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Census Data Show Historic Investments in Social Safety Net Alleviated Poverty in 2020

A family spends time together in their RV after narrowly escaping eviction earlier that day, on October 7, 2020, in Phoenix.

Newly released data on income, poverty, and health insurance coverage from the U.S. Census Bureau provide insights on the economic well-being of individuals and families in 2020. Today’s new data are limited; they don’t reflect the totality of economic hardship experienced across the country in 2020 or the current political and economic reality. They do, however, give clear evidence that the historic federal aid provided last year—including expanded unemployment insurance, nutrition support, and direct cash assistance through economic impact payments—worked to reduce poverty, lifting millions of people above the poverty line in a year of significant economic insecurity.

During a time of unprecedented change—including an ongoing pandemic and the resulting economic recession—the poverty rate measured by the official poverty measure (OPM) increased by 1 percent, from 10.5 percent to 11.4 percent; in addition, 3.3 million more people lived below the federal poverty threshold, defined as $26,246 annually for a family of four, and the median household income fell by 2.9 percent, to $67,500.

Meanwhile, the supplemental poverty measure (SPM), a more comprehensive poverty measure that accounts for both expenses such as child care and government assistance such as tax credits and the Supplemental Nutrition Assistance Program (SNAP), shows that poverty decreased from 11.8 percent in 2019 to 9.1 percent in 2020. Due to historic federal aid, in 2020, the SPM was lower than the less comprehensive official poverty rate for the first time in history.

As Congress negotiates a reconciliation package, it is imperative they include continued federal supports as well as investments that modernize the safety net and provide long-term, equitable solutions to ensure an economy that works for all. Today’s census release underscores what’s at stake and what’s possible through informed policy choices.

Annual data don’t reflect monthly financial instability

For millions of families—with incomes above and below the federal poverty level—2020 was a year of incredible financial stress and uncertainty. Neither the OPM nor the SPM capture the true experiences of families struggling to afford enough to eat each week, the threat of eviction looming over millions of families, or the fear many felt as vital assistance such as the expanded unemployment insurance (UI) expired without congressional action. For many, these concerns informed their year, and the same worries persist in 2021.

Today’s census data provide an important annual measure of poverty. However, monthly poverty estimates developed by researchers at Columbia University show more volatile poverty rates as a result of the government’s uneven response to the public health and financial crisis. For example, expanded UI and stimulus checks from the Coronavirus Aid, Relief, and Economic Security (CARES) Act kept 18 million out of poverty in April 2020; yet by August, congressional inaction had pushed 8 million Americans below the federal poverty line, according to similar estimates from researchers at the University of Chicago.

That same dynamic is displayed in another important measure of well-being: food insecurity. Last week, the U.S. Department of Agriculture released its annual food insecurity report. From 2019 to 2020, the overall food insecurity rate held steady at 10.5 percent, proof that robust federal aid blunted an annual rise in hunger in 2020. But that overall rate masks serious disparities, with higher rates of food insecurity among Black and Hispanic households as well as households with children. Moreover, the findings don’t reflect monthly volatility measured by the Census Bureau’s Household Pulse Survey, which suggests that food hardship increased for many at some point in 2020.

Persistent disparities in poverty rates by race, ethnicity, and gender demonstrate need to focus on equity

The economic devastation of 2020 did not affect people indiscriminately; those with the fewest economic resources continued to experience the bulk of the hardship. Today’s data show that disparities in poverty rates and incomes by race, ethnicity, and gender persisted in 2020.

Racial disparities were particularly pronounced. The official poverty rate for Black people did not experience a statistically significant change—from 18.8 percent in 2019 to 19.5 percent in 2020—and the SPM rate decreased to 14.6 percent. Among Hispanic people of any race, the official poverty rate was 17 percent and the SPM rate was 14 percent. For Asian Americans, meanwhile, the official poverty rate was 8.1 percent and the SPM rate was 8.8 percent, though it’s important to note that data disaggregated by country of origin show serious disparities within that broad umbrella. Comparatively, among non-Hispanic whites, the official poverty rate was 8.2 percent in 2020, less than half the poverty rate for African Americans and Hispanics.

Similarly, the poverty rate for women in 2020 was 12.6 percent, compared with a 10.2 percent poverty rate for men. And women of color—especially Black and Hispanic women—experienced some of the highest rates of poverty, at 21.5 percent and 18.8 percent, respectively.

The gender wage gap

Importantly, today’s census release also includes income data that allow us to calculate the gender wage gap each year. In 2020, the gender wage gap persisted, with women working full time, year-round earning just 83 cents for every $1 earned by their male counterparts.

