Of the various measures of thecomet strike on the U.S. economy, one especially reveals the size of the crater: Over a six-month period, nearly 8 million Americans have tumbled into poverty.
The nation's poverty rate in November jumped to 11.7%, up 2.4 percentage points from 9.6% in June — the biggest one-year increase in the 60 years that the government has been keeping numbers, according to new research from three universities. James X. Sullivan, a professor of economics at Notre Dame, and Bruce D. Meyer, an expert in poverty and inequality and professor at the University of Chicago's Harris School of Public Policy, are tracking the nearly real-time data on a dashboard that registers the economic impact of COVID-19.
Their work shows that poverty actually declined in the first few months after the virus first hit U.S. soil this spring, thanks to federal, enhanced unemployment benefits, small-business loans and other aid, but that it has risen sharply since June. Even as the economy was beginning to recover when unemployment peaked at 14.7% in April, millions of people were being pushed below the official poverty line of $26,200 for a family of four.
Official poverty estimates are typically available in September for the previous calendar year. The professors used Census data, including a question about monthly household income, to come up with their estimates.
"We realized when the pandemic hit there was all of a sudden an urgency to what's happening to poverty right now, and there was a pretty reasonable way to measure that," Sullivan told CBS MoneyWatch.
$1,200 is "a pretty big bonus"
The study, which also included economist Jeehoon Han of China's Zhejiang University, underscores the importance of swift government intervention after what was the sharpest economic downturn since the Great Depression.
"The patterns tell a pretty straightforward and striking story," Sullivan said. "At first we saw a decline in poverty even though unemployment rates were rising sharply, and the reason for that is the expanded benefits through the [Coronavirus Aid, Relief and Economic Security (CARES) Act] and from economic impact payments and more generous unemployment benefits and broader eligibility for them."
In other words, the increase in benefits outstripped the coronavirus-induced loss in earnings, which led to a decrease in poverty.
"Even though unemployment rates were rising and households lost a primary source of income, at least in the short term the stimulus households received exceeded what they lost. Twelve hundred dollars is a pretty big bonus for someone near the poverty line," Sullivan added, referring to the $1,200 stimulus payments ($2,400 for married couples) distributed to more than 160 million Americans.
Poverty rose as federal aid fell away
But those payments were a one-time event, while supplementary jobless benefits under CARES lapsed at the end of July. As a result, poverty started rising as aid for the unemployed dwindled and after most individuals and families had spent their stimulus checks.
"The CARES Act and additional government relief went a long way to staving off a rise in poverty, but those benefits have expired or will soon expire, so it's not surprising we see poverty creeping up again," Sullivan said.
While the nation's headline unemployment rate has fallen to 6.7%, poverty has steadily risen over this period. One explanation is that although fewer Americans are jobless, the official rate of unemployment doesn't capture the millions of workers who've given up looking for a job altogether. Other workers may be employed full time, but have had their hours cut and earn incomes that put them below the poverty line.
"A lot of people have left the labor force, so, while officially about 10 million Americans are unemployed, there's another 5 million people that have left the labor market and are still looking for jobs," Meyer said.
Some economists argue that the true rate of joblessness is much higher. the Ludwig Institute for Shared Economic Prosperity (LISEP), headed by American businessman Gene Ludwig, calculates how many American workers aremeaning they either want to be working full-time but are unemployed, or cannot secure employment that lifts them above the poverty line. LISEP estimates that the "True Rate of Unemployment" for November was nearly 26%.