What the pandemic teaches us about poverty measurements
Since the onset of the Covid-19 pandemic in the United States, more than 40 million people have applied for unemployment benefits. In April, unemployment spiked to nearly 20 percent, almost double the rate observed at the peak of the Great Recession. To blunt the financial blow, Congress passed the CARES Act, a package that included, among many other things, around $500 billion in income transfers for the U.S. population.
With my colleagues at Columbia University’s Center on Poverty & Social Policy, I have worked to understand how the CARES Act might affect annual poverty rates in the U.S. Our findings took us by surprise: despite the rapid rise in unemployment, we find that the CARES Act’s two major income transfers—the Recovery Rebates (one-time stimulus payment) and expanded unemployment benefits—have potential to return projected poverty rates to pre-crisis levels if access to the benefits is adequate. Jason DeParle of The New York Times neatly brings life to the findings here, while our full report can be found at the Center’s website. The report also details the many important shortcomings of the CARES Act, such as its exclusion of undocumented immigrants, the difficulties that families are facing in accessing the benefits, and the upcoming expiration of the top-up to unemployment benefits.