In September 2022, the U.S. Census Bureau and the U.S Department of Agriculture (USDA) released new data on the economic well-being of American households during 2021. While the poverty, income, and food insecurity data in particular demonstrate that the U.S. economy is showing signs of recovery from the COVID-19 pandemic, substantial gender, racial, and ethnic gaps remain. These gaps have persisted for decades and make it clear that policymakers must provide targeted and sustained investments to address inequities.
The official poverty measure (OPM), the Census Bureau’s older metric for measuring poverty, as well as the rate of food insecurity among U.S. households, held steady at 11.6 percent and 10.2 percent, respectively. Meanwhile, the supplemental poverty measure (SPM), a more holistic metric that accounts for a broader array of income sources and expenses, reached a record low of 7.8 percent. These rates all signify positive developments when placed in the context of 2021—a difficult year, as many communities across the United States struggled to recover from the economic turmoil of the COVID-19 pandemic. Spikes in COVID-19 cases throughout the year exacerbated this turmoil moreover, they were more likely to harm people of color and people with disabilities.
In response to the ongoing crisis, Congress and the Biden administration passed the American Rescue Plan Act (ARPA) in March 2021. The act provided much-needed fiscal stimulus to help ease the struggles of those hit hardest by the effects of the pandemic. Expansions in the child tax credit (CTC), unemployment insurance, and food assistance programs, as well as stimulus checks and more, helped provide some financial stability, easing poverty and food insecurity just one year into the pandemic.
------The official poverty measure vs. the supplemental poverty measure
Developed in the 1960s, the official poverty measure considers pre-tax cash income from sources such as wages, unemployment insurance, and Social Security over the year, measuring them against an annually updated threshold.
The supplemental poverty measure is a newer measure that takes into account additional factors to reflect the financial situation of people more accurately these factors include tax credits, food assistance, and housing benefits received, as well as taxes, medical expenses, and child care costs paid, with varying thresholds based on geographic differences. This measure is more helpful in a policymaking context because it more thoroughly reflects policy choices and individual and family needs.
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While investments made through the ARPA were imperative to post-COVID-19 recovery and resiliency, eliminating poverty and food insecurity will require more targeted, long-term investments in strengthening the social safety net, as well as a rethinking of the U.S. economic system so that it works effectively for everyone. Economic hardship is estimated to have increased immediately as provisions from the ARPA expired, with 3.7 million children entering poverty in January 2022 after monthly payments from the expanded CTC ended. Poverty is a policy choice, and federal policymakers must recognize this by working to reverse harmful trends. This includes addressing the facts that the federal minimum wage has stagnated for years, public cash assistance dollars have slowly withered away, and the supplies of affordable housing and child care are inadequate and do not have enough federal support. To reverse the impacts of these occurrences and strengthen economic security for all, policymakers must make properly sustained investments in low-income communities.
OPM and SPM illustrate persistent racial gaps in a period of comparatively low poverty
The newest set of poverty data comes from the Annual Social and Economic Supplement of the Current Population Survey conducted by the U.S. Census Bureau. According to the data, the 2021 official poverty rates did not change much compared with 2020, when Black and Hispanic poverty rates were already measured near the lowest levels seen for decades. Yet the OPM does capture some investments made during the pandemic, such as the temporary expansions to the unemployment insurance system that helped millions of jobless workers stay afloat. Such investments helped prevent an increase in poverty similar to the one that followed the Great Recession but did not change the persisting gaps between white people and Black and Hispanic people. (see Figure 1)*
Importantly, the OPM only looks at before-tax cash income. When looking at the SPM to see how investments into tax and noncash benefits, such as CTC and food assistance expansions, have affected poverty, rates for Black and Hispanic people actually dropped by 3.5 percentage points and 2.8 percentage points, respectively, from 2020 to 2021—record-low levels since at least 2010. (see Figure 2)**
For the first time in more than a decade, supplemental poverty rates for Black and Hispanic people were both under twice the supplemental poverty rate for white people, while gaps in official poverty rates did not break this threshold. These trends, shown in Figure 3***, exemplify the strong and immediate impact that investments in low-income families can have on long-standing racial disparities in poverty rates.
Poverty among Asian American and Pacific Islander people has proved to be an outlier in these trends. It increased under both poverty measures from 2020 to 2021, though the Census Bureau notes that only the change in the OPM was statistically significant. When looking at poverty among various Asian ethnicities, however, it is clear that experiences vary widely among different ethnicities. As shown in Figure 4****, poverty rates have increased among Indian, Chinese, and Korean people and decreased among Filipino, Japanese, and Vietnamese people. Although using yearly data to compare these populations means that the sample sizes are small and prone to inaccuracies, previous analysis combining multiple years of data supports the idea that these groups vary in everything from poverty rates and income to education level and health insurance coverage.
Women of color face greater inequities
While overall poverty numbers have decreased for people of color, persistent disparities remain for women of color. In 2021, Black women continued to experience the highest poverty rates of any group as measured by both the OPM and the SPM, while Hispanic women experienced the second-highest rates. (see Figure 7 (5*))
However, the trend in the SPM (see Figure 10) reveals that recent economic supports have helped close this gap, as differences between the SPM for men and women of the same race or ethnicity are each at or below 0.4 percent. For Black Americans in particular, the SPM rates have hit parity, meaning that Black men and women experienced equal levels of poverty in 2021 when factoring in government benefits, including those from the Supplemental Nutrition Assistance Program (SNAP), the CTC, and other supports that were expanded in 2021 in response to the COVID-19 pandemic.
Despite progress in reducing poverty within these communities, however, gender and racial wage gaps, occupational segregation, and a lack of family-centered policies such as access to paid leave and affordable child care prevent meaningful closure of racial and ethnic poverty gaps. In addition, recent laws banning and restricting abortions in many states upon the overturning of Roe v. Wade risk reversing progress in future years, as women of color, particularly Latinas and Black women, are set to lose access to abortions at disproportionate rates. Studies have shown that restricting access to abortion can harm women’s economic security, leading to increased exits from the workforce and moves to lower-paying jobs, while also increasing child poverty rates. These things are compounded by the fact that the majority of states with abortion bans have minimum wage rates at the federal floor of $7.25 per hour.
Overall, while official poverty rates have gradually declined for Black and Hispanic women over the past 30 years, they are still far higher than the rate for white women.
Despite these overall trends, women of color continued to experience the highest rates of poverty in 2021. Overall, the poverty rates of Black and Hispanic women were more than double those of white, non-Hispanic women under the OPM and roughly double under the SPM. (see Figure 7)
Men of color have experienced similar declines in poverty over the past several decades. Yet as Figure 8 shows, while the official poverty rate has decreased by more than 10 percentage points for both Black and Hispanic men since 1990, it continues to far exceed the rate for white men.
Conclusion
2021 was a landmark year in the fight against poverty and for economic resiliency in light of continuing COVID-19 impacts. Moving forward, policymakers should learn from these victories and build on them. The persistence of poverty, income, and food insecurity gaps demonstrates that efforts to strengthen economic security for all are still a work in progress—one that cannot continue without sustained investments in low-income communities and a stronger safety net. Policies such as renewing the now-expired enhanced CTC, increased investments in child care, fair wage and employment laws, access to paid leave, and expanded support for food assistance can go a long way toward reshaping the traditionally inequitable gaps that have held the American economy back for decades
Kyle Ross, Research Associate, Inclusive Economy
Justn Dorazio, Policy Analyst, Racial Equity and Justice
