Study: 8 Million Americans Now Mired in Poverty Thanks to Coronavirus
October 21, 2020 Topic: Coronavirus Region: Americas Blog Brand: Coronavirus Tags: PovertyUnemploymentCares ActCoronavirusCOVID-19Recession

Study: 8 Million Americans Now Mired in Poverty Thanks to Coronavirus

Even businesses are now afraid to take risks.

As early coronavirus financial relief ended without more to follow, the number of Americans now living in poverty has surged by eight million since May, according to a new study by Columbia University.

The researchers noted that although the federal Cares Act—which gave individuals a one-time stimulus check of $1,200 and unemployed workers an enhanced benefit of $600 each week—was largely successful in curbing rising poverty rates in the spring, the effects became more muted as summer wore on.

“We find that the monthly poverty rate increased from 15 percent to 16.7 percent from February to September 2020, even after taking the Cares Act’s income transfers into account,” the study’s researchers wrote.

“Increases in monthly poverty rates have been particularly acute for Black and Hispanic people, as well as for children.”

The federal stimulus package likely saved about eighteen million Americans from poverty in April, the researchers added, but as of September, that figure plummeted to four million.

According to the U.S. Department of Health and Human Services, a family of four earning $26,200 or less annually is considered living below the poverty line. Roughly fifty-five million in the United States is currently living in poverty, the study said.

Columbia’s data is backed by a recent study published by the University of Chicago and the University of Notre Dame, which discovered that within the past three months, six million Americans have slipped into poverty.

The researchers asserted that more people will fall into poverty unless federal relief is quickly green-lighted to help the financially struggling population.

“In this time of crisis, it is important for policymakers to respond as quickly as possible to address the needs of those hit hardest by the pandemic,” the study wrote.

In another study that was released at the Federal Reserve Bank of Kansas City’s annual conference in September, the research contended that the ongoing coronavirus pandemic has already instilled enough fear within the public that will dampen risk-taking and economic output for decades.

Conducted by the Federal Reserve Bank of St. Louis, the study went on to say that the pandemic will only increase the “perceived probability of an extreme, negative shock in the future.”

“While the virus will eventually pass, vaccines will be developed, and workers will return to work, an event of this magnitude could leave lasting effects on the nature of economic activity,” the paper said. “Businesses will make future decisions with the risk of another pandemic in mind.”

The researchers noted that businesses will continue to be overly cautious about not only another viral outbreak but also other possible unexpected disruptions to the economy.

Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters