Despite the severe economic disruptions brought about by the pandemic, government aid led to a decline in poverty last year. Census Bureau numbers released last week show a nationwide drop in poverty from 2019 to 2020 (11.8% to 9.1%), when accounting for social safety net benefits and federal pandemic relief efforts. In California, federal stimulus payments (also known as economic impact payments) and key expansions to unemployment insurance (UI) helped millions make ends meet.
California saw a similar decline in poverty—from 16.2% to 12.3%—compared with the nation as a whole. The state’s poverty rate nonetheless remains higher than the nationwide rate. California has long been a high-poverty state, as the boost that families get from safety net programs is often outweighed by high housing costs. Notably, the reduction in poverty was sharpest for children, who are traditionally a focus of safety net assistance.
As has been noted nationally, this decline underlines the ability of government action to alleviate poverty. In California, federal stimulus payments kept 1.58 million Californians out of poverty, and unemployment insurance helped 940,000 Californians stay out of poverty. These two programs played important roles across racial/ethnic groups—but had larger effects for Latino, Asian American, and Black Californians. Disparities in poverty between Latinos and whites narrowed markedly—in 2019, Latinos were 2.3 times more likely to be in poverty than whites, compared to 1.8 times more likely in 2020. Black-white disparities and Asian-white disparities also narrowed slightly during this time frame.
Nonetheless, there continue to be stark racial/ethnic disparities in poverty, with groups facing the most severe economic, health, and educational consequences of the pandemic also facing the highest levels of poverty. Further, trends in food insecurity show a mixed picture—though there was no overall national increase in food insecurity between 2019 and 2020, food insecurity rose for households with children and for Black families, but dropped for white families. Housing costs have also continued to soar during the pandemic, creating challenges for alleviating poverty in the long run.
Stimulus payments, unemployment insurance, and other pandemic relief programs were short-term fixes designed to avert economic hardship amid a crisis. The fact that they were so successful in reducing poverty may prompt state and federal policymakers to reassess the role of longstanding safety net programs in boosting family incomes and supporting well-being and economic success. Recent actions taken by California policymakers—including expanding school meals programs and broadening eligibility for the CalEITC to tax payers regardless of immigration status—are steps in this direction.