For the first time in over two decades, a critical benefit for the low-income elderly and severely disabled is getting a hearing in the Senate.
The Supplemental Security Income (SSI) program provides monthly checks to nearly 8 million Americans who have a disability or are over the age of 65 and are low-income. The maximum federal SSI benefit of $794 per month is $279 below the federal poverty level and some Democrats want to lift it higher.
Ohio Sen. Sherrod Brown, who reintroduced the Supplemental Security Income Restoration Act in June, is leading Tuesday’s hearing of the Senate Finance Subcommittee on Social Security, Pensions, and Family Policy to discuss improvements to the program.
The last time Senate held a hearing on the issue was in 1998, when monthly SSI payments were $494, which fell below the Dept. of Health and Human Services poverty guidelines even at the time.
Brown is pushing to get the proposals in the bill – like increasing SSI benefits to 100% above the poverty level for individuals – included in Democrats’ $3.5 trillion social spending bill.
“The promise of Social Security is to ensure that no one in America should live in poverty – least of all our nation’s seniors and people with disabilities,” Brown said in a statement, adding that “Congress must prioritize these long-overdue reforms as part of upcoming recovery legislation.”
Insider reported earlier this month that Brown’s proposal to boost SSI benefits would lift 3.3 million people out of poverty and cut the poverty rate of SSI recipients by more than half, citing the Urban Institute.
Disability advocates lauded the senate hearing. Rebecca Vallas, senior fellow at the Center for American Progress, wrote on Twitter that the hearing is “historic,” given that the last Senate hearing on SSI was in 1998 and the last hearing on SSI’s eligibility criteria was in 1987.
Mia Ives-Rublee, director of the Disability Justice Initiative and the Center for American Progress, who is testifying at the hearing, wrote on Twitter that restoring the program will “fulfill its original intent” of lifting those burdened by economic hardship out of poverty.
The Democrats’ $3.5 trillion reconciliation bill includes other measures to address poverty, like giving families with children monthly checks through an extended child tax credit. But the size of the bill has some more moderate Democrats concerned, and given that fully funding Brown’s bill would require about $510 billion in new spending, according to the Social Security Administration, its inclusion won’t be easy.
But, as Brown wrote in a letter to the Social Security Administration, raising asset limits would cost just $8 billion, showing potential for some of the measures in his bill to be included in the spending package if the whole proposal doesn’t make the cut.
Poverty in the US increased in 2020 as the coronavirus pandemic hammered the economy and unemployment soared. Those at the bottom of the economic ladder were hit hardest, new figures confirm, suggesting that the recession may have widened the gap between the rich and the poor.
At the same time, full-time year-round workers saw their real median earnings increase 6.9% from 2019 levels – indicating that losses were borne primarily by part-time workers and people who aren’t employed throughout the whole year.
What’s more, the share of aggregate income – the sum of all incomes generated in the whole country – for the lowest-income households declined by 3.4%, while it increased by 0.7% among the highest-income households.
In another sign that low-income workers were hit the hardest in 2020, 53% of all jobs lost were held by workers earning less than $34,000 per year.
It’s unclear whether these inequality-exacerbating trends are continuing in 2021 or will be sustained in the years to come. But in June 2021, employment for low-wage workers had fallen by 21% from January 2020 levels, while employment for high-income workers had gained 9.6%.
Some success for stimulus and relief measures
The impact of the stimulus and supports is much more apparent in the Supplemental Poverty Measure rate, which takes into account additional sources of income, such as tax credits and other government benefits.
Without the series of relief and stimulus packages implemented between March 2020 and the end of the year, the supplemental poverty rate would have reached 12.7%, the Census said. Instead, it stood at only 9.1%, 2.6 percentile points lower than what it otherwise would have been.
In the report, three-year poverty level averages were calculated for each state and the District of Columbia using the supplemental poverty measure, which found that 15.4% of California residents lived in poverty from 2018 to 2020. Only the District of Columbia had a higher rate of poverty – 16.5%.
The supplemental poverty measure expands on the official poverty measure, which was developed by Social Security economist Mollie Orshansky in the 1960s, by accounting for cost of living, work and medical expenses, tax credits, and government programs designed to assist low-income families and individuals.
Social Security transfers and stimulus payments prevented a combined 38.2 million individuals across the US from falling into poverty, while medical expenses caused the largest increase of the number of individuals in poverty, according to the Census Bureau report.
West Virginia Sen. Joe Manchin on Sunday floated the possibility of establishing a work requirement for people to receive the child tax credit, a program that was expanded earlier this year by President Joe Biden and Democrats in the stimulus law.
“I support child tax credits. I sure am trying to help the children,” Manchin, an influential moderate Democrat, said Sunday, though he was hesitant about whether the credit should become permanent when asked Sunday by CNN’s Dana Bash on “State of the Union.”