Again, many women of color—who often face unique barriers stemming from the intersection of race and gender bias—experienced the widest gaps. Hispanic women earned just 57 cents for every $1 earned by white, non-Hispanic men; and the data on Black women alone reveal that despite consistently having some of the highest labor force participation rates, they earned just 64 cents for every $1 earned by white, non-Hispanic men. Meanwhile, the data for Asian women alone indicate that Asian women earned 101 cents for every $1 earned by white, non-Hispanic men. However, the wage gap is much larger for many subpopulations of Asian American, Native Hawaiian, and Pacific Islander women, who face significant disparities in occupation, with some subpopulations concentrated in high-wage occupations and others concentrated in low-wage occupations. It should also be noted that the data on Asian women alone and Black women alone do not capture the experiences of multiracial women, but the data cited above do help to provide accurate comparisons with the data calculations used in prior years. Further, 2020 data for Native Hawaiian and Pacific Islander women are currently unavailable, making it harder to provide an updated in-depth analysis of this group’s pay disparities.

This very slight reduction in the overall gender wage gap—from 28 cents to 27 cents—must be understood in context: The COVID-19 pandemic caused an unprecedented disruption to the labor market, leading to a massive departure of women from the workforce in 2020. So, even with the gains made during 2021, there are still nearly 3 million fewer women employed now than there were before the recession, as well as 1.2 million more women formally classified as unemployed. Women earning low wages—particularly Black and Hispanic women—were hardest hit by the economic consequences of the pandemic. In fact, many of these women are no longer earning wages due to job loss and therefore are not counted in these census data, which means that the gender pay gap misses their experiences. Moreover, available data for intersectional analyses along gender, racial, and ethnic disparities are often limited and fragmented at best—a widespread issue that enables incomplete narratives about the economic realities of many women of color.

Addressing the systemic barriers women face, with an intentional focus on women of color, is therefore essential to increasing the economic security of this demographic.

Millions experienced record job loss and financial hardship in 2020

Millions of families across the country experienced devastating financial consequences throughout the pandemic. In April 2020, workers cumulatively lost more than 20 million jobs, bringing the unemployment rate up to 14.8 percent, the highest on record since data collection began in 1948. In December 2020, more than 10 million people were unemployed.

Job losses were most heavily concentrated among low-wage workers in the service, leisure, and hospitality industries, where women and individuals of color are more likely to work—though low-wage workers across all sectors experienced disproportionate impacts. Workers who remained employed were more likely to begin working part time for economic reasons. In particular, Black and Hispanic workers—already experiencing significant wage gaps, higher unemployment, and higher poverty before the pandemic—saw more job losses than their white counterparts. These groups were also more likely to work in low-wage front-line roles that increased their risk of being exposed to and contracting COVID-19.

Notably, since February 2020, more than 1.6 million women have left the workforce entirely.

Temporary expansions to economic security programs kept millions out of poverty

Decades of disinvestment in the American social safety net meant that vital government programs were ill-prepared to provide timely and adequate assistance during the pandemic. Beginning in March 2020, Congress took temporary actions to address this by expanding key anti-poverty programs.

For example, the Families First Coronavirus Response Act authorized “emergency allotments” for SNAP households, which allowed them to receive the maximum benefit level for their household size—for instance, $374 for a household of two. Meanwhile, the CARES Act, also passed in March 2020, expanded unemployment insurance to cover many who would have been otherwise ineligible and offered a groundbreaking additional $600 in weekly UI payments. Congress also authorized economic impact payments, commonly known as “stimulus checks”; those eligible received $1,200 in April 2020 and $600 in December 2020 or January 2021.

Despite the clear benefits of these programs for families dealing with loss of income, pandemic-related health issues, and/or housing and food insecurity, most of these federal investments have already or are set to expire by the end of this year. The impact of expanded UI is reflected in the official poverty measure: Without unemployment insurance, nearly 5.5 million more people would have been pushed into poverty in 2020; and if UI hadn’t been allowed to expire, its benefits would have been even more far-reaching.

Even in the midst of such clearly documented economic hardship, the supplemental poverty measure decreased from its 2019 rate. That’s largely a testament to the power of economic security programs that, while flawed, still managed to support millions of people. Refundable tax credits such as the earned income tax credit (EITC) kept 5.3 million people above the poverty line; and expanded nutrition assistance programs such as SNAP and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) lifted an additional 3 million people above the federal poverty line, compared with 2.7 million in 2019.

The SPM also includes the first two rounds of stimulus checks, which lifted a stunning 11.7 million people out of poverty in 2020. Notably, without those stimulus payments, the SPM rate would have increased to 12.7 percent, rather than decline to 9.1 percent, in 2020.

