Decline in Supplemental Poverty Measure Shows Positive Effect of Pandemic Economic Stimulus

On September 14, the U.S. Census Bureau released its annual reports on income, poverty and health insurance coverage for 2020. Following are some highlights of these reports, which were compiled from the Census’s Current Population Survey Annual Social and Economic Supplement (CPS-ASEC) conducted in March, 2021.

 37.2 million Americans were poor in 2020.

Of particular interest this year is a comparison between official poverty estimates, which rely solely on pre-tax money income, and the Supplemental Poverty Measure (SPM), which takes into account the value of non-cash benefits, such as SNAP and housing assistance, while subtracting non-discretionary expenses such as taxes, child care, and medical expenses. (Pandemic stimulus payments and refundable tax credits are added into a household’s available resources.)  

Using the official poverty definition, 37.2 million Americans (11.4 percent) were poor in 2020, a significant increase from 34.0 million (10.5 percent) in 2019. Using the SPM, 29.8 million Americans (9.1 percent) were poor in 2020, a significant decrease from 38.3 million (11.8 percent) in 2019. 2020 marked the first year the SPM was lower than the official poverty rate, as well as the lowest it has been since it was introduced in 2009.

Official Poverty Estimates

Unlike the federal poverty guidelines used to determine eligibility for assistance programs, the federal poverty thresholds used by the Census Bureau are determined by a family’s size, composition, age of householder and money income, and is adjusted for inflation annually. For 2020, the federal poverty threshold was:

• $13,465 for a single person under 65;
• $12,413 for a single person 65 or older;
• $20,852 for a single parent with two children; and
• $26,246 for two parents with two children.Nationally in 2020, there were 37.2 million Americans living below the poverty threshold, for a poverty rate of 11.4 percent. This represents an increase of three million people from 2019, when the poverty rate was 10.5 percent.  

Once again, the new data show that poverty rates differed by race and ethnicity. The rates for Blacks and Hispanics were more than double that for non-Hispanic Whites:

• 8.2 percent for Non-Hispanic Whites;
• 19.5 percent for Black Residents;
• 17.0 percent for Hispanic or Latino People; and
• 8.1 percent for Asian Americans.There was an inverse relationship between educational attainment and poverty. For adults age 25 or older, 24.7 percent of those with no high school diploma were poor, as were 13.2 percent of those with only a high school diploma; 8.4 percent of those with some college, but no degree; and 4.0 percent of those with a bachelor’s degree or higher.

 Children had a higher poverty rate than working-age adults or seniors.

Children had a higher poverty rate than working-age adults or seniors. More than 11.6 million children under 18 (16.1 percent) were poor, as were 20.6 million adults 18 to 64 (10.4 percent); and 5.0 million seniors 65 or older (9.0 percent).  

Around 7.3 million families, or 8.7 percent of all families, were below poverty in 2020, an increase of more than 600,000 families from 2019. Poverty rates differed by type of family, with 4.7 percent of married-couple families living below poverty compared to 23.4 percent of single female-headed families and 11.4 percent of single male-headed families.

Poverty Estimates Using the Supplemental Poverty Measure (SPM)

In calculating a household’s resources, SPM estimates incorporate the value of non-cash benefits such as SNAP (food stamps), WIC, energy and housing assistance in addition to money income. It also deducts necessary expenses such as taxes, work-related and child care expenses and medical expenses. The SPM thresholds are calculated by the Bureau of Labor Statistics, derived from the Consumer Expenditure Survey data and adjusted for geographic differences in housing costs.

 Nationally in 2020, there were 29.8 million Americans living below the SPM threshold.

Nationally in 2020, there were 29.8 million Americans living below the SPM threshold, for a SPM rate of 9.1 percent. This represents a decline of 8.5 million from 2019, when the SPM rate was 11.8 percent. In Ohio, the three-year average SPM from 2018 through 2020 was 9.3 percent, significantly lower than the average official poverty rate of 12.4 percent.  

Across the country, SPM rates differed by race and ethnicity. As with the official poverty measure, the rates for Blacks and Hispanics/Latinos were more than double that for non-Hispanic Whites:

• 6.5 percent for Non-Hispanic Whites;
• 14.6 percent for Black Residents;
• 14.0 percent for Hispanic/Latino People; and
• 8.8 percent for Asian Americans.Unlike the official poverty measure, children and seniors had only slightly higher SPM rates than working-age adults; 7.1 million children under 18 (9.7 percent) were poor under the SPM definition, as were 17.4 million adults 18 to 64 (8.8 percent); and 5.3 million seniors 65 or older (9.5 percent).  

Since the SPM uses a broader definition of household consumption units than the official poverty measure, comparable family poverty rates cannot be calculated under the SPM. Nevertheless, SPM rates can be calculated for persons in different types of consumption units. According to the report, the SPM rate was 5.0 percent for married couples; 8.5 percent for cohabiting couples; 18.2 percent for units with a female reference person; 11.7 percent for units with a male reference person; and 17.5 percent for unrelated individuals.  

Household Income

Real (inflation-adjusted) median income for all households in the U.S. declined significantly from $69,560 in 2019 to $67,521 in 2020, a 2.9 percent decrease. (The median income is the “middle value,” with half of households earning above the median and half earning below.)  