“You want to help the children and the parents that are basically providing for those children,” Manchin said. “There’s no work requirements whatsoever. There’s no education requirements whatsoever for better skill sets. Don’t you think, if we’re going to help the children, that the people should make some effort?”
Biden and supporters say the credits serve as an important tool to slash child poverty rates.
Currently, the child tax credit provides up to $300 a month for each child aged 5 or younger, or $3,600 annually. For children between ages 6 and 17, families can receive up to $250 each month, or $3,000 each year.
Individuals who earn $200,000 or more and couples with a combined income of $400,000 or more are not eligible to receive the credit.
As Insider previously reported, House Democrats and Senate Democrats could clash over the expansion of the tax credit. Democrats in the House are pushing forward on a plan to renew the revamped child tax credit through 2025, while Senate Democrats are eyeing a shorter extension of the credit.
The United Nations’ development agency on Thursday said Afghanistan is heading toward “universal poverty” following the Taliban’s swift takeover of the country.
Within a year, the poverty rate in Afghanistan will hover at a whopping 97% or 98%, said Kanni Wignaraja, UNDP’s Asia-Pacific Director, according to the Associated Press.
“Afghanistan pretty much faces universal poverty by the middle of next year,” Wignaraja said. “That’s where we’re heading – it’s 97-98% no matter how you work these projections.”
The Taliban took over Afghanistan following President Joe Biden’s decision to withdraw US troops from the region. In its takeover, the Taliban renamed the country to the Islamic Emirate of Afghanistan, reverting back to the same name used during the last time the regime took power, in 1996. The regime remained in power until 2001, after the US invaded Afghanistan.
After the US ousted the Taliban from power in 2001, Afghanistan made several developmental gains including the doubling of per capita income and an increase in the average number of years of education, Wignaraja said.
In the two decades since the Taliban has not been in power, Afghanistan made significant economic gains that are now in danger of collapsing because of political instability. Afghanistan now faces “a crush on local banking” because of the Taliban takeover, Wignaraja said. That instability is only worsened by the pandemic.
The situation is “a humanitarian and development disaster,” Wignaraja said.
The poverty rate in Afghanistan is hovering at 72%. But without crucial humanitarian and financial aid, Afghanistan will sink deeply into poverty by the middle of next year, the AP reported.
The Biden administration, in an effort to limit the Taliban’s resources, froze nearly $10 billion in reserves in the country’s central bank – most of which is reportedly held by the Federal Reserve Bank in New York. The move has been criticized as misdirected and will ultimately hurt Afghans more than the Taliban, Shah Mehrabi, a senior board member of Da Afghanistan Bank, told Bloomberg.
“President Biden is not hurting the Taliban or the current regime,” Mehrabi said. “This is really hurting everyday Afghans and they will push them into further poverty.”
The Taliban has been blocked by US officials from accessing the reserves, Insider’s Natalie Musumeci reported. And there’s “almost no chance” that the Taliban will be able to bypass this restriction, a legal and financial expert told Insider.
Gwen Carney’s main hope is that her three grandchildren don’t grow up in poverty. But her $75,000 student-debt load is standing in the way.
Carney, a 61-year-old single grandmother in Oklahoma, has a Bachelor’s degree in counseling, a minor in psychology, and a Master’s degree in Indigenous people’s law. With her grandchildren’s parents out of the picture, she is supporting a 12-year-old, a 14-year-old, and a 17-year old in addition to herself. She told Insider it takes “every penny she earns” to get by.
“I probably would be able to qualify for food stamps, but I don’t want to do that,” Carney said. “I don’t want my grandkids to know that grandma had to go get food stamps, and that’s how they ate.”
Insider reported in May on the over 8 million borrowers over the age of 50 who hold 22% of the $1.7 trillion student-debt load in the country, with three of those borrowers saying they don’t think they will ever be able to pay off their student debt before they die. Massachusetts Sen. Elizabeth Warren told Insider that “student debt isn’t just crushing young people,” and that student debt is one of the biggest contributors” to the rise in debt for seniors overall.
The situation for Carney is different from most seniors. She desperately wants to give her grandchildren the lives they deserve, but with having to pay all of their expenses, including medical and education, on top of her student debt, working 40 hours a week at a job in counseling just isn’t enough.
“They’re good athletes, they’re good students, they’re good kids, and they give me no trouble whatsoever,” Carney said, referring to her grandchildren. “I don’t want my grandkids to be in poverty.”
‘Restarting payments makes me very anxious’
The student-loan payment pause during the pandemic has given Carney significant relief. She sewed facemasks and sent them across the country, and to Canada, to make some extra cash while she wasn’t paying off her student debt. But with payments set to resume in February, Carney is worried she won’t be ready.
