Government Relief Programs Are Causing Poverty to Plummet

Off the Charts: The Visual Says It All

Little Girl Checking a Mailbox
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Poverty rates have declined dramatically because of pandemic-era relief programs such as stimulus checks, enhanced unemployment benefits, and an expansion of the child tax credit, the Urban Institute estimated this week. 

A projected 7.7% of Americans will live below the poverty line in 2021, compared with 13.9% in 2018, according to a new estimate published Wednesday by the Urban Institute think tank. That picture is better than one presented by the same group earlier this year, which indicated that the American Rescue Plan relief bill would reduce the poverty rate to 8.7%. Without the government relief efforts, the group said, poverty would be at 13.7% in 2021.

The Urban Institute said its revised outlook comes from improvements in the economy and in the Institute’s methodology.

The financial benefits of the government aid were even greater for children than for the general population, as shown in the chart below.

The study showed the massive impact that government relief programs are having, just as they are about to end. The Institute said that stimulus checks, which have already been distributed, likely lifted 12.4 million people out of poverty. Food aid and unemployment benefits, both of which were enhanced during the pandemic, will bring a projected 7.9 million and 6.7 million out of poverty, respectively, and advance payments of the child tax credit, which was expanded for 2021, will take an estimated 1.7 million people out of poverty, according to the Institute. There are no additional rounds of stimulus checks planned. Enhanced unemployment benefits are set to expire in September (earlier in some states), and the advance child tax credit payments will stop at the end of the year. 

The Institute’s analysis used different poverty rates for different areas depending on cost-of-living there. A family of four was considered to be living in poverty with a national average annual household income of $30,232 or less. 

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