Safety net spending reduced poverty, but disparities remain

Safety net spending reduced poverty, but disparities remain

Fewer Americans lived in poverty last year than in 2019 even as the Covid-19 pandemic wreaked havoc on the U.S. economy, according to new data from the U.S. Census Bureau’s Supplemental Poverty Measure (SPM) – which accounts for public assistance when measuring poverty. Poverty, as measured by the SPM, fell to 9.1% in 2020, a drop of 2.7 percentage points from 2019. That’s because of timely federal aid that kept families and businesses afloat, including stimulus checks, enhanced unemployment benefits and federal relief for businesses that kept workers on the payroll. Elise Gould of The Economic Policy Institute reports:

The losses to income and increases in poverty would have been far worse if not for programs such as unemployment insurance to workers who suffered from job loss, as well as the ad hoc expansions to those programs legislated in the wake of COVID-19’s arrival. While Social Security remains the largest poverty reducer in the U.S.—reducing the number who would have been in poverty in 2020 by 26.5 million—the stimulus payments passed in response to the COVID-19 shock moved 11.7 million people out of poverty. Expanded unemployment insurance lifted 5.5 million out of poverty in 2020. The expansions of eligibility and enhanced payments in 2020 meant that unemployment insurance reduced poverty for ten times as many people that were kept out of poverty by unemployment insurance in 2019.

But disparities in poverty by race and ethnicity persisted and saw minimal changes. The Center for American Progress has more on why we must invest in 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.

LBP has a detailed breakdown of the Census data in a new brief by Stacey Roussel, Jackson Voss and Richard Davis, Jr. 

Disaster-SNAP on the way for Louisiana
The federal government has given final approval to Louisiana’s plans for providing disaster food assistance to households affected by Hurricane Ida. The Advocate’s Mark Ballard reports that 150,000 Louisiana households that don’t normally qualify for Supplemental Nutrition Assistance Program benefits may be eligible for substantial food assistance — $680 a month for a family of four — if they can prove that they lost income or suffered other financial hardship as a result of the hurricane. 

Very generally, to qualify for regular SNAP, a family gross income has to be below a certain amount – $34,452 for a family of four. Plus, when rent and utilities, child support and other allowable expenses are deducted, the net income can be no more than $26,508 per year. D-SNAP waives some of those requirements. For instance, there’s no gross income standard. The applicant just has to meet the net monthly income of $2,990 or less, for a family of four. But the calculations that determine that net income number includes deductions for disaster-related expenses.

Equity is a good economic investment 
When some groups of Americans are held back from reaching their full potential due to systemic disparities, everyone suffers economically. Conversely, eliminating the barriers that have held people back has the potential to produce large economic gains, making equity both a moral and economic imperative. A new report by the Federal Reserve Bank of San Francisco estimates the cost of racial inequities and the potential gains from investing in equity. A summary from Brookings:  

(The authors) conducted a thought experiment, asking: “How much larger would the U.S. economic pie be if opportunities and outcomes were more equally distributed by race and ethnicity?” Their answer is $22.9 trillion over the 30-year period. “The persistence of systemic disparities is costly, and eliminating them has the potential to produce large economic gains,” the authors write. Standard economic models often assume markets work efficiently and thus suggest explanations—such as unmeasured differences in productivity or cultural differences—that would support the existence and persistence of racial and ethnic gaps. The authors instead assume talent and job and educational preferences are distributed evenly across race and ethnicity. They then show the economic effects of disparities that hold people back from fully realizing their potential.

Another broken promise to Black Farmers 
Federal aid included in the American Rescue Plan was supposed to help reverse the legacy of racism against Black farmers, who lost more than 12 million acres of land over the last century due, in large part, to systemic discrimination. But lawsuits calling the aid itself discriminatory “reverse racism” against white farmers are helping to stall the long-overdue aid. Facing South’s Elisha Brown looks at how the stalled debt relief is the newest broken promise to Black farmers:

In July, a Tennessee judge ruled in favor of a white farmer represented by the conservative groups Southeastern Legal Foundation of Georgia and Mountain States Legal Foundation of Colorado, calling the debt relief “reverse racism.” And the Florida case that halted the aid nationwide is backed by the Pacific Legal Foundation, a libertarian organization based in California, according to NC Policy Watch. “Right now things are very bleak for Black and brown farmers,” Hishaw of FARMS said. “The fact that you have white farmers in seven different states and the court honoring their requests when they already own 97, nearly 98% of the land in this country, and we’re just trying to save the 2% that’s owned collectively by BIPOC [Black, Indigenous, and people of color] farmers, and they consider that to be a problem, just shows the standard operating procedure of white dominance when it comes to assets in this country.”

Number of the Day
53 million  – The number of people that federal aid kept above the poverty line in 2020. (Source: The Center on Budget and Policy Priorities)