Confirmed - COVID relief programs kept millions of Americans from going under in 2020

While there was a wealth of information that came out from today's annual Income and Poverty report from the Census, this stat blew me away.

Absolutely incredible: Census says poverty rate **fell** in 2020 ***during one of the worst labor market shocks in US history***, due to the combo of stimulus checks/federal relief that reached millions both in and outside the workforce. Reflects limits of jobs to reduce poverty. https://t.co/rgOKZo50qi

— Jeff Stein (@JStein_WaPo) September 14, 2021

That's despite a drop in median household income of more than $2,000, and the largest job losses since the Great Depression. So how did that happen? Let's go into the Supplemental Poverty Measure, and go over the difference between the supplemental figure and the “official” poverty measure.

Income used for estimating the official poverty measure includes cash benefits from the government (e.g., Social Security, unemployment insurance benefits, public assistance benefits, and workers’ compensation benefits), but does not take into account taxes or noncash benefits aimed at improving the economic situation of the population. The SPM incorporates all of these elements, adding cash benefits, noncash transfers, and stimulus payments, while subtracting necessary expenses such as taxes, medical expenses, and expenses related to work. An important contribution of the SPM is that it allows us to gauge the potential magnitude of the effect of tax credits and transfers in alleviating poverty. We can also examine the effects of nondiscretionary expenses such as work and medical expenses.

What’s remarkable is that the Supplemental Poverty Measure has traditionally said poverty is worse than the official measure, due to the high cost of living in many places and other expenses. That flipped big-time with the huge boost in assistance after COVID broke out and millions were thrown out of work.

The Census Bureau quanitifes the effect that the social programs and costly expenses have on either putting people out of or into poverty, and it is quite illuminating.

Figure 8 shows the effect that various additions and subtractions had on the number of people who would have been considered poor in 2020, holding all else the same and assuming no behavioral changes. Additions and subtractions are shown for the total population and for three age groups. Additions shown in the figure include cash benefits, also included in the official measure, as well as noncash benefits included only in the SPM. This allows us to examine the effects of government transfers on poverty estimates. Since child support paid is subtracted from income, we also examine the effect of child support received on alleviating poverty. Child support payments received are counted as income in both the official measure and the SPM (but child support paid is only deducted in the SPM).

Social Security is a typical support that keeps millions afloat, but look at how the next four items helped to keep Americans out of poverty in 2020. All of those items were part of COVID relief packages, from stimulus checks, to expanded unemployment benefits, to the Child Tax Credit and other breaks, and in the Feds covering more of the cost of SNAP and school lunches.

Locally, Wisconsin was one of 30 states to have a significantly lower Supplemental Poverty Rate (6.9%) vs its “official” poverty rate (8.3%) – affecting 88,000 state residents (imagine if we had expanded Medicaid on top of it!). While we lost jobs and had shutdowns like everyone else, it does seem like the state survived 2020 better than many others, and fortunately we have a Governor who believes in using COVID relief funds for actual services and subsidies to hammered industries, along with continuing expanded unemployment benefits. That seems to be doing a better job at allaying poverty than trying to score points with Trump trash and allowing this pandemic to continue, while banning measures that may mitigate the spread of COVID (Hey there, Confederacy!)

The lower SPM also shows the danger that comes with allowing the COVID relief measures to fade away with no additional supports to replace them, as so many Americans remain close to the edge, with the country still 5.3 million jobs below our pre-COVID peak. Fortunately, the Dems' infrastructure plan in DC would expand services such as child care and long-term care that try to remove barriers to work and keeps from driving people into poverty, while keeping the child tax credit that was crucial for so many Americans in the tough times of 2020.

Poverty in the US declined during the pandemic because out imperfect political system sort of worked. What this graph shows is that the level of poverty in the US is a choice and that the social safety net works if given a chance. pic.twitter.com/5oeTT86lvA

— Don Moynihan (@donmoyn) September 14, 2021

I also don't think it was a coincidence that these measures were put in place when a Republican president and Republican Senate were trying to stay in power in 2020. Even GOPs know that helping the poor, providing a robust safety net, and giving checks to most Americans helps the economy even in the worst of times. Which tells you that their crocodile tears about deficits and debt in 2021 has everything to do with trying to hurt Dems' chances in 2022, and nothing to do with any kind of real beliefs.