Even as inflation remains high and COVID stubbornly persists, economic indicators show a potential for remarkable resiliency when the political will exists.
New data from the U.S. Census Bureau reveals that there were a whopping 45 million fewer Americans in poverty in 2021 than in 2020. In the midst of the worst global and national public health crisis of our time, the federal government’s supplemental poverty measure fell to its lowest measure on record.
Even more impressive, the child poverty rate fell by over half, driven primarily by the enhanced Child Tax Credit. The number of households with children experiencing hunger also fell in 2021.
Results like these aren’t miraculous — they’re the result of common sense federal investments.
Pandemic investments included extended unemployment insurance to support people who lost work, student loan repayment pauses to keep borrowers above water and nutrition assistance to keep food on tables.
Federal help with home energy costs, rental assistance and eviction moratoria kept people safe in their homes. Free COVID-19 testing and vaccines, along with health care subsidies, kept people healthier. And tax credits for low and moderate-income families kept millions out of poverty.
Together with Social Security and historic investments in infrastructure, these investments ensured not only a dramatic decrease in poverty even as millions lost their jobs, but also created a far more rapid economic recovery than we had from the 2008 Great Recession.
Consider: This country lost over 9 million jobs in 2020. By this August, all of those — and more — had returned. Unemployment dropped from 8.1 percent in 2020 to 3.7 percent this August, while wages for the lowest paying jobs grew at the fastest rate.
This shows what we can do when social justice movements force lawmakers to prioritize the well-being of the people they represent. Despite the immense tragedy of the pandemic, this progress is unmistakable.
But unfortunately, it’s also at risk.
These highly effective pandemic programs were temporary because all congressional Republicans — plus Democratic Sen. Joe Manchin (W.Va.) — killed the extensions proposed in the Build Back Better bill at the end of 2021.
In 2022, many of the gains we saw in economic well-being reflected in the 2021 U.S. Census numbers are already sliding backward. Notably, the enhanced Child Tax Credit — responsible for nearly halving the child poverty rate all on its own — has ended. After those last payments went out, child poverty immediately began to spike back up.
Federal pandemic food assistance, like an expansion of the free school lunch program, expires this year — even as food prices rise due to inflation. And although federal health insurance subsidies were extended in the recently passed Inflation Reduction Act, the expanded Medicaid and Children’s Health Insurance Program eligibility — which helps 15 million people — is set to expire at the end of the year if the federal Public Health Emergency ends.
Indeed, most of the investments that led to the steep reductions in poverty in 2021 have already expired or will soon.
It’s worth noting that even the rosiest numbers can mask real struggles. Although 2021 shows that improvements have occurred across racial and ethnic lines, significant racial disparities persist in poverty, income and health coverage. And nearly all anti-poverty experts consider the federal government threshold for poverty far too low.
But these are reasons to deepen these successful investments, not end them.
The U.S. Census data for 2021 demonstrates that poverty is a political choice. We chose during the pandemic to take it head-on relatively effectively. Now we must reaffirm that choice.
Karen Dolan directs the Criminalization of Race and Poverty Project at the Institute for Policy Studies.