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Poverty is referred to as the condition of not being able to meet basic needs like food, water, and shelter. It is present in every country, to varying degrees, and is unlikely to disappear any time soon. The United States, which is regarded as one of the wealthiest countries in the world, is no exception either.
The country has been battling poverty issues for a long time, and as of the 2019 census, there are 34 million people who live in poverty. This stands as a testament to the statement made by Ronald Reagan – “We fought a war on poverty and poverty won.”
When looking at the US poverty history, one sees that it recorded its highest poverty rate in the late 1950s, at 22%. Over the years, the rate declined steadily, hitting a low of 11.1% in 1973. However, the rate soared to nearly 15%, i.e., three times – in 1983, 1993, and 2011 before hitting an all-time low of 10.5% (in 2019).
However, things quickly turned sour due to Covid-19 in 2020. The pandemic hammered the economy of the US, increasing unemployment and poverty. According to the center, the poverty rate peaked at 17.3% in August 2020 and fell to 16% two months later.
The recent figures confirm that the recession hit those at the bottom of the economic ladder the hardest. In other words, the rift between the rich and poor became even broader.
Census Bureau figures released on September 14, 2021, reveal that “Americans living below the poverty line pegged at US$26,695 for a family of four have been increased by 1%.” Though this is only a small percentage, some Americans lost their incomes in 2020, and the nation’s income inequality worsened.
In addition to this, the Census Bureau’s additional data indicate that poorer households are having more difficulty rebounding from the recession.
The report also revealed that the share of aggregate income generated in the country – for the lowest-income households fell by 3.4%. In comparison, it increased by 0.7% for the highest-income households.
Another indicator that low-income workers were hit the hardest in 2020 was that 53% of all jobs lost were held by people making less than $34,000 per year.
It is uncertain whether these inequality-intensifying trends will continue into 2021. However, adding more injury, low-wage employment fell by 21% in June 2021 over January 2020. At the same time, high-income employment rose by 9.6%.
However, the US government rose to the challenge and introduced several policies to support the economy and relief for those affected by the disaster. In addition to fiscal stimulus, the Federal Reserve took a series of significant monetary stimulus measures.
The overall impact of these supports is noticeable in the Supplemental Poverty Measure rate, which takes additional sources of income into account.
The Census reports that the supplemental poverty rate would have reached 12.7% if not for the relief and stimulus packages implemented between March 2020 and the end of the year. However, it stood at only 9.1%, 2.6 percentage points lower than it otherwise would have been.
Thus, it can be concluded that things would have been worse if not for the relief measures that the Government implemented.
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