The ACA and public programs such as Medicaid and CHIP likely helped stabilize health insurance coverage rates during the pandemic

According to the U.S. Census Bureau’s Current Population Survey (CPS), 8.6 percent of people in the United States—28 million in total—had no health insurance coverage at any point during 2020. About half of all Americans had health coverage through an employer in 2020, and many lost not only their jobs but also their source of coverage amid an unprecedented public health crisis. While the CPS data show a 0.7 percentage point decrease in the share of people with employer-sponsored coverage, there was no significant change in the uninsurance rate from 2018 to 2020—due to challenges with data collection and nonresponse bias during the pandemic, the census report on health insurance emphasizes comparisons between those time periods. Today’s census report notes that people who lose job-based coverage may have access to coverage through other sources, including the marketplaces and Medicaid. A separate survey by the Urban Institute found that 5.5 million adults lost job-based coverage from March 2019 to April 2021, but fortunately, the Affordable Care Act’s (ACA) coverage options likely offset some of the loss of employer-sponsored coverage in 2020.

Even though the CPS data did not show a significant change in marketplace enrollment from 2018 to 2020, the health insurance marketplaces do provide an important alternative to employment-based coverage for those experiencing job loss or reduction in income. In fact, 12 states that operate their own state-based marketplaces offered a special enrollment period (SEP) in 2020 to allow people to sign up for coverage during the pandemic. For example, California enrolled nearly 290,000 residents in marketplace coverage during its 2020 COVID-19 SEP. And overall enrollment in the marketplaces could have been even greater had the Trump administration not refused to open a federal SEP in 2020.

Public programs, including Medicaid and the Children’s Health Insurance Program (CHIP), likely also helped people maintain coverage during 2020. The share of people with public coverage—34.8 percent—increased nationally in 2020, a 0.4 percentage point increase from 2018. Although the CPS indicated no significant change in Medicaid coverage from 2018 to 2020, administrative data show that the number of people enrolled in Medicaid and CHIP increased by nearly 10 million, or 13.9 percent, from February 2020 to January 2021.

Moreover, nonelderly adults in states that have not expanded Medicaid under the ACA remain far more likely to be uninsured than those in expansion states: 8.9 percent in expansion states versus 17.6 percent in nonexpansion states. In fact, the rate of uninsurance for nonelderly adults rose in nonexpansion states, increasing by 0.9 percentage points from 2018 to 2020. In order to reduce the number of uninsured, ensure that Americans in all states have adequate access to coverage, and address the persistent racial disparities in coverage rates highlighted in the census report, Congress should prioritize permanently closing the Medicaid coverage gap. This would help the 2.2 million uninsured adults in nonexpansion states without affordable options for health insurance.

Conclusion

Today’s data are proof that government programs can make a difference for millions of families struggling to make ends meet. But more must be done to center the needs of low-income Americans. The Biden administration has taken promising steps to meet that goal. Most notably, a groundbreaking but temporary expansion of the child tax credit (CTC) has the potential to decrease child poverty by more than 40 percent in 2021. Additionally, executive actions around SNAP, housing, racial equity, and more will help to tackle poverty and inequality.

However, millions of Americans are once again facing a steep benefits cliff that threatens their ability to get by. In a late-night decision last month, the U.S. Supreme Court ended an evictions moratorium that protected many of the 11 million renters behind on their payments, leaving roughly 3.6 million people vulnerable to losing their homes in the coming months. Just two weeks ago, vital UI expansions expired even as coronavirus cases continue to spread; and as a result, more than 8 million workers were estimated to lose their unemployment benefits on Labor Day. Meanwhile, more than 30 million SNAP participants are also likely to experience a loss in benefits when the emergency allotments expire.

Poverty in America existed long before the pandemic. Addressing this crisis—both during the pandemic and beyond—will require more than temporary programs that, once expired, plunge millions of households into financial insecurity. Policymakers must do better. As Congress negotiates a historic budget package, it is imperative they learn from today’s data and invest in expanding and making permanent the CTC, strengthening safety net programs such as UI and SNAP, closing the Medicaid coverage gap, and more. Only then can we build an economy that works for all.

Areeba Haider is a research associate for the Poverty to Prosperity Program at the Center for American Progress. Jocelyn Frye is a senior fellow at the Center. Rose Khattar is the associate director of rapid response and analysis on the Economic Policy team at the Center. Juli Adhikari is a policy and advocacy coordinator for the Women’s Initiative at the Center. Nicole Rapfogel is a research assistant for Health Policy at the Center. Emily Gee is a senior fellow and the senior economist for Health Policy at American Progress.