Stimulus checks, unemployment benefits lift 1.6 million from poverty

A woman walks past tents for homeless people on 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 one million Americans were lifted out of poverty in January as a result of federal stimulus controls and additional unemployment benefits.

This is the first drop in poverty since the summer, although they have warned that gains could wear off quickly if there is no more relief.

Federal lawmakers approved a $ 900 billion Covid-19 aid measure in December that offered $ 600 stimulus checks and a $ 300 weekly boost in unemployment benefits. It has also extended unemployment benefits to those who do not normally qualify, such as the self-employed and gig workers.

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That cash infusion caused US poverty to fall to 11.3% in January, from 11.8% in December Bruce Meyer, James Sullivan and Jeehoon Han, who co-authored the report.

This means that about 1.6 million people fell from the ranks of the poor when the government started handing out payments.

The reduction is a reversal of the increasing hardship that arose after the CARES Act relief began to dry 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 indicate that this relief has reversed the recent trend of rising poverty,” they write in a paper Issued Friday.

In 2021, the federal poverty line is $ 12,880 in annual income for a single adult and $ 26,500 for a family of four.

Poverty has fallen sharply for groups such as blacks and those without university degrees, who have experienced a sharp increase in poverty since the summer.

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

The unemployment benefits will expire by March 14 for millions of Americans who no longer have pandemic assistance. However, Congress may soon issue more relief.

The Democratic-led House passed a $ 1.9 billion benchmark on Saturday. The bill offers $ 1,400 stimulus checks to individuals earning up to $ 75,000. (This reduces the check amount thereafter for those earning up to $ 100,000.) The bill increases the unemployment supplement by $ 100 per week – up to $ 400 – and extends payments until August.

According to the Labor Department, more than 19 million people receive unemployment benefits.

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