One of the most successful elements of the government’s response to the coronavirus recession — protecting people on the margins from falling into poverty — is faltering as the safety net shrinks and federal benefits expire. Major recessions are especially fraught for low-income earners, whose finances can veer from tenuous to dire with one missed paycheck. But as the economy cratered this spring, economists and poverty experts were mildly surprised to discover that the torrent of government support that followed — particularly the $600 a week in expanded unemployment benefits and one-time $1,200 stimulus checks — likely lowered the overall poverty rate.

In fact, 17 million people would have dropped below the poverty line without the $500 billion in direct intervention for American families, said Zach Parolin, a researcher at Columbia University.

Data collected by the Census Bureau capture financial pain. For the week that ended July 21, the most recent numbers available, roughly 29 million U.S. adults — about 12.1 percent — said their household sometimes or often didn’t have enough to eat the preceding seven days, according to the Center on Budget and Policy Priorities. Nearly 15 million renters said they were behind on rent during the same period. Bruce Meyer, a University of Chicago professor who studies poverty and inequality, said the Cares Act stimulus package more than offset lost earnings for many low-wage earners. This helped lower the nation’s poverty rate in April and May, when it was projected to spike after the pandemic set off widespread job losses.

Posted in: USA