Did Unemployment Insurance Lower Official Poverty Rates in 2020?

In the early months of the COVID-19 pandemic, shutdowns across the country resulted in rapid job loss. In response to soaring unemployment, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in late March 2020. The CARES Act significantly expanded unemployment insurance by $600 a week, broadened eligibility, and extended benefits for an additional 13 weeks.

How did these moves affect the official poverty rate?

Unemployment insurance (UI) benefits lowered the overall poverty rate by 1.4 percentage points to 11.4% in 2020 and decreased poverty across all racial groups and all age groups, according to U.S. Census Bureau data released today (differences due to rounding).

Without unemployment insurance, 4.7 million more people would have been in poverty and the overall poverty rate would have been 12.9% in 2020. Less than full-time, year-round workers were among the most impacted by expanded unemployment insurance benefits.

UI lowered the poverty rate for less than full-time, year-round workers by 4.1 percentage points (2.2 million) in 2020.

The effects of UI on poverty rates were particularly stark for some demographic groups.

Unemployment insurance had a large impact on poverty among the Black population, lowering the number of Black people living in poverty by 2.5% (1.1 million).

Impact of UI on other groups:

• For White, non-Hispanic individuals, the number in poverty decreased by 1.0% (1.9 million).
• For Hispanic individuals, the number in poverty dropped by 1.9% (1.2 million).
• For Asian individuals, 2.1% (425,000) were not in poverty due to UI.

The decline in poverty rates between Asian and Hispanic individuals and Asian and Black individuals were not statistically different.

Unemployment insurance lowered the number of individuals in the United States living in poverty for all age groups in 2020.

UI had the greatest impact on children (under age 18) and the least impact on people 65 and older.

The number of children living in poverty fell by 2.0% (1.4 million) after including the value of UI while the number of people ages 18 to 64 living in poverty fell by 1.6% (3.1 million).

Among people ages 65 and older, UI pulled only 0.3% (160,000) out of poverty.

Unemployment insurance lowered the number of people living in poverty across all educational attainment groups.

UI had the smallest effect on the poverty rate of those with a bachelor’s degree, keeping only 0.7% (636,000) of these individuals out of poverty.

The effects were higher for all other attainment groups:

• For those with some college, 1.5% (855,000 people) were not in poverty due to UI.
• For those with a high school diploma but who did not attend college, the number in poverty dropped 1.5% (948,000).
• For people without a high school diploma, the decline was 1.5% (307,000).

The percentage point decline in poverty rates between those without a high school diploma was not significantly different from the decline in poverty rates for those with a high school diploma who did not attend college or attended some college.

Neither the decline in poverty rate nor the change in the number of people in poverty were significantly different between those with a high school diploma who did not attend college and those with some college.

Frances Chen and Em Shrider are survey statisticians in the Census Bureau’s Poverty Statistics Branch.