COVID-19 Pandemic & Poverty: 3.3 Million Americans Fall Below the Poverty Line

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The pandemic took a huge financial toll on millions of people.

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Key points

• Although many people lived in poverty before the pandemic, that number increased a lot in 2020.
• While lots of aid went out in the course of the pandemic, at this point, that assistance may be tapering off.

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It's no secret the COVID-19 pandemic has taken a huge toll on a lot of people's finances. But new data from Self Financial reveals how drastic that toll has been.

In 2019, the U.S. recorded its lowest poverty rate on record at 10.5%. One year later, in the wake of the pandemic, that number rose to 11.4%. All told, an additional 3.3 million Americans were pushed into poverty as a result of widespread unemployment and income loss. Since the pandemic, poverty rates have increased in 39 states.

Understanding poverty rates

Living in poverty doesn't simply mean being cash-strapped. In 2020, the definition of living in poverty was having an income of $13,465 or less as a single adult under the age of 65. Last year, a total of 37.2 million people were living below the poverty line across the United States.

Some states saw more drastic changes than others last year with regard to poverty levels. New Hampshire had the largest increase in residents living in poverty in the wake of the pandemic, while several states actually saw their own poverty numbers drop.

How lawmakers have addressed poverty issues

Lawmakers were fairly quick to address the need for financial aid during the pandemic. Early on, the CARES Act was signed into law, and with that came an initial round of direct stimulus checks that helped millions of Americans make ends meet. Two follow-up rounds of stimulus checks came after that.

Unemployment benefits were also boosted throughout the pandemic, with enhanced payments only coming to an end in September of 2021. Benefits were extended to cover gig workers and the self-employed -- groups that normally wouldn't qualify for unemployment.

Meanwhile, protections were made available to both renters and homeowners. For the former group, a federal eviction ban kept many Americans in their homes until the ban expired at the end of July. And even now, some individual states have extended their own eviction moratoriums. Meanwhile, homeowners were given the option to pause their mortgage payments during the pandemic through forbearance.

Finally, the most recent stimulus bill enhanced two important tax credits -- the Child Tax Credit and the Earned Income Tax Credit. Both credits were able to reach a wider audience thanks to these enhancements.

Will future aid be coming through?

While there's been plenty of aid for struggling Americans to date, that aid may be coming to an end. At this point, it seems unlikely that a fourth stimulus check will hit Americans' bank accounts. And while it looks like the expanded Child Tax Credit and Earned Income Tax Credit will stick around for another year, those credits may revert to their former state after 2022.

As the economy continues to improve and jobs continue to get added, the hope is that more people who struggled with income loss during the pandemic will manage to get back on their feet so poverty levels drop back down across the United States on a whole. It may take some time to reach that point, though, given the widespread blow the pandemic dealt.

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