American household income fell last year amid the economic hit of the pandemic, reflecting the first decline in median household income since the Great Recession in 2011, according to new data from the Census Bureau.
The median household income decreased 2.9% to $67,500 between 2019 and 2020, the Census said.
The hit to the economic prospects of U.S. workers was underscored by a decline in full-time workers in 2020. The Census found that the number of people with full-time jobs plunged by 13.7 million last year. That is the biggest drop since the agency started tracking this data in 1967.
The brunt of full-time job losses was borne by low-income workers, with the Census finding that about 54% of those lost jobs paid less than $34,000 a year, Census officials said.
Even so, the number of people living in poverty actually declined last year, when taking into account government aid — ranging from stimulus payments to pandemic unemployment aid — according to one measure of poverty tracked by the Census. Without that government assistance, it’s likely that poverty would have risen sharply last year, economists said.
“Last year was an unprecedented year in terms of job losses in March and April, but the government response in the form of expanded unemployment, stimulus payments, expanded SNAP [food stamps] and other benefits was unlike anything we had seen in the past,” said Bruce Meyer, an economist at the University of Chicago Harris School of Public Policy who studies issues such as poverty and social safety net programs.
The first two stimulus checks lifted 11.7 million people out of poverty last year, making the direct-payments the most effective anti-poverty program after Social Security, which kept almost 27 million people from poverty, the Census said. The federal government issued a third stimulus check in the spring of 2021, but that wasn’t counted in the data given that the funds didn’t impact household finances in 2020.
Impact of unemployment aid
Unemployment aid, which was expanded and extended during the pandemic, kept 5.5 million people out of poverty, the analysis found. But that likely understates the impact of the unemployment program, given that a fair share of people tend to underreport income in surveys such as the Census, Meyer said.
Programs like Pandemic Unemployment Assistance, which provided jobless aid to gig workers for the first time, were targeted to those who had lost their jobs and income, while stimulus checks were distributed to all eligible low- and middle-class people, regardless of whether they needed the help, Meyer noted.
But those unemployment programsover Labor Day, and another round of stimulus checks . Some households may struggle without that aid, especially as the jobless rate remains elevated compared with prior to the pandemic.
“You might expect the poverty rate to inch upwards — maybe more than inch,” Meyer noted.
Once the impact of stimulus payments, tax credits and other government benefits are stripped away, the poverty measure actually rose last year, the Census said. The so-called “official poverty measure” rose to 11.4%, an increase of 1 percentage point, in 2020. That marks the first increase in poverty after five consecutive annual declines.
But a more complete supplemental measure of poverty, which takes into account income streams such as stimulus payments, actually showed that the share of people in poverty dipped after the aid was factored in. The Supplemental Poverty Measure declined to 9.1% last year, a decrease of 2.6 percentage points from 2019, the Census said.
All told, the government’s multiple rounds of stimulus payments and enhanced aid helped lift nearly 12 million people out of poverty during the depths of the pandemic recession.
“This shows the importance of our social safety net,” said Liana Fox, chief of the poverty statistics branch of the Census, on a call Tuesday to discuss the findings with reporters.
— With reporting by the Associated Press.