In one of the worst years ever for the economy and labor market, America's poverty rate dropped, per one measure that takes into account pandemic-era aid, the government said Tuesday.
Why it matters: It underscores the colossal impact stimulus checks, expanded unemployment payments and other benefits had on households in 2020 — even as millions lost jobs. Without them (and other safety nets, like Social Security), the poverty rate jumped for the first time in five years by one percentage point to 11.4%.
The big picture: The poverty rate typically cited each year focuses solely on cash income. But an alternate rate that includes major aid programs took on new significance given the flood of pandemic-era stimulus injected into the economy.
That measure fell to 9.1% — the lowest rate since the government started publishing this estimate in 2009.
By the numbers: Stimulus checks lifted nearly 12 million Americans out of poverty, while expanded unemployment benefits lifted over 5 million.
Of note: There was no statistically significant change in the uninsured rate last year from 2018, the data shows. If someone lost their job, they were able to get coverage through Medicaid or other heavily subsidized individual health insurance.
According to new U.S. Census Bureau statistics, California — once again — has the highest poverty rate of any state in the country.
However, despite the heavy economic toll of COVID-19, the state's poverty rate actually fell last year.
Why? Largely because of federal aid.
“Federal stimulus payments and unemployment insurance kept millions of citizens out of poverty,” said Caroline Danielson, senior fellow at the Public Policy Institute of California.
“We can see that those programs really did make a big difference,” she said.
The census measures poverty in a few different ways. Its supplemental poverty measure takes into account regional cost of living, as well as the effects of government aid.
Using this approach, California consistently has the highest poverty rate in the country — eclipsing states such as Mississippi, Florida and Louisiana.
And 2020 was no different. The latest supplemental poverty measure puts California’s poverty rate at 15.4%. No other state had a higher rate (though the District of Columbia came in at 16.5%).
Unaffordable housing costs are primarily to blame for California’s nation-leading poverty rate.
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