[The increase in poverty reversed two years of large declines. ]
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POVERTY RATE SOARED IN 2022 AS AID ENDED AND PRICES ROSE  
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Ben Casselman and Lydia DePillis
September 12, 2023
New York Times
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_ The increase in poverty reversed two years of large declines. _

Volunteers at Common Pantry, a nonprofit food pantry in Chicago.
Poverty soared last year as living costs rose and federal programs
that provided aid to families during the pandemic were allowed to
expire.Credit..., Jamie Kelter Davis for The New York Times

 

Poverty increased sharply last year in the United States, particularly
among children, as living costs rose and federal programs that
provided aid to families during the pandemic were allowed to expire.

The poverty rate rose to 12.4 percent in 2022 from 7.8 percent in
2021, the largest one-year jump on record, the Census Bureau said
Tuesday
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Poverty among children more than doubled, to 12.4 percent, from a
record low of 5.2 percent the year before. Those figures are according
to the Supplemental Poverty Measure, which factors in the impact of
government assistance and geographical differences in the cost of
living.

The increases followed two years of historically large declines
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poverty
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driven primarily by safety net programs that were created or expanded
during the pandemic. Those included a series of direct payments to
households in 2020 and 2021, enhanced unemployment and nutrition
benefits, increased rental assistance and an expanded child tax
credit, which briefly provided a guaranteed income to families with
children.

Nearly all of those programs had expired by last year, however,
leaving many families struggling to stay ahead of rising prices
despite a strong job market and improving economy. Overall poverty now
looks much the way it did in 2019, with the notable difference that
financial hardship has declined among Black households, reflecting
higher incomes in recent years.

The Share of Children in Poverty More Than Doubled

The poverty rate for those under 18 rose to 12.4 percent last year.

Share of each age group living in poverty

Note: Data are the supplemental poverty rates, which adjust for
geographic differences. The rates also include wage income, taxes and
the fullest account of government aid.

Source: Census Bureau     By Karl Russell

One pandemic program that did not expire was a temporary freeze in
Medicaid terminations, a move that allowed the program to cover more
Americans than ever
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Because of that program, the share of Americans without health
insurance matched a record low last year of 7.9 percent. But states
are unwinding that temporary coverage, and the uninsured rate has
probably increased in recent months.

The increasing cost of living added to the challenge last year. The
poverty threshold, which is based on the cost of essential items like
food and housing, rose sharply
[[link removed]]: A family of
four living in a rental home was considered poor under the
supplemental measure if the family’s income was less than $34,518 in
2022, up from $31,453 in 2021.

Higher prices didn’t just hit the poor. Median household income,
adjusted for inflation, fell 2.3 percent in 2022, to $74,580, as the
fastest inflation since 1981 overwhelmed the impact of increased
employment and rising wages.

“People are working hard,” said Margaret O’Conor, who runs
Common Pantry, a small food bank in Chicago. “They’re just not
making ends meet, the cost of living is too much.” Rent in
particular has soaked up a lot of people’s extra earnings.

Common Pantry, like many food banks, had demand explode during the
pandemic and then recede in 2021, when people received stimulus
checks, enhanced unemployment benefits and the child tax credit, among
other assistance. Then, as those programs lapsed, demand began to
climb again.

“2022 just threw us,” Ms. O’Conor said. “We were not expecting
it. I don’t think any food pantry was really expecting it.”

The White House, in a blog post
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the report, argued that more recent data “tell a more optimistic
story.” Inflation has cooled in recent months, while the job market
has remained strong and wages continue to rise.

The hot job market has had clear benefits for those able to take
advantage of it. Many workers, especially in low-paying industries
like hospitality and retail, experienced significant wage gains in
2022. Supersized unemployment benefits and other cash payments allowed
workers to hold out for higher-paying jobs. Income for the poorest 20
percent of households — excluding tax credits and some other
government benefits — rose 4.3 percent last year, adjusted for
inflation. Income gains also outpaced inflation for the least educated
workers.

Those effects were more pronounced for women. The share of working
women who were employed full time for the whole year reached 65.6
percent, the highest level on record — which also allowed real
earnings to fall less for women than they did for men.

The story was not as rosy for Americans over 65, for whom the poverty
rate rose to 14.1 percent, despite an 8.7 percent cost-of-living
increase in Social Security payments. Labor force participation among
older people remains depressed
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and have had a difficult time re-entering the workplace.

“People became more isolated, experienced significantly more health
problems,” said Jess Maurer, the executive director of the Maine
Council on Aging. “Older people had a harder time coming out of the
pandemic, coming back into the community.”

Inequality, as measured by the gap in pretax income between the
richest and poorest 10 percent of households, narrowed, as most of the
decrease in median incomes came from those at the middle and top of
the wage distribution. Racial gaps also shrank, as white households
lost ground to inflation, while inflation-adjusted income was little
changed for other racial and ethnic groups.