Family households had a higher median in 2020 ($86,372), compared to non-family households ($40,464), many of whom live alone. Among family households, married couples had a median of $101,517, compared to single female-headed families at $49,214 and $67,304 for single male-headed families.

 All racial/ethnic groups experienced a decline in household income in 2020, and racial disparities persisted.

All racial/ethnic groups experienced a decline in household income in 2020, and racial disparities persisted. The median income for households led by someone who is non-Hispanic white was $74,912, compared to $45,870 for Black-headed households, $55,321 for Hispanic/Latinx households and $94,903 for Asian American households.  

Households headed by a senior 65 or over had a lower median income ($46,360) compared to households headed by someone under 65 ($76,800).  

Real median earned income (from wages, salaries, and/or self-employment) declined from $42,056 in 2019 to $41,535 in 2020, a 1.2 percent decrease. However, for those working full-time and year-round, median earnings rose 6.9 percent, from $52,650 to $56,287. Coupled with the fact that full-time, year-round employment declined by 13.7 million, compared with a decline of 3.0 million for all employment, this increase in median income may indicate that because of the pandemic, more full-time lower-wage workers either moved to part-time status or lost their jobs altogether.  

There was still a significant gender gap in earnings in 2020. Female full-time, year-round workers earned a median of $50,923, just 83.0 percent of the median $61,417 earned by their male counterparts.

Insured, Uninsured, and Type of Health Insurance

In 2020, 28.0 million Americans (8.6 percent) lacked health insurance coverage for the entire year. Of the 297.7 million with coverage for all or part of the year, 216.5 million (66.5 percent) had private coverage, and 113.3 million (34.8 percent) had public coverage. (Some people may have more than one type of coverage.)

• Private coverage includes:  
• Employment based (177.2 million covered; 54.4 percent);  
• Directly purchased (34.0 million; 10.5 percent), including 10.8 million or 3.3 percent from the marketplace); and  
• TRICARE (military) (9.2 million; 2.8 percent).
• Public coverage includes:  
• Medicare (59.8 million; 18.4 percent);  
• Medicaid (57.9 million; 17.8 percent); and  
• VA or CHAMPVA (3.0 million; 0.9 percent).Compared to 2019, there was a small but significant decline in the percent of Americans with health insurance coverage in 2020, mostly due to a 2.0 percent decline in employer-based coverage. Since the “uninsured” category only counts those without insurance for the entire year, people who were insured at the beginning of the year but lost coverage later in the year are still counted among the insured.  

Due to their eligibility for specific public coverage, children under 19 and senior 65 and over were less likely to be uninsured than working-age adults between 19 and 64. Around 5.6 percent of children under 19 were uninsured in 2020, compared to 11.9 percent of adults 19 to 64 and 1.0 percent of seniors 65 and over.  

Of racial/ethnic groups, 5.4 percent of non-Hispanic whites were uninsured, compared to 10.4 percent of Blacks; 5.9 percent of Asian Americans; and 18.3 percent of Hispanics and Latinos.  

The uninsured rate also declined with increasing income relative to the poverty level:

• 17.2 percent among those with less than 100% of the FPL;
• 13.33 percent of those 100%-199% of the FPL; and
• 3.4 percent of those 400% or more of the FPL.Since many adults obtain coverage through their spouses, the uninsured rate was lower among the married (8.5 percent) than the rate of more than 10 percent for adults who were single, divorced, widowed or separated.

States with Medicaid Expansion vs. Non-Expansion

The Affordable Care Act (ACA) offered states the option of expanding Medicaid coverage to adults who were previously ineligible, based on a higher income-to-poverty ratio. As of January 2020, the District of Columbia and 35 states -- including Ohio -- had opted for expansion. The uninsured rate in these states was 6.4 percent, compared to 12.6 percent in the 15 others that had not expanded Medicaid. This means the uninsured rate in non-expansion states is almost double the rate for expansion states.

Effect of Pandemic Relief on the Supplemental Poverty Measure

In response to the COVID-19 pandemic and the subsequent economic decline, the federal government made two economic stimulus payments to households in 2020, expanded unemployment benefits, and expanded other assistance programs such as SNAP. The SPM methodology enables the calculation of the effect of these payments on the number and percent of people in poverty by gauging the effect of removing these components from the SPM. In particular, the Census Bureau has shown that in 2020:

• The pandemic economic stimulus payments lifted 7 million people out of poverty. Without these payments, the SPM would have been 3.6 percentage points higher;
• Unemployment benefits, both traditional and supplemental, lifted 5 million people out of poverty. Without these benefits the official poverty rate would have been 1.4 percentage points higher;
• SNAP, school lunch programs, and Pandemic-EBT benefits lifted 2 million people out of poverty.(These effects may overlap and are not additive.)

 The data released in September give us the first official look at poverty conditions across the country in 2020.

In addition to helping individual households weather the pandemic, these payments, when spent, provided a counter-cyclical stimulus to the overall economy, thus softening the resulting economic recession caused by the pandemic.  

The data released in September give us the first official look at poverty conditions across the country in 2020. Community Solutions will continue to monitor data and information as it is released.