The big drop in American poverty during the pandemic, explained

“In March, researchers at Columbia led by Zachary Parolin estimated that as a result of President Joe Biden’s stimulus package, the American Rescue Plan, the US poverty rate would fall to 8.5 percent, the lowest figure on record and well below 2018’s figure of 12.8 percent. This past month, researchers at the Urban Institute, using a slightly different means of measuring poverty, found that 2021 poverty will be around 7.7 percent, almost a halving relative to 2018’s rate of 13.9 percent per their methodology. (Official US Census poverty statistics for 2020 have not yet been released.)

The Columbia authors find that if you compare 2021 to every year for which the census does have data, from 1967 to 2019, and use a consistent poverty line, 2021 is projected to have the lowest poverty rate on record.

Considering that the US endured a pandemic and economic shock in 2020, these numbers are remarkable.”

“If handing out cash led people to work dramatically fewer hours or to quit their jobs, then cash payments wouldn’t cut poverty by as much as they initially seem to.

Luckily, cash doesn’t seem to discourage work to that degree. In 2019, a group of economists and sociologists specializing in child poverty put together a major report for the National Academy of Sciences, and their estimate based on the research literature was that a cash benefit of $3,000 per year for all but the richest children would reduce work effort by about 1.15 hours a week on average — a fairly trivial amount that barely changes the antipoverty impact of such a program.

The effects of stimulus checks to adults, like those pursued in the past year, are surely different, but the evidence generally suggests that work disincentive effects of cash are small. University of Pennsylvania economist Ioana Marinescu, in a wide-ranging review of the effects of cash programs, concluded, “Our fear that people will quit their jobs en masse if provided with cash for free is false and misguided.””

“The US has been sending out a lot of cash during the pandemic. But that’s almost certainly coming to an end. The enhanced child tax credit is a policy many Democrats want to make permanent, or at least (as the Biden administration has proposed) extend for several more years. But the $1,200 and $600 and $1,400 stimulus checks were emergency measures, as were the $300/$600 weekly unemployment supplements.

All that implies that in 2022, when those measures are gone, poverty is likely to shoot back up again, even in a strong economy with robust job growth.”

The Democratic plan to smash poverty for seniors and people with disabilities

“In 2021, the maximum SSI benefit for an individual is $9,530.12 per year. The poverty line for a single person is $12,880 — meaning that SSI, at most, brings recipients up to less than three-quarters of the poverty line.

It gets worse, though. Let’s say you’re an SSI recipient married to another recipient, which makes you an “eligible couple.” You could both be retirees in your 70s, or disabled/blind people earlier in life.

You don’t get to add your benefit amounts together. Instead, you have to share a maximum benefit of $14,293.61, only 50 percent more than the individual benefit. The effect is a really dramatic marriage penalty: Two SSI recipients receive a large income boost if they get divorced, but those who marry take a big cut in benefits.

In late May 2020, Joe Biden announced his campaign’s disability policy platform, which included major expansions of SSI benefits. The plan set the maximum benefit at 100 percent of the poverty line, a 35 percent increase in benefits over the status quo. The proposal would also eliminate both the marriage penalty — letting couples keep their full benefits — and the complex “in-kind assistance” provisions that result in reduced SSI checks for some people who, say, live for free in a family member’s home.

There’s more. SSI is currently limited to people with assets of less than $2,000, or $3,000 for couples. That means many seniors who have even a small amount of retirement savings, as well as disabled people with nest eggs, aren’t eligible.

Biden would more than double the asset limit for individuals and nearly triple it for couples. I’d personally prefer getting rid of the asset test altogether, as it can encourage people to spend every bit of savings they have to qualify for the benefit; that said, raising it is an improvement.

Biden has recently faced a strong push from his allies in Congress to include these changes in the huge $6 trillion spending package Democrats plan to pass later this summer or in the fall.”

If the US Postal Service fails, rural America will suffer the most

“The USPS is legally required to deliver all mail, to all postal addresses in all regions, at a flat rate, no matter how far it may have to travel. The service’s accessibility and affordability are especially important to rural communities that live in poverty and to people with disabilities, who can’t afford the cost of a private business to deliver their daily necessities. (In 2017, the rural poverty rate was 16.4 percent, compared with 12.9 percent for urban areas.)
And while some may argue that the USPS is becoming more obsolete as an increasing number of services are becoming digitalized, there’s still a large chunk of people who rely on mail because they have poor (or no) internet service. (The Federal Communications Commission estimates that 14.5 million people in rural areas lack access to broadband.) In fact, 18 percent of Americans still pay their bills by mail, according to an ACI Worldwide report; meanwhile, 20 percent of adults over 40 who take medication for a chronic condition get those pills by mail order, according to a survey by the National Community Pharmacists Association.

Then there are the several small towns around the country that vote only by mail because they’re not populated enough to open up polls. In Minnesota, for example, 130,000 receive a mailed ballot every election because they live in a town with fewer than 400 people.

“USPS isn’t just a public service,” Baker said. “It’s a lifeline.””

“The USPS was never really meant to operate as a business but as a public service, which is why it’s been able to keep its prices lower than private companies. Businesses like FedEx and UPS don’t build offices in remote rural areas, like deep in Wyoming or in the mountains of Colorado, because it’s simply not profitable. They often rely on the Post Office for last-mile delivery; the agency delivers mail for them from major transportation hubs to the final delivery destination, often in secluded areas.

This ultimately means that without the USPS, FedEx and UPS won’t have the resources to deliver to remote rural areas, nor will they likely make investments to do so since they’ll lose money in the process. Instead, people will have to bear the burden of traveling to the companies’ offices in larger towns to meet their mailing needs.”

“The USPS also serves a crucial role in ensuring that everyone has a right to vote by delivering mail-in ballots to the most remote areas of America. Several states allow those in small towns to vote by mail so that they don’t have to travel miles to their polling area in larger cities. It’s played a particularly important role in rural areas where the population is growing older — rural communities have the largest share of people above the age of 65 — and is less mobile than younger generations.”