The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in March could help bring poverty rates down to pre-pandemic levels — but only if enough families are able to access its income transfer programs, a report from the Center on Poverty & Social Policy at Columbia University finds.
A follow-up to a study published in April — which projected that the poverty rate in the United States would reach 18.9 percent if the unemployment rate rose to and remained at 30 percent — the report, The CARES Act and poverty in the COVID-19 crisis (18 pages, PDF), analyzes the potential efficacy of the CARES Act's Recovery Rebates (better known as stimulus checks) and expansion of Pandemic Unemployment Compensation (PUC), which together under a high-access scenario could provide up to $500 billion in income transfers in 2020. Assuming the 19.7 percent unemployment rate recorded in April remains unchanged, the poverty rate in 2020 would rise from 12.5 percent to 16.3 percent without the legislation, whereas with adequate access to the programs included in the bill, the poverty rate could return to pre-crisis levels by the end of the year.
The report notes, however, that two factors could undermine the legislation's potential to mitigate rising poverty: administrative barriers to accessing benefits and the expiration of key benefits at the end of July. Many eligible families have had difficulty accessing the benefits due to complex application procedures, outdated administrative infrastructure, and deadlines imposed with little warning. Combined with the exclusion of millions of individuals from eligibility, many families have struggled to get by with little to no income for months. According to the report, in a high-access scenario in which 90 percent of the eligible receive stimulus checks and 80 percent of the recently unemployed receive expanded unemployment benefits, the poverty rate could drop to 11.3 percent, compared with 12.7 percent in a medium-access scenario (70 percent and 60 percent) and 13.8 percent in a low-access scenario (50 percent and 40 percent). In all three scenarios, however, people of color are significantly more likely to face poverty, with poverty rates in the medium-access scenario projected to reach 20.2 percent for African Americans, 20.3 percent for Latinx individuals, and 14.5 percent for Asian Americans, compared with 8.7 percent for white Americans.
If high unemployment rates persist beyond July 2020, the study's authors conclude, additional income support will be needed to prevent a subsequent increase in economic insecurity and hardship. "Regular income transfers could come through additional installments of the [stimulus checks], through extensions of the PUC benefits beyond July 2020, and through expanding the accessibility and generosity of existing transfers such as the Supplemental Nutrition Assistant Program (SNAP)," they add.
(Photo credit: Feeding America)