Americans’ incomes plummeted last year, but fewer people lived in poverty as the COVID-19 pandemic threw millions of people out of work but also triggered billions of dollars in federal aid.
Median US household income fell 2.9% to $ 67,500, the US Census Bureau said on Tuesday, the first significant drop since 2011. This follows gains of 1.8% in 2017, from 0. 9% in 2018 and 6.8% in 2019.
Household income includes premiums, social security, government assistance payments, and investment interest and dividends, among other sources.
And the economic toll from the pandemic and state lockdowns has raised the official poverty rate for the first time in six years. Last year, 37.2 million people lived in poverty, 3.3 million more than in 2019. The poverty rate increased after five consecutive annual declines, from 10.5% to 11.4 % in 2019.
But a broader measure of poverty has declined. After taking into account government assistance related to the pandemic, such as stimulus checks, food stamps, school meals and housing assistance, the additional poverty measure was 9.1%, 2.6 percentage points less than in 2019.
Unemployment benefits, increased by $ 600 and then $ 300 from the federal government, kept 5.5 million people from sliding into poverty. Stimulus payments lifted 11.7 million people out of poverty, according to the census.
“The federal government has played a critical role in stemming losses from the pandemic,” said Elise Gould, senior economist at the left-wing Economic Policy Institute. “Without government intervention, the pandemic and the ensuing economic shock would have resulted in even more widespread devastation, large-scale income losses and increased poverty.”
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The pandemic cut 22.4 million jobs early last year and triggered the deepest recession in U.S. history, with states ordering businesses to shut down to contain the spread of the virus. The unemployment rate climbed to 14.8%, the highest since the Great Depression.
The federal government responded by rolling out a massive social safety net that included three rounds of stimulus checks, totaling $ 3,200 for most individuals, improved unemployment benefits, expanded food stamps and a moratorium on evictions, between other aids.
As businesses reopened or ramped up operations, the two-month slowdown turned out to be the shortest on record and the country recovered about 12 million of the 22 million jobs lost by the end of the year. Unemployment fell to 6.7% at the end of the year and to 5.2% last month. But despite the strongest economic growth since the early 1980s, the United States still lacks 5.3 million jobs at its pre-pandemic level, and the delta variant of COVID recently slowed the gains of employment and economic growth.
As millions of workers lost their jobs, more and more people were left without health insurance. Last year 8.6% of Americans, or 28 million, had no health insurance at any time of the year. In 2019, 8%, or 26.1 million people were not covered at any time of the year.
From 2018 to 2020, the share of people covered by private health insurance decreased by 0.8 percentage point to 66.5%, while employer coverage decreased by 0.7 percentage point to 54 , 4%. During this period, the rate of public health coverage increased by 0.4 percentage point to 34.8%.
For the second year in a row, the numbers have been skewed by reduced responses to U.S. Census survey participants during the COVID-19 pandemic. Census officials noted that the response rate to its annual survey was only 73% in March of last year due to the health crisis, down from around 83% in the previous months and a year earlier.
The report highlights a wealth and income gap that has been dramatically widened by the health crisis. While the inflation-adjusted median earnings of all workers fell 1.2%, the median wage of full-time, full-year workers rose 6.9%. The number of people with incomes fell by 3 million while the number of full-time, full-year workers plunged by 13.7 million.
The top quintile, or fifth, of households by income received 52.2% of all income, up from 51.9% in 2019, while the bottom quintile received 3.1%.
The Midwest saw the largest decline in median income, at 3.2%. Median income fell 2.3% in the South and West and remained broadly unchanged in the Northeast.
Among races, median income fell 2.7% for white households, 4.5% for Asians, and 2.6% for Hispanics. The income of black households was roughly stable.
Median earnings for men who worked full time and full year increased 5.6% to $ 61,417 and for women, 6.5% to $ 50,982.