Study finds nearly 8M Americans in poverty since June 2020, Congress scrambles to finalize fresh relief deal

Congress leaders are hoping to finalize a deal that would revive subsidies for businesses affected by the pandemic, facilitate distribution of new coronavirus vaccines and renew job benefits


                            Study finds nearly 8M Americans in poverty since June 2020, Congress scrambles to finalize fresh relief deal
(Getty Images)

Poverty levels in the US have shot up due to the coronavirus pandemic this year with nearly 8 million people falling into financial challenges since summer. According to a new study conducted by economists at the University of Chicago, Notre Dame and Zhejiang University (China), the poverty level rose from 9.3 percent in June to 11.7 percent in November — the largest rise in a single year since the 1960s. 

The report, titled ‘Real-time Poverty Estimates During the Covid-19 Pandemic through November 2020’, which has been financially supported by the National Science Foundation, the Menard Family Foundation and the Wilson Sheehan Lab for Economic Opportunities, shows the poverty level fluctuating since January, with a sharp increase in the months after the federal unemployment benefits expired in July.

More than 307,000 people have died in the US from the coronavirus while nearly 17 million have been affected. The study also revealed that the poverty levels went up more in states that have "less effective employment insurance systems". “Our estimates imply that about 39 million individuals are [currently] in poverty,” James Sullivan, an economics professor at the University of Notre Dame who is one of the three authors of the study, told DailyMail on Wednesday, December 16. 

“The jump in poverty is very significant. The 2.4 percentage point rise in the five months since June is nearly double the largest annual increase in poverty since the 1960s,” he added. The increase, according to researchers, has “raised concerns about future increases in poverty” since the unemployment aid is set to expire in December and there are no signs of a new economic stimulus package from the federal administration in sight. 

The authors of the alarming report also said that the estimated poverty rates that are illustrated in the study could help the government in making policies and programs to prevent people from slipping into poverty during sharp economic slides. 

Political leadership hopeful about new deal

Political leaders have found themselves in a deadlock over forming a new relief package. The top four leaders of the Congress met twice on Tuesday, December 15, hoping to finalize a deal that would revive subsidies for businesses that have been affected by the pandemic, facilitate distribution of new coronavirus vaccines, fund schools and renew jobless benefits that would expire soon.

Both Republicans and Democrats in Congress have shown interest in a new relief package but they have been unable to arrive at an agreement and time is running out fast. While House Minority Leader Kevin McCarthy said the lawmakers were “moving in the right direction” after the meeting, Senate Majority Leader Mitch McConnell said “I think we’re getting closer and closer” and was “optimistic that we're gonna be able to complete an understanding sometime soon”.

Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer were also present while Treasury Secretary Steve Mnuchin participated over phone. 

The US Capitol (Getty Images)

The stimulus checks and unemployment benefits that expired helped in bringing down the poverty level from 10.9 percent before the pandemic to 9.3 percent through March, April and May, the researchers said. But once the aid expired and the economy slowed down, more households were trapped in poverty even as unemployment rates went down, they added.

“The entire decline in poverty through June can be accounted for by the one-time stimulus checks the federal government issued, predominantly in April and May, and the expansion of unemployment insurance eligibility and benefits. In fact, in absence of these programs, poverty would have risen sharply,” they wrote in the report.

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