A woman walks past homeless tents along a street in Los Angeles, California, on Feb. 1, 2021.
FREDERIC J. BROWN | AFP | Getty Images
According to economists at the University of Chicago and the University of Notre Dame, more than a million Americans were lifted out of poverty in January as a result of federal stimulus controls and additional unemployment benefits.
It’s the first drop in poverty since the summer, they said, though they warned that profits could erode quickly without more relief.
Federal lawmakers approved a $ 900 billion Covid-19 aid measure in December that offered $ 600 incentive checks and a $ 300 weekly boost in unemployment benefits. It also expanded unemployment benefits for those typically ineligible, such as the self-employed and gig workers.
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That money injection led the US poverty rate to drop from 11.8% in December to 11.3% in January, said Bruce Meyer, James Sullivan and Jeehoon Han, who co-authored the report.
That means that about 1.6 million people fell from the ranks of the poor when the government started handing out payments.
The cut marks a reversal of the growing hardship that arose after the CARES Act pandemic aid began to dry up last year. More than 8 million people fell into poverty between June and December, the researchers found.
“Our latest poverty estimates, for January 2021, indicate that this relief has reversed the recent trend of increasing poverty,” they wrote in a Friday newspaper.
In 2021, the federal poverty line is $ 12,880 in annual income for a single adult and $ 26,500 for a family of four.
Poverty declined sharply for groups such as blacks and people without university degrees, who had experienced a sharp rise in poverty since the summer.
However, rates for such groups are still high. According to the economists, the poverty rate for blacks is more than double that of whites, and it is nearly three times higher for those with a high school diploma or below, compared to those with more education, the economists said.
Unemployment benefits will expire on March 14 for millions of Americans who are out of pandemic aid. However, Congress may soon bring more relief.
The Democrat-led House passed a $ 1.9 trillion measure on Saturday. The bill provides $ 1,400 incentive vouchers for individuals making up to $ 75,000. (After that, the check amount will be reduced for those who earn up to $ 100,000.) The bill increases the unemployment benefit by $ 100 per week – up to $ 400 – and extends payments through August.
According to the Department of Labor, more than 19 million people receive help without a job.