Without Another Stimulus Bill, Millions At Risk Of Poverty

Without Another Stimulus Bill, Millions At Risk Of Poverty


As Congress remains deadlocked over the next coronavirus relief bill and extended unemployment benefits about to expire for millions of Americans, 127 economists urged lawmakers to distribute another round of direct payments.


“We urge policymakers to use all the tools at their disposal to revitalize the economy,” the coalition wrote in their letter, “including direct cash payments, which are one of the quickest, most equitable, and most effective ways to get families and the economy back on track.”


More stimulus checks would “help families meet basic needs” and simultaneously “boost state and local economies, and speed the recovery,” the economists wrote. 


The economists also pressed Congress to supplement the stimulus checks with more assistance programs, including “unemployment benefits, aid to state and local governments, stronger SNAP benefits, robust child care funding.”


The Pandemic Emergency Unemployment Compensation (PEUC) and Pandemic Unemployment Assistance (PUA) programs expire on December 31. If Congress fails to pass a bill before then, an estimated 12 million people will lose unemployment insurance.


1 Million Americans Entered Poverty In October

Prior to the election, Democrats and the White House nearly reached an agreement on another bill’s cost. However, the Senate, who is heading negotiations, back a limited package. While the House proposed a $2.2 trillion legislation and the White House $1.9 trillion, Republicans are reluctant to spend more than $500 billion. 


During a press briefing last week, President-elect Biden told reporters, “Right now Congress should come together and pass a COVID relief package like the HEROES Act that the House passed six months ago.”


Even as the divide between party lines grows, the country’s economy has begun to stall, and millions of people are at risk of becoming impoverished. According to a University of Chicago study, over 1 million Americans fell into poverty in October. Since May, over 7 million people have slipped below the poverty line. 


“Stimulus checks have been an essential tool to keep the number of people in poverty from going even higher,” the letter continued. “While extending unemployment benefits has been essential, cash reaches millions who are struggling economically, including those who don’t qualify for unemployment benefits.”


But with crucial relief measures expiring this year and no stimulus in sight, more Americans will likely fall into poverty. “For a few months you can get by drawing down savings, borrowing from friends, not paying the electricity bills so quickly,” Bruce Meyer, an economist at the University of Chicago, told Yahoo Money. But “the longer the recession continues and the more people are below the poverty line, the more troubles people are going to face.”


Minorities, Children, And Lower-Educated People Affected The Most 

Minorities have been among the hardest hit by the pandemic. Of the 7 million Americans who fell into poverty since May, nearly 3 million (43%) were Black. However, Black Americans account for just 13% of the country’s total population. 


“This all goes back to structural racism where there are barriers throughout the economy that limit economic opportunities for Black Americans,” Gbenga Ajilore, Center for American Progress senior economist, told Yahoo Money. “Many policymakers and economists are talking about how the economy is doing better than what was expected, but that thought process completely ignores the plight of Black Americans.”


Although unemployment has declined from April’s 14.7% to 6.9% this month, unemployment remains high among Black communities. 16.8% of Black Americans were unemployed in May. Six months later, the rate is still above 10% at 10.8%.


The University of Chicago also found that the number of children and those with a high school diploma increased significantly. “Until there’s a solution to the continued spread of the virus or a vaccine is widely distributed, we’re facing a bad labor market that is not going to solve this problem,” Meyer remarked.


When Congress passed the CARES Act at the start of the pandemic, the poverty rate dropped, and economic recovery accelerated. However, as those provisions gradually ended, the number of impoverished Americans has risen, and recovery has slowed. 


With the last of the CARES Act programs ending in December, the improvements seen at the beginning of the year will be undone.


The weak labor market and the absence of government support pose a twofold problem for Americans. Although a jump in the poverty rate might not occur immediately, Meyer notes that deprivation will soar as poverty climbs.


“We will see a more pronounced increase in deprivation than poverty,” he noted. “But people’s available money to pay for food and rent will drop sharply.”


  • Tsekova, Denitsa. “Coronavirus Stimulus Checks: 127 Economists Urge Congress to Provide More ‘Direct Cash Payments’ to Americans.” Yahoo!, Yahoo!, 23 Nov. 2020, money.yahoo.com/coronavirus-stimulus-checks-economists-urge-congress-170323747.html.
  • Tsekova, Denitsa. “Another 1 Million Americans Entered Poverty in the Last Few Weeks as Coronavirus Pandemic Drags On.” Yahoo!, Yahoo!, 19 Nov. 2020, money.yahoo.com/1-million-americans-entered-poverty-in-pandemic-170459864.html.


Ian Schindler