2020 Poverty Projections: Assessing Three Pandemic-Aid Policies

Brief

2020 Poverty Projections: Assessing Three Pandemic-Aid Policies

Projections of HEROES Act Policies by Race and State for August through December

Abstract

In response to the economic crisis caused by the COVID-19 pandemic, Congress is considering policies to further support households and stimulate the economy. A temporary increase in unemployment insurance benefits is set to expire at the end of July, and families have likely used their earlier stimulus checks on immediate needs, like rent and food.

To help inform Congress’s decisions, we project how three major provisions in the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would affect poverty from August to December 2020. The three provisions are

  1. providing a second and expanded round of stimulus checks;
  2. extending the $600-a-week increase in unemployment insurance benefits through January 2021; and
  3. increasing Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) allotments 15 percent and increasing the minimum benefit amount.

If no new legislation is passed, we project that the poverty rate from August to December will be 11.9 percent. The poverty rate will be even higher in families where someone lost a job because of the COVID-19 recession (15.6 percent).

In this brief, we use a modified definition of poverty that counts cash income, SNAP, and the proposed second round of stimulus checks in August through December as income. (This results in lower estimates of poverty than the official measure produces.) We then compare that amount to five-twelfths (representing the months of August to December) of the annual poverty threshold.

The effect on poverty rates by policy

Of the three policies, the one with the greatest antipoverty effect, according to our projections, is the stimulus checks. A second round of checks alone would keep 8.3 million people out of poverty from August to December. The extension of unemployment benefits would have the next-largest effect, keeping 3.6 million people out of poverty. Finally, about 1.7 million people would be kept out of poverty by SNAP expansions.

If all three policies are enacted, roughly 12.2 million people would be kept out of poverty for the rest of the year, including 4.5 million in households with a job loss.

Or, looking at the poverty rate, we project poverty from August through December would fall from 11.9 percent to 8.1 percent (and from 15.6 percent to 9.0 percent for households with a job loss) with all three policies in place.

The effect on poverty rates by race and ethnicity

These three policies would have antipoverty effects for all racial and ethnic groups, illustrating the universal benefit as the country continues to experience pandemic-related economic effects.

The three policies would keep from poverty 4.9 million white people, 3.7 million Hispanic people, 2.4 million Black people, and 0.6 million Asian Americans and Pacific Islanders (white, Black, and AAPI  categories are non-Hispanic.)

Hispanics would see the greatest decline in their projected poverty rate (36 percent). And in households where at least one person has lost a job, these policies would cut projected Black poverty in half (falling from 20.4 percent to 10.1 percent).

The effect on poverty rates by state

The antipoverty effects of these three policies over the next five months vary by state, ranging from a 21 percent reduction in North Dakota and Wyoming to a 42 percent reduction in Delaware.

In absolute terms, the number of people who would be kept out of poverty ranges from 13,000 in Wyoming to over 1.5 million in California.

For people in households with a job loss, the policies would cut projected poverty by more than half in seven states: Alaska, Florida, Louisiana, Mississippi, North Carolina, South Carolina, and West Virginia.

Projecting poverty rates

In an earlier brief in this series, we projected poverty rates for the entire year. In both analyses, we consider only job loss and don’t consider that some people might still working but earning less. But we hope these projections provide a sense of how many people might be helped by different supports and what poverty rates might look like without additional supports.

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