployment benefits and broader eligibility for them. Even though unemployment rates were rising and households lost a primary source of income, at least in the short term the stimulus households received exceeded what they lost. Twelve hundred dollars is a pretty big bonus for someone near the poverty line”. He was referring to the $1,200 stimulus payments ($2,400 for married couples) distributed to more than 160 million Americans. But those payments were a one-time event.