Bryan Olin Dozier/NurPhoto via AP
Demonstrators with the Poor People’s Campaign gather at the Supreme Court in Washington on June 20, 2023, to speak out in favor of equal wealth and justice in the United States.
If the guys from Men in Black wiped your memory clean with a neuralyzer and erased the years 2020 and 2021 (which wouldn’t be such a bad idea), you would have greeted yesterday’s release of the Census Bureau’s 2022 Income, Poverty and Health Insurance reports with mostly a shrug. The Supplemental Poverty Measure (which includes taxes and transfer payments and other factors, providing a more credible picture of a person’s financial picture) shows that poverty rose modestly from 2019 to 2022, from 11.8 percent to 12.4 percent. For children under 18, poverty actually fell slightly, from 12.6 percent to 12.4 percent. There is a problem among seniors, where poverty is rising, from 12.8 percent in 2019 to 14.1 percent in 2022.
Reading these figures, you get the sense of a country that still has nagging problems with poverty, despite near record-low unemployment and national wealth. And you can see the higher cost of living as contributing to this struggle. But if you have any memory of 2020 and 2021, the story becomes quite a bit more tragic.
In 2020, the onset of the COVID pandemic led the United States to scramble to construct a working social safety net on the fly, to account for the fact that millions of people would be either out of work or confined to their homes. Congress provided three rounds of cash payments, and boosted weekly unemployment insurance to a level well above poverty, not to mention many workers’ incomes. In 2021, the American Rescue Plan enhanced the Child Tax Credit, increasing its value, making it a monthly advance payment, and removing the work requirement so the very poor were included for the first time. This all combined with boosted food aid, expansion of the Medicaid rolls, rental assistance, a bigger Earned Income Tax Credit, and other supports.
The results are clear in the poverty statistics. It turns out you can cure a lack of money by simply delivering wads of cash. In 2020, the Supplemental Poverty Measure for all people dropped from 11.8 percent to 9.2 percent. In 2021, it fell even further, to 7.8 percent. Only in 2022, after the checks stopped coming and unemployment retreated to its miserly level and the enhanced Child Tax Credit and other measures expired, did poverty shoot back up again. For children, the sequence goes: 12.6 percent in 2019, 9.7 percent in 2020, an incredible 5.2 percent in 2021, and all the way back to 12.4 percent in 2022.
That translates into 5.1 million kids moving back into poverty, with all the trauma and long-term damage associated with that, because Congress couldn’t be bothered to continue a program that was working to eradicate it from American life. Specifically, because congressional Republicans and Joe Manchin, who refused to extend the enhanced Child Tax Credit on the grounds that parents used the money to buy drugs, couldn’t be bothered. “A spike in child poverty like this didn’t need to happen. Congress had the chance to extend these programs that would keep our children fed and boost working families out of poverty. But it didn’t. It’s shameful,” Sen. John Fetterman (D-PA) said in a statement.
But let’s not let everyone else off the hook. Increased unemployment insurance, the experiments with cash benefits (which amounted to a universal basic income for a short period), and all the other forms of assistance were essentially rejected by everyone in Washington, regardless of party. The pop-up safety net was only envisioned on an emergency basis. When it disappeared, the basic fact that we have too many desperately poor people in this country returned. That was not seen as enough of an emergency to battle.
“The new poverty data for 2022 tells the story of a deeply unequal United States,” said Rebecca Riddell, Oxfam America’s economic justice policy lead, in a statement. But it tells more than that. It tells the story of a policy mechanism that worked successfully to make the United States more equal, which was then nonchalantly abandoned in favor of a deeply distressing status quo.
The experiments with cash benefits and all the other forms of assistance were essentially rejected by everyone in Washington, regardless of party.
The way that Republicans—and some Democrats—put it is that the greatest anti-poverty measure is a job. The new numbers actually offer a good window into how that strategy works. Since the financial crisis and the Great Recession, we have had a pretty good string of growing employment. Before the pandemic, unemployment was at or near 50-year lows; after the recovery and the drive to full employment in the Biden administration, those records were reached once again.
You can definitely say that today’s unemployment picture is incredibly strong. So how is that bearing on the poverty statistics? There’s definitely been progress from when poverty peaked at 16.1 percent, in 2011, to today. (At that time, child poverty peaked at 18 percent.) But it’s been grindingly slow. If you look at that four-year window from 2019 to 2022, there’s been effectively no progress, despite an increase of millions of jobs; even the decade-long improvement on poverty is relatively disappointing, given the economic expansion.
Market mechanisms to fight poverty, in other words, can work, if you have a decade or two of straight-line progress, and even then only inch by inch. By contrast, the best progress America has made in the past several decades on poverty was during a time of mass unemployment, during the pandemic period. That’s because steps were taken to directly intervene on behalf of peoples’ economic security. It makes sense when one considers that many categories of people, like children, students, the elderly, disabled folks, either can’t or struggle to work, and so will tend to be left out of any job-based prosperity. Reliably about half the population is not working at any one time.
Now, there are certainly quibbles you can make about these numbers. The Supplemental Poverty Measure, while better than the traditional poverty calculation (which literally showed virtually no change between 2021 and 2022), is still imperfect, as it sets the poverty rate by mixing certain absolute and relative factors, making it vulnerable to distortion over time. In addition, some argue that the Census Bureau overstated the drop in poverty in 2021 because it assumed a greater level of take-up of the enhanced Child Tax Credit than actually occurred. Nevertheless, the trends on poverty are unmistakable.
In other areas, the picture is a little brighter. Health insurance coverage, another of the reports released yesterday, continues to expand, up to 92.1 percent of the population. Because inflation was so high between 2021 and 2022, real median household income fell by 2.3 percent in this report; given the subsiding of inflation, that will probably turn around this year. But full-time workers rose 3.4 percent, and pretax income inequality actually fell a little bit (1.2 percent), for the first time since 2007. (With the loss of the transfer payments, post-tax income inequality was down 3.2 percent.)
But it’s important to speak plainly about what happened on poverty. We figured out how to support the most vulnerable people in America during the pandemic, and every statistical measure shows that it was a rousing success. Then policymakers, primarily Joe Manchin and congressional Republicans, decided to just not do it anymore. If you want to know why there are such bad feelings about the economy, at least among this segment of the population, that abandonment is a good place to start.
