The number of people living in poverty in the United States has grown by 8 million since May, finds a new study co-authored by Teachers College economist Jordan Matsudaira and researchers at Columbia University’s Center on Poverty & Social Policy.
The number had fallen by four million at the outset of the COVID pandemic because of the $2 trillion emergency Cares Act, but, as reported in The New York Times, it has grown in recent months after the expiration of the CARES Act’s unemployment supplement of $600 per week.
The report also finds that “increases in monthly poverty rates have been particularly acute for Black and Hispanic individuals, as well as for children.”
“Given projections that high unemployment rates may persist throughout the next year, additional income transfers are likely necessary to blunt further increases in poverty,” write the report’s authors.
[Read the full paper, “Monthly Poverty Rates in the United States during the COVID-19 Pandemic,” which Matsudaira published with Zachary Parolin and Megan Curran, Post-Doctoral Research Scientists at Columbia University’s Center on Poverty & Social Policy; Jane Waldfogel, an affiliated faculty member at the Center who is Compton Foundation Centennial Professor of Social Work for the Prevention of Children’s and Youth Problems at the Columbia School of Social Work; and Christopher Wimer, the Center’s Co-Director.]
“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,” reports the Times. “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.”
A key motivation behind our work is that in a time of upheaval like we’re in right now, having a poverty-rate estimate from a full year ago, when the nation was at the peak of a historic economic expansion, is not providing policymakers with the information they need to respond to an evolving crisis.
A major innovation of the new study is the researchers’ development of a method to make high-frequency estimates of the poverty rate based on families’ monthly resources.
“The government only releases its official statistics once a year, in September, which creates a big time-lag between its numbers and what’s happening in the present moment,” says Matsudaira, Associate Professor of Economics & Education Policy, who served from 2013 to 2015 as Chief Economist on President Obama’s Council of Economic Advisers. “So, for example, the report the government released last month was based on numbers from 2019. A key motivation behind our work is that in a time of upheaval like we’re in right now, having a poverty-rate estimate from a full year ago, when the nation was at the peak of a historic economic expansion, is not providing policymakers with the information they need to respond to an evolving crisis.”
The most important takeaway from our study is that the expiration of the Cares Act has caused an uptick in people with resources below the poverty line. We need action from Congress to help those people.
Matsudaira, who is also Senior Research Scholar at TC’s Community College Research Center, says that the new study uses a variety of statistical modeling methods to “take a relatively limited set of up-to-date high-frequency signals of how the economy is performing, match them with year-old information about people’s poverty status, and then make an estimate of where they stand now.” The study also “layers in some simulations in order to model the impact of polices evolving in real time — for example, changes in unemployment insurance.”
The government considers an urban family of four poor if its annual income falls below $28,170.
“When you do this kind of work, you are constantly reminded of the precariousness of people’s ability to make ends meet,” says Matsudaira. “The most important takeaway from our study is that the expiration of the Cares Act has caused an uptick in people with resources below the poverty line. We need action from Congress to help those people.”