Census Data Demonstrate Success of Federal Investments to Address Poverty

By Hannah Matthews and Priya Pandey

2020 was a year marked by illness, death, multiple hardships, and uncertainty for families across the country. The start of the COVID-19 pandemic created a crisis of public health, but also laid bare the cracks in our economic system and public policies—with the most harmful impacts disproportionately concentrated among people with low incomes, essential workers, women, and Black, Latinx, Asian, Indigenous, and immigrant communities. 

Yet even in this tragic context, this week’s Census Bureau annual release on income, poverty, and health insurance coverage shows that government investments in 2020 successfully reduced poverty. Even though household earnings and full-time, full-year employment were sharply down, particularly for women, people of color, and people in jobs paying low wages, the Census Bureau found that the number of people in poverty (measured by the Supplemental Poverty Measure (SPM), which incorporates income from key public programs as well as earnings) was down 2.6 percentage points from 2019 to 9.1 percent.   This was the first year-to-year decrease in the SPM since the measure was created in 2009. 

The decrease in poverty occurred because Congress passed COVID relief bills in response to the pandemic that put direct cash payments in people’s pockets. This assistance included stimulus payments and refundable tax credits, expanded nutrition benefits to keep families fed, and expanded unemployment insurance so that COVID-induced job loss did not lead to a further economic decline. Congress also provided emergency paid leave benefits and maintained government-sponsored health coverage for individuals who might have otherwise lost coverage. These policies mattered enormously. They blunted the impacts of the pandemic for many and prevented what could otherwise have been far more substantial increases in poverty.

With clarity of the importance of these programs, policymakers should continue to build on investments in children, families, and workers. Policies that were expanded in response to COVID—such as refundable tax credits and investments in health and nutrition—must be continued. With the Build Back Better Act, the country has an opportunity to go further to transform the economy so it works for everyone by making long-overdue investments in good jobs, child care, and paid leave. 

Even as government response efforts in 2020 decreased poverty across racial/ethnic groups, longstanding inequities in poverty and hardship persisted. Black, Latinx, Asian, Indigenous and immigrant families have borne the brunt of the pandemic, and there remains a crucial need to harness the full resources of the federal government to support those whose potential has been perpetually blocked by structural barriers. 

Although the relief responded directly to the impacts of COVID, it did not address widespread structural inequities in our public polices and economic systems. Relying on an emergency response means that many people – particularly families with children and people of color – experienced hardship such as hunger before the relief came, which is another reason to have permanent and effective public investments. To sustain the effects of these positive programs, the government must move beyond COVID relief and invest in rebuilding an economy that works for all.

>> Read the full brief here.