8 million have slipped into Poverty in US since May as govt aid has dried up

The number of poor people has grown by eight million since May, according to researchers at Columbia University, after falling by four million at the pandemic’s start as a result of a $2 trillion emergency package known as the Cares Act. Using a different definition of poverty, researchers from the University of Chicago and Notre Dame found that poverty has grown by six million people in the past three months, with circumstances worsening most for Black people and children.

 

WASHINGTON:

After an ambitious expansion of the safety net in the spring saved millions of people from poverty, the aid is now largely exhausted and poverty has returned to levels higher than before the coronavirus crisis, two new studies have found.

The number of poor people has grown by eight million since May, according to researchers at Columbia University, after falling by four million at the pandemic’s start as a result of a $2 trillion emergency package known as the Cares Act.

Using a different definition of poverty, researchers from the University of Chicago and Notre Dame found that poverty has grown by six million people in the past three months, with circumstances worsening most for Black people and children.

“These numbers are very concerning,” said Bruce D. Meyer, an economist at the University of Chicago and an author of the study. “They tell us people are having a lot more trouble paying their bills, paying their rent, putting food on the table.”

Underscoring those concerns, the Labor Department reported on Thursday that about 886,000 people filed new claims for unemployment benefits last week, an increase of nearly 77,000, or 9.5 percent, from the previous week. Adjusted for seasonal variations, the total was 898,000.

The recent rise in poverty has occurred despite an improving job market since May, an indication that the economy had been rebounding too slowly to offset the lost benefits. And now the economy is showing new signs of deceleration, amid layoffs, a surge in coronavirus cases and deadlocked talks in Washington over new stimulus.

The Democratic House has twice passed multitrillion-dollar packages to provide more help and to stimulate the economy, but members of a divided Republican Senate, questioning the cost and necessity, have proposed smaller plans.

President Trump has alternately demanded that Congress “go big” before the elections and canceled negotiations. On Thursday, he signaled he was ready to increase the size of previous White House offers, to accommodate Democrats, only to be rebuffed hours later by Senator Mitch McConnell, Republican of Kentucky and the majority leader.

The Cares Act included one-time payments for most households —$1,200 per adult and $500 per child — and a huge expansion of unemployment insurance.That expansion at least doubled the share of jobless workers who receive checks, the researchers estimated, by including gig workers and the self-employed through December. In addition, it added $600 to weekly aid through July — nearly tripling the average benefit. For about two-thirds of the beneficiaries, the bolstered checks more than replaced their lost wages.

At its peak in May, the aid kept more than 18 million people from poverty, the Columbia researchers found. But by September, that number had fallen to about four million.

“The Cares Act was unusually successful, but now it’s gone, and a lot more people are poor,” said Zachary Parolin, an author of the Columbia analysis.

While the Columbia model showed an improvement in September, the Chicago and Notre Dame analysts found poverty continued to grow.

Income volatility is especially hard on low-income families, who lack the savings or credit to keep essential bills paid. It acts as a kind of invisible tax, measured in units as varied as late fees, toxic stress and worse school outcomes for children. “The lack of predictability has all kinds of negative consequences,” said Bradley L. Hardy, an economist at American University, who notes the recent benefit fluctuations amplify the economic gyrations.


Comments