Nearly 8 million Americans fell into financial hardship during the past five months, marking the single largest year-over-year increase since the government began tracking the poverty rate in 1960.
Data released in mid-December by economists at the University of Chicago and the University of Notre Dame indicate that the U.S. poverty rate increased to 11.7% in November, representing a surge of 2.4 percentage points since June.
The latest spike is nearly twice the next-largest increase in the national poverty rate ever recorded, which occurred during the 1979-1980 oil crisis, The Washington Post reported, citing the work of professors James X. Sullivan at Notre Dame and Bruce D. Meyer at the University of Chicago’s Harris School of Public Policy.
In addition to their analysis, “Real-time Poverty Estimates During the COVID-19 Pandemic through November 2020,” Sullivan and Meyer also created a COVID-19 Income and Poverty Dashboard to track how many Americans are plummeting below the current federal poverty line of $26,200 for a family of four during the current economic recession.
The U.S. Department of Health and Human Services sets the federal poverty line, Forbes reported.
In their report, Sullivan and Meyer attributed the acute surge in poverty nationwide to the combination of paltry employment opportunities and the substantial decrease in available government assistance since the summer. Specifically, the economists pointed to the novel coronavirus pandemic’s decimation of the labor market and the staggered expiration of benefits from the government relief package that has kept many families afloat since the spring, Forbes reported.
Moreover, the national unemployment rate decreased from 11.1% in June to 6.7% in November, representing a decrease of 40%, yet poverty increased consistently month after month, trapping 7.8 million Americans below the poverty line, the economists stated.
“We’ve seen a continual rise in poverty every month since June,” Sullivan wrote in the report.
In addition, the report stated that the federal government’s $2.2 trillion Coronavirus Aid, Relief, and Economic Security – or CARES – Act, approved in March, offered one-time stimulus payments of up to $1,200 per person and substantially expanded unemployment insurance benefits, thereby, stymieing the poverty rate through June, Forbes reported.
Meanwhile, the Post confirmed that the average weekly unemployment benefit plunged to about $300 in August compared with the average $900 weekly benefit paid out at the onset of pandemic lockdown activity in late March.
In turn, the economists contend that only one of two things may offset the steep increase in the nation’s poverty rate: A vastly improved labor market or increased federal support.
“Given the state of the virus, I wouldn’t bet on significant improvement in the labor market in the short run,” Sullivan wrote.
On Dec. 21, Congress approved a second, leaner COVID-19 stimulus package that would provide direct payments of $600 per person, on average, and extend additional $300 per week unemployment benefits. Meanwhile, the House on Monday voted to increase the one-time payment amounts to $2,000 per person, and the measure is now bound for Senate consideration.
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