“Restarting payments makes me very anxious because I somehow have to find that extra $200,” Carney said. “I just don’t have it.”
Since her grandchildren were doing school remotely during the pandemic, Carney said her water, gas, electric, and food bills tripled, and even though she was still getting her paychecks, the money that could have gone toward her student-loan payments went elsewhere.
Other borrowers took money saved from the payment pause and used it toward other expenses, as well. One borrower previously told Insider that the almost $400 she saved each month from not making student-loan payments during the pandemic allowed her to pay off the expenses of giving birth, in full.
And even for borrowers who did make payments on their student debt during the freeze, some of them did not even get $1 less in debt than their original balances, showing the inescapable nature of the debt.
“I’m really not looking forward to February at all,” Carney said. “It scares me.”
‘Don’t forget about us grandparents’
Elizabeth Warren and Senate Majority Leader Chuck Schumer wrote a CNBC op-ed in February highlighting the student debt plight for older Americans.
“Older Americans with student debt include people who may not have had a chance at a degree when they were younger because they had a family to support, but took a shot at the American dream and went to college later in life,” the lawmakers said. “Now their student debt eats away at the retirement security they worked so hard for.”
Carney pursued her Master’s degree because she had a family to support, and she wants to make sure other grandparents like her are not getting lost in the student-debt forgiveness conversation.
“Don’t forget about us grandparents that have done a great job raising our grandchildren with student debt,” she said.
But even with the constraints of student debt, Carney does not regret seeking an education. She just doesn’t want the debt to hold her grandkids back.
“I want them to be able to grow up and say, ‘We did not live in poverty. We did not use food stamps. We did not rely on the government to support us – Grandma did,” Carney said. “‘She did it the best she knew how.'”
Expanding child allowances is becoming a growing part of the conversation in Congress today, and new data from the US Census Bureau that reflected high and continuous poverty rates for children might accelerate that conversation.
The census released a report last week that analyzed poverty in the US from 2013-2016, and it found that 44% of children under 18 experienced poverty for at least two consecutive months during that time. This is known as “episodic poverty,” and that rate is nearly triple the episodic poverty rate for people aged 65 and older, at 15.8%. Adults aged 18-64 also had a lower episodic poverty rate than children at 33.6% in the same time frame.
Not only did children have the highest episodic poverty, the census found, but they also had the highest chronic poverty rate, which describes those in poverty for all months in the 2013-2016 time frame. For children, that rate stood at 4.6%, with adults and seniors at 2.4% and 1.5%, respectively.
Given the high rates of child poverty, in 2017, Colorado Sen. Michael Bennet and Ohio Sen. Sherrod Brown introduced the American Family Act to triple the Child Tax Credit and give families a $300 check for children ages 5 and under, and $250 for each child between 6 and 17.
This provision made it into President Joe Biden’s March stimulus law. The first payments started going out in July and will continue each month through December. Insider’s Madison Hoff reported last week that the first round of payments kept 3 million children out of poverty with the rate dropping from 15.8% in June to 11.9% in July, according to Columbia University researchers. Data from the Census Bureau also showed the checks fed 2 million children in its first month, as Insider’s Juliana Kaplan reported.
Even though the credit is set to end in December, Insider’s Joseph Zeballos-Roig reported that Democrats might seek to expand it to at least 2025, and possibly make it a permanent allowance.
“We’re talking, I keep pushing for permanence, but we’ll see where it goes,” Rep. Rosa DeLauro, the chair of the House Appropriations Committee, told Insider about the expanded child tax credit.
In addition to fighting child poverty, providing additional stimulus checks would also be significant in fighting poverty nationwide. The Economic Security Project found a fourth and fifth stimulus check could keep 12 million more Americans out of poverty, and with universal basic income pilot programs on the rise, recurring payments could become a reality.
The monthly payments the government started sending out to eligible families in July are already saving three million children from falling below the poverty line – and that’s just with one payment.
New research from Columbia University’s Center on Poverty and Social Policy finds that the first child tax credit payment has already contributed to the child poverty rate dropping from 15.8% in June to 11.9% in July, or a decline of 25%.
The authors note that this monthly decline was driven by the first advance child tax credit payment where the credit alone kept about three million children out of poverty. Families getting advance monthly payments are receiving up to $250 a month per child for children between 6 to 17 and up to $300 a month per child for children under 6 years old. Coronavirus relief measures altogether seem to have been effective in reducing child poverty, keeping 6 million children out of poverty in just July.
A ‘big deal’ for America’s kids
Zachary Parolin, a senior fellow at the Center on Poverty & Social Policy at Columbia University and one of the report’s authors, wrote on Twitter that “child poverty is very volatile throughout the