A new report from the Urban Institute finds that three federal policies intended to help families weather the economic impacts of the coronavirus pandemic have kept more than 10 million Americans out of poverty this year.
Two relief bills signed in March, the Families First Coronavirus Response Act and the $2.2 trillion coronavirus relief package, provided funds for several emergency programs, including a one-time economic impact payment, expanded unemployment insurance benefits and enhanced Supplemental Nutrition Assistance Program, or SNAP, benefits.
With the aid of these policies, the annual poverty rate is projected to be 9.2%, with 29.3 million Americans living in poverty in 2020, according to the Urban Institute report. The Census Bureau defines the poverty threshold as roughly $13,000 for a single individual and $26,000 for a family of four with two adults and two children.
Without current pandemic response measures, however, the poverty rate would have been 12.4%, impacting 39.5 million people.
Broken down by race, the report estimates that 4.6 million White, 2.1 million Black and 2.7 million Hispanic people will be kept out of poverty due to relief efforts.
Black and Hispanic communities have been disproportionately impacted by both the health and economic devastation of the pandemic due to a host of factors, including over-representation in low-paying service jobs that can't be done remotely and a lack of access to health care. Even with the relief measures, poverty rates remain highest for Black and Hispanic people, at 15.2% and 13.7% respectively, compared with a 6.6% poverty rate for White people.
Had the current recession not happened, analysts project the U.S. would have had an annual poverty rate of 11.1% in 2020. That means recent relief efforts have both kept families out of poverty during the economic upheaval of the pandemic, and also lifted families above the poverty threshold, says Gregory Acs, vice president for income and benefits policy at the Urban Institute and an author of the report.
With that said, he tells CNBC Make It that seeing reduced poverty rates averaged over a year doesn't have a sustaining impact if certain policies that brought down those rates end.
Families kept from or lifted out of poverty likely "got some breathing room," Acs says, "but it's unlikely they will have saved those resources to stretch out into the next five months and into 2021."
"Their story in the first half of the year will be different from their story in the second half of the year," Acs says.
Policies that have kept the poverty rate down are set to expire in July: 'It would be wrong not to worry'
The Urban Institute's conclusion that more than 10 million Americans will stay above the poverty line this year assumes that several relief measures that are set to expire in July will not be renewed by lawmakers. However, many experts remain concerned that families will face increased financial hardship in the months to come.
Enhanced SNAP benefits ensure that all families participating in SNAP, not just the poorest families, receive the maximum amount of benefit for their family size. Maximum benefits are still available in 41 states and the District of Columbia and expire at the end of July, though states can request monthly extensions.
And at the end of July, workers receiving unemployment benefits will no longer get the $600 weekly boost. The Urban Institute projects tens of millions of Americans will soon face an "income cliff" without enhanced benefits and will be unable to cover food, clothing and other living expenses.
"There's currently pain all around, and there's going to continue to be," Acs says. "What we did is use one marker of hardship, people right around poverty line — people we worry about even when things are good — when they were offered the resources we threw to everyone, it really benefited them relative to their position. Six hundred dollars a week means a lot more to someone used to living on $500 a week than someone living on $1,000 a week."
The House of Representatives passed another $3 trillion relief package in May, known as the HEROES Act, which would extend the $600 weekly unemployment benefit through January 2021. Senate Majority Leader Mitch McConnell called the bill "an unserious product from an unserious majority." It remains stalled in Senate, which is scheduled to return from a two-week recess on July 17.
Meanwhile, members of Congress have debated the need to issue additional stimulus payments since one-time payments of up to $1,200 per individual, $2,400 per couple and $500 per dependent were issued in April. The HEROES Act calls for another round of stimulus checks of up to $6,000 per household. The White House has expressed likely support for another round of stimulus payments.
While Congress continues negotiations of what another stimulus package may look like, the labor market has shown modest gains after a precipitous drop at the outset of the pandemic, which resulted in a loss of 26.45 million jobs from March to April. Many businesses called people back to work as state economies reopened in May. However, the Congressional Budget Office projects continued high unemployment and estimates the unemployment rate will reach 11.5% by the end of the year, and the Economic Policy Institute estimates 17.6 million unemployed Americans are unlikely to return to their pre-pandemic jobs.
"Covid responses did blunt what would have been a rise in poverty," Acs says. "It did help lots of families up and down the income distribution, but the losses that were felt were only partially offset. Some folks are in line for a very significant drop in income for the second half of the year without additional policy.
"It would be wrong to not worry."