Poverty Rate Could Reach Levels Not Seen Since 1967, Study Finds

Poverty Rate Could Reach Levels Not Seen Since 1967, Study Finds

The poverty rate in the United States could reach its highest level in fifty years as a result of the dramatic slowdown in economic activity due to COVID-19, a report from the Center on Poverty & Social Policy at Columbia University finds.

Using the Supplemental Poverty Measure (SPM) framework, the report, Forecasting Estimates of Poverty During the COVID-19 Crisis (18 pages, PDF), estimates that if the unemployment rate were to rise to and remain at 30 percent — as one Federal Reserve projection for the second quarter forecasts — through year-end, the poverty rate would jump from 12.4 percent to 18.9 percent, an increase of more than twenty-one million individuals living in poverty and the highest rate since at least 1967 (the first year for which reliable SPM estimates are available). And even if the employment rate were to fully recover by the fall, the poverty rate would rise to 15.4 percent, comparable to levels seen during the Great Recession, although those projections do not take into account the expanded cash assistance payments that federal and state governments have enacted in recent weeks.

According to the study, poverty rates among working-age adults and children will see particularly large increases; if a 30 percent unemployment rate were to persist through year-end, the poverty rate would increase 63 percent (up 7.4 percentage points, from 11.6 percent to 19 percent) among working-age adults and 53 percent (up 7.3 percentage points, from 13.6 percent to 20.9 percent) among children, compared with 12.5 percent (up 1.7 percentage points, from 13.6 percent to 15.3 percent) for those age 65 and older. And while no racial/ethnic group is likely to be spared, people of color will face larger increases, with the rate among African Americans rising from 19.7 percent to 32.3 percent and that among the Latinx population rising from 19.7 percent to 29.1 percent. 

The study also estimates that the "deep poverty rate" — defined as the share of those living below 50 percent of the SPM poverty threshold — would increase from 4 percent to 7 percent, an increase of thirteen million, to twenty-three million.

The study includes estimates for two other scenarios: at an unemployment rate of 10 percent, the level seen at the peak of the Great Recession in 2010, the poverty and deep poverty rates would rise to 15 percent and 5.1 percent, respectively; and with an unemployment rate of 20 percent, the poverty and deep poverty rates would reach 16.9 percent and 6 percent. 

"Our current projections emphasize the urgent need for the provision of income assistance to all U.S. residents," the report's authors write, "with a particular focus on children and working-age adults who we find are at the greatest risk of falling into poverty."

"Forecasting Estimates of Poverty During the COVID-19 Crisis." Columbia University Center on Poverty & Social Policy Report 04/16/2020. "Poverty in the United States Could Reach Highest Levels in Over 50 Years." Columbia University Center on Poverty & Social Policy Webpage 04/16/2020.