US suffers sharpest rise in poverty rate in more than 50 years

The end of 2020 brought the sharpest rise in the U.S. poverty rate since the 1960s, according to a study released Monday.

Economists Bruce Meyer, from the University of Chicago, and James Sullivan of the University of Notre Dame found that the poverty rate increased by 2.4 percentage points during the latter half of 2020 as the U.S. continued to suffer the economic impacts from Covid-19.

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That percentage-point rise is nearly double the largest annual increase in poverty since the 1960s. This means an additional 8 million people nationwide are now considered poor. Moreover, the poverty rate for Black Americans is estimated to have jumped by 5.4 percentage points, or by 2.4 million individuals.

The scholars’ findings put the rate at 11.8% in December. While poverty is down from readings of more than 15% a decade earlier, the new estimates suggest that the annual Census Bureau tally due in September will be higher than the last official, pre-pandemic level of 10.5% in 2019.

Black Americans were more than twice as likely to be poor as their White counterparts in December — an improvement from the summer months when they were nearly three times more apt to live in poverty — but an increase from before the pandemic, when the differential was under 2.

Despite improvements in the overall poverty rate since the middle of the 20th century, Black Americans had been about three times as likely to be poor as White Americans for most of the past 60 years. The gap started to narrow after the financial crisis, during the longest economic expansion in history.

These December poverty estimates are based on survey data collected late in the month after some government relief measures expired. The researchers found that the stimulus checks the federal government issued in the spring helped forestall the poverty rate from rising even faster.

In late December, $900 billion in addition federal relief aid was passed, and President Joe Biden is asking Congress for an additional $1.9 trillion in stimulus.

© 2021 Bloomberg