The “official” poverty rate — an older measure that is widely
considered outdated because it excludes many of the government’s
most important anti-poverty programs, among other shortcomings — was
nearly flat last year, at 11.5 percent, reflecting the offsetting
forces of higher prices and increased earnings of low-wage workers. By
that measure, the poverty rate for Black Americans was 17.1 percent,
the lowest rate on record.

U.S. Poverty Increased Last Year

The supplemental poverty rate — which accounts for the impact of
government programs — increased to to 12.4 percent last year,
surpassing the official poverty rate, which was 11.5 percent.

Share of the population living in poverty

Note: The supplemental rate adjusts for geographic differences. It
also includes wage income, taxes and the fullest account of government
aid.

Source: Census Bureau      By Karl Russell

“There has really been this resurgence in terms of the labor market
fortunes of Black workers, particularly Black male workers,” said
Michelle Holder, an economist at John Jay College in New York. “The
most important element for people in my community is can we get a job,
and if we can get a job, can we keep a job? And right now, both things
look pretty darn good.”

But those unable to work, or unable to work full-time, faced a one-two
punch of higher costs and lost benefits in 2022 — problems that have
continued this year. Increased federal nutrition benefits, one of the
last vestiges of pandemic aid efforts, expired last spring
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Factoring in the loss of benefits, real income fell for the poorest
households in 2022, and inequality rose.

“Tight labor markets are incredibly powerful, they’re really
important, but they’re not sufficient,” said Elisabeth Jacobs, a
senior fellow at the Urban Institute.

When a high-risk pregnancy forced Amber Summers to leave her job in
rural Southern Illinois in 2021, the expanded child tax credit
provided a lifeline. The $250 monthly payments helped cover her
mortgage and allowed her son, now 9, to play Little League Baseball
for the first time.

“It was financial stability and stress relief for our family,” she
said.

But when the payments lapsed at the end of 2021, the family’s
finances quickly unraveled — especially after Ms. Summers’s
husband, Tim, contracted Covid and lost his job as a cook. And while
both of them have since returned to work, neither is receiving
full-time hours, and they are falling further behind on their bills.
Opportunities for better-paying jobs are limited in their area.

“The child tax credit helped pull our family out of poverty for such
a short period of time,” Ms. Summers, 32, said.

Congress passed the expanded child tax credit as part of the American
Rescue Plan, President Biden’s pandemic-relief package, in early
2021. But while other Covid-era relief programs were always intended
to expire once the emergency passed, supporters hoped to make the
expanded child credit permanent.

That didn’t happen. Faced with united opposition from congressional
Republicans as well as some conservative Democrats, Mr. Biden dropped
his effort to extend the program at the end of 2021; a renewed
push failed again last year.
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rise in poverty in 2022, social policy experts said, was the
inevitable result of that decision.

“Today’s Census report shows the dire consequences of
congressional Republicans’ refusal to extend the enhanced Child Tax
Credit, even as they advance costly corporate tax cuts,” Mr. Biden
said in a statement.

Correspondingly, the highest increases in poverty were in the South,
where research has shown
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child tax credit had the greatest effect, and among Alaska Natives and
American Indians, for whom the poverty rate rebounded to 23.2 percent.

Critics of the child tax credit and other pandemic aid have argued
that the rapid rebound in poverty after the programs’ expiration is
evidence that the progress made against poverty in recent years was,
in effect, artificial. Michael Strain, an economist at the
conservative American Enterprise Institute, argued that programs that
offer incentives to work — such as the earned-income tax credit and
the standard child tax credit — have led to more sustainable gains.

“Yes, this alleviated child poverty, but it didn’t really do a
whole lot to encourage self-sufficiency,” he said.

Progressives take a different lesson: Government programs succeeded in
lifting millions of people out of poverty. An analysis by researchers
at Columbia University
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Tuesday found that child poverty would have been nearly 50 percent
lower in 2022 if the expanded tax credit had remained in place. The
programs might also have had longer-run benefits, they argue, but
ended before those effects could be seen.

“The last few years just illustrated in an incredible way the power
of effective government intervention,” said Arloc Sherman, a vice
president at the Center on Budget and Policy Priorities, a progressive
research organization. “The last couple years, through a plunge in
poverty and what is now a record single-year increase in poverty in
2022, have shown that poverty is very much a policy choice.”

_Ben Casselman [[link removed]] writes
about economics, with a particular focus on stories involving data. He
previously reported for FiveThirtyEight and The Wall Street
Journal. More about Ben Casselman
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_Lydia DePillis [[link removed]] is a
reporter on the Business desk who covers the changing American economy
and what it means for people’s lives. More about Lydia DePillis
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* U.S. Poverty
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* federal government
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* budget cutbacks
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