Poverty fell and incomes rose during the early months of the pandemic thanks to government relief, according to a new economic study, even as millions of people lost their jobs.
“Despite a dramatic slowdown in the labor market, our results indicate that poverty fell, and percentiles of income rose in the early months of the pandemic,” concluded the study, circulated Monday by the National Bureau of Economic Research.
“We further show that in absence of the stimulus payments and expanded unemployment insurance, poverty would have risen sharply,” the study added.
The poverty rate fell by 1.5 percentage points from the winter to late spring. The decline occurred despite that fact that employment rates fell by 14% in April, the largest one-month decline on record.
Incomes also rose across the board. For example, those at the 25th percentile of family income increased their income from about $46,000 in January and February to about $49,000 in April, May, and June.
The study, authored by economists Jeehoon Han, Bruce Meyer, and James Sullivan, measures income distribution and poverty using high-frequency data from the Basic Monthly Current Population Survey from the Census Bureau, which collects income information for a large, representative sample of U.S. families.
The paper notes, though, that the emergency government relief programs in question were one-time or temporary, including the $1,200 stimulus checks, the $600-a-week extended unemployment, and the small business relief loans. Negotiations regarding the further coronavirus aid are at a standstill.
And although annual income increased at all levels, a share of families experienced substantial drops in income in the past few months, according to the study.
