Poverty grows despite stimulus package; many fall through the cracks and are ineligible for such aid

"Even as average personal incomes rose during the pandemic largely because of government aid, millions of people who didn’t receive such help have fallen into poverty, struggling to pay for food and other basic expenses," Tim Henderson reports for Stateline. "That group, trying to get by with the help of local charities, may have been excluded from the federal payments because of immigration status, lack of time in the labor force needed to claim unemployment benefits, or just red tape in states that have been slow to pay jobless claims." 

The economic stimulus package Congress passed in December has more help for families with mixed immigration status, since those families were excluded from previous stimulus payments. "Immigrants are a large share of the people not receiving aid. Others include people with criminal convictions, new graduates without a work history, and people who have experienced gaps in employment," Henderson reports.

Unemployment payments helped bolster average personal income, a figure that was higher in almost all states in the third quarter of 2020 compared to the year before. "But at the same time, poverty rose more than 2 points nationwide between June and November to 11.7 percent, the fastest jump in history, according to a study by the University of Chicago and the University of Notre Dame. The largest increase previously recorded was 1.3 points between 1979 and 1980, during a deep recession caused by a spike in oil prices," Henderson reports. "The recent increase of 7.8 million more people in poverty hit minorities and those without a college education the hardest, along with residents of states with less effective unemployment systems, said Bruce Meyer, a co-author of the study and University of Chicago professor of public policy."

The unemployment rate declined from 14.7% in April to 6.7% in November, but low-wage restaurant and hospitality jobs have been particularly hard-hit and are still struggling. Several groups are calling for more help for workers who are excluded from typical unemployment benefits, including immigrants or recent graduates "who haven’t built up enough time in the labor force to qualify, and therefore the supplemental payments," Henderson reports. But state revenues have declined during the pandemic, so it may be difficult to pay for such unemployment benefits, which are financed by fees on employers.