U.S. household income fell in 2020 while the national poverty rate rose from a 60-year low as the Covid-19 pandemic upended the U.S. economy and threw millions out of work.

Median, inflation-adjusted household income decreased 2.9% last year to $67,521 according to annual data released Tuesday by the U.S. Census Bureau. The poverty rate rose one percentage point to 11.4% after having dropped for five straight years and reaching the lowest since 1959 in 2019. 

The data help flesh out the picture of American families’ economic health in 2020 amid a pandemic that caused the first annual economic contraction since 2009, put tens of millions out of work and exacerbated existing inequalities. 

Lower-wage service-industry workers and people of color bore the brunt of job losses. The government’s stimulus checks and extra $600 a week in jobless benefits helped soften the blow, supporting incomes and spending amid widespread unemployment. 

The Supplemental Poverty Measure, which includes many government-assistance programs, declined 2.6 percentage points to 9.1% in 2020, the lowest since the gauge started in 2009. This rate is lower than the official poverty rate because of economic-relief payments related to the pandemic, which moved 11.7 million people out of poverty in the first two rounds of disbursements. Five million people were added to poverty due to medical expenses.  

There were 37.2 million people living in poverty in 2020, 3.3 million more than a year earlier, the Census Bureau said. It considers a two-parent, two-child household with less than $26,246 in income to be living in poverty; the measure differs by size of household.
The data show that the official poverty measure is outdated and “can’t be used to examine public policy,” said David Johnson, a research professor at the Institute for Social Research and Ford School of Public Policy at the University of Michigan.

Digging Deeper

• Poverty rates rose among Hispanics and non-Hispanic Whites. While the poverty rate among Black people was the highest at 19.5% and the Asian rate also increased, both weren’t statistically significant changes from 2019

• Close to one in four people without a high-school diploma were in poverty compared with less than 4% of people with a bachelor’s degree or higher

• Women are still more likely to live in poverty at rates of 12.6% compared with 10.2% for men. The female-to-male earnings ratio was 0.83, not statistically different from the 2019 ratio

• For families with single female heads of household, 23.4% were in poverty compared to 11.4% for families led by single males. Married couples saw the lowest poverty rates at 4.7%, up slightly from a year ago

• Median incomes for non-Hispanic White, Asian, and Hispanic households all decreased in 2020, while changes for Black households were not statistically different. Real median incomes fell in every region of the country other than the Northeast. Every household income group saw income fall in 2020 except for the top 5% of households

Tuesday’s report also shows the share of Americans without health insurance at 8.6% last year, amounting to 28 million people. For people with health insurance coverage, 66.5% are on private insurance and 34.8% are on public plans

This article was provided by Bloomberg News.