A year later: the pandemic’s impact on poverty

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“Millions of people in the US are falling into preventable poverty and hunger.”

—Lena Simet, Senior Poverty & Inequality Researcher at Human Rights Watch

In the years leading up to 2020, the poverty rate in the United States had been steadily declining. According to the US Census Bureau, the official poverty rate had decreased for the fifth consecutive year in 2019. At 10.5%, the poverty rate was the lowest since estimates were first published in 1959.  In the space of a year, due to the pandemic, much of that progress was wiped out. 

It’s been just over a year since the coronavirus disrupted life as we’d known it. Minnesota abruptly shifted to remote work for everyone able, with whole sectors of the economy shuttered nearly overnight.  In the past couple of weeks, we’ve begun to see restrictions eased, however, it may take some time before it becomes clear just how many businesses were unable to weather the long pause, how many jobs may never return. 

During the past year we were forced to change many of our habits And so we adapted. There’s concern, however, that many of these shifts in our habits could have a permanent scar on the economy.  Recently a group of researchers from Mexico’s ITAM Business School, Stanford University and the University of Chicago concluded that 32 to 42% of COVID-induced layoffs may become permanent as a result of changes made during the pandemic. 

Since the beginning of the pandemic, over 74 million people have lost work. A majority of the jobs lost were in industries that pay below-average wages.  A year later, unemployment insurance claims remain elevated.  The week ending March 20, 2021, another 926,000 people applied for unemployment insurance.  These ongoing unemployment figures rival those of the Great Recession.  Continuing claims are nearly 17 million above where they were a year ago. 

According to Lael Brainard, a Federal Reserve governor, the poorest 25% of American workers were facing “Depression-era rates of unemployment of around 23%” in mid-January.  This was nearly quadruple the national jobless rate at that time. 

While jobs numbers are expected to improve as a result of government aid programs, there are still a considerable number of people who have been unemployed for the long-term and the job outlook is bleak for many. 

Even though the unemployment rate fell substantially between June 2020 and January 2021—with a more than 40% decline, down to 6.3%—poverty has increased over the same period, with about eight million more people now living in poverty. The economic impacts of the COVID-pandemic have been disproportionate, with low-income workers bearing the brunt. 

According to US Census Bureau data from their Household Pulse Survey which was analyzed by Human Rights Watch, more than four million people have left the labor force in the past year, and two in five of the over 22.3 million jobs lost in March and April 2020 have not yet returned. 

According to Simet, “Food and housing insecurity is rising and millions of people are going hungry or are on the brink of losing their home or seeing their utilities shut off.”

Data from the most recent Household Pulse Survey collected during the week of March 3-15, 2021 showed:

Some 22 million adults—11% of all adults in the country—reported that their household sometimes or often didn’t have enough to eat in the last seven days

An estimated 12.1 million adults living in rental housing—1 in 6 adult renters—were not caught up on rent

79 million adults—34% of all adults in the country—reported it was somewhat or very difficult for their household to cover usual expenses such as food, rent or mortgage, car payments, medical expenses, or student loans in the past seven days.

The American Rescue Plan, enacted on March 11, 2021, is projected to dramatically begin reducing poverty. This aid is greatly needed, as the data show poverty has been on the rise in the past year, that people are suffering.