The Covid Economy

The CARES Act kept many families financially afloat. Now millions are falling into poverty without additional aid


A few months after the novel coronavirus began ravaging the U.S., economic fallout was temporarily stymied by the $2.2 trillion CARES Act stimulus.

While record numbers of people were losing their jobs and applying for unemployment insurance, generous financial aid, specifically the supplemental $600 per week in UI and one-time stimulus check, "directly lifted" 18 million out of poverty in April, according to researchers from Columbia University and first reported by the New York Times.

But those were temporary fixes. Now, with some of the most effective federal aid provisions long expired, the U.S. is seeing a reversal. An estimated 8 million people have fallen into poverty since May, the researchers find.

The monthly poverty rate, which the researchers calculated based on a household's estimated monthly resources, was not only higher in September than it was in April and May, it was higher than it was before the pandemic began. Black and Hispanic individuals fared the worst, each group experiencing a monthly poverty rate over 25% in September, compared to 12% for White individuals.

Though the CARES Act wasn't perfect, it did mitigate what would have been a much larger increase in poverty, says Megan Curran, a postdoctoral research scientist at Columbia's Center on Poverty and Social Policy and one of the authors of the report.

"If high levels of unemployment continue, as they are projected to, poverty levels are likely to continue to rise," Curran says.

Recovery lags even as jobs return

Though more and more people are returning to work, 25 million Americans are still receiving unemployment benefits. And as the recession continues, more and more people are falling into "deep poverty," Columbia's research indicates. Deep poverty is defined by the researchers as having monthly income lower than half the monthly poverty threshold.

Luci Kazmar is one of those still struggling. The single mother lost her job at a Steak n' Shake restaurant in March. She is currently homeschooling her son and trying to pay all of her bills on $112 per week in unemployment benefits in Florida, before taxes. Each day, she experiences "blinding fear" of how she will survive financially. "I am literally counting pennies," the 38-year-old says. Without help from her mother, who is paying half of her bills right now, she says she'd be homeless.

Kazmar hopes Congress can come to an agreement to extend unemployment insurance, even if it's for less than the $600 per week she was receiving previously (she also received four payments of $300 per week from the Lost Wages Assistance program). She says $200 to $300 per week is more reasonable.

She is "disgusted" with the stimulus stalemate between Congressional Democrats and Republicans and the White House.

"Getting paid less than $400 a month [on] unemployment is nearly impossible to survive off of," Kazmar says. "The American people are suffering and starving and losing their homes."

While Democrats in the House of Representatives have passed two relief bills in the past few months that include an extension of unemployment insurance benefits and another stimulus check, Senate Republicans say the bills are too generous. They are unable to come up with a compromise that appeases all of their members.

A compromise looks less and less likely as the election draws closer and Senate Republicans focus their efforts on confirming Amy Coney Barrett to the Supreme Court.

President Donald Trump, meanwhile, said earlier this month that negotiations were off until at least after the election, before changing his tune and telling Congress to "go big or go home" and that he is "ready to sign" whatever bill Congress sends him.

Economists have said for months that more aid is necessary to keep the economic recovery going and ensure that people like Kazmar and her son don't suffer more than they already have.

Extending enhanced unemployment insurance, in particular, has been deemed one of the most effective stimulus measures. "Action is needed at the federal level to deliver more and continuing income assistance to families," says Columbia's Curran.

Kazmar is tired of Congress getting her hopes up only to watch another stimulus deal fall apart.

"I am terrified, and my family is suffering just like so many others out there," she says.

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