money Another 1 million Americans entered poverty in the last few weeks as coronavirus pandemic drags on
Poverty keeps growing in the U.S. as COVID-19 cases reach record highs, forcing shutdowns, and the last of government support disappears this winter.
In October alone, 1 million more Americans fell below the poverty threshold, a study from the University of Chicago found. A total of 7 million Americans have entered poverty since May, with Black Americans falling into poverty in the greatest numbers.
That number is likely to grow as more relief provisions are set to expire at the end of this year and the chances for more stimulus before the next administration takes hold look grim.
"For a few months you can get by drawing down savings, borrowing from friends, not paying the electricity bills so quickly," Bruce Meyer, a University of Chicago economist, 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.”
‘This all goes back to structural racism’
Like many of the effects of this pandemic, poverty has affected some communities more than others. Around 3 million of the 7 million who entered poverty since May — or 43% — were Blacks. But Black Americans only make up 13% of the overall U.S. population.
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“This all goes back to structural racism where there are barriers throughout the economy that limit economic opportunities for Black Americans,” Gbenga Ajilore, a senior economist at the Center for American Progress, a non-profit for public policy research and advocacy, 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.”
While the overall unemployment rate has fallen to 6.9% from its 14.7% peak in April, the Black unemployment rate is still at 10.8% after reaching 16.8% in May. The overall job market recovery is also slowing down, with an unexpected week-over-week rise of 742,000 Americans filing for first-time unemployment benefits last week.
Poverty also rose noticeably among children and people with a high school education or less.
“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 said.
‘We will see a more pronounced increase in deprivation’
Poverty in the U.S. unexpectedly declined at the beginning of the coronavirus pandemic, thanks largely to generous government support from the CARES Act. Since then, there has been no second round of checks, the extra $600 in weekly unemployment benefits expired in July, and the extra $300 for jobless workers under the Lost Wages Assistance program expired in September.
An even bigger cliff is coming at the end of the year when the Pandemic Unemployment Assistance and the Pandemic Emergency Unemployment Compensation programs are set to expire. That will leave up to 12 million unemployed workers with no benefits at all, according to a report from the Century Foundation.
The combination of a slowly recovering job market and lack of more government relief will likely mean more financial hardships for Americans. While a big increase in poverty may not be immediate because it’s measured as cumulative income over the past year, deprivation will rise sharply while the poverty rate continues to increase slowly, according to Meyer.
“We will see a more pronounced increase in deprivation than poverty,” he said. “But people's available money to pay for food and rent will drop sharply.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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