Stimulus checks and unemployment benefits lift 1.6 million Americans out of poverty

A woman walks past homeless tents that line a street in Los Angeles, California on February 1, 2021.

FREDERIC J. BROWN | AFP | Getty Images

According to economists from the University of Chicago and the University of Notre Dame, more than a million Americans were lifted out of poverty in January due to economic tests and additional unemployment benefits.

It’s the first fall in poverty since summer, they said, though they warned that gains could wear off quickly without further relief.

Federal lawmakers passed a $ 900 billion Covid-19 relief measure in December that enabled stimulus checks of $ 600 and a weekly increase in unemployment benefits of $ 300. It has also expanded unemployment benefits to include those who are typically unskilled, such as the self-employed and gig workers.

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According to Bruce Meyer, James Sullivan and Jeehoon Han, who co-authored the report, the poverty rate in the US fell from 11.8% in December to 11.3% in January.

That means roughly 1.6 million people fell from the ranks of the poor when the government started distributing payments.

The reduction marks a turnaround in the growing hardship that emerged after the pandemic aid under the CARES Act dried up last year. More than 8 million people fell into poverty between June and December, the researchers found.

“Our latest poverty estimates for January 2021 show that this relief has reversed the recent trend of increasing poverty,” they wrote in a paper released on Friday.

The poverty of groups such as blacks and those without college degrees, who had seen a sharp rise in poverty since the summer, fell sharply.

However, the rates for such groups are still high. The poverty rate for blacks is more than double that of whites, and it is almost three times higher for those with a college degree or less than for those with more education, according to economists.

Unemployment benefits are expected to expire on March 14 for millions of Americans who are more lacking in pandemic aid. However, Congress could soon bring more relief.

The Democrat-run house passed a $ 1.9 trillion measure on Saturday. The bill provides $ 1,400 of stimulus checks for individuals earning up to $ 75,000. (After that, the check amount is reduced for those earning up to $ 100,000.) The bill increases the unemployment benefit by $ 100 per week – to $ 400 – and extends payments through August.

According to the Ministry of Labor, more than 19 million people are receiving unemployment benefits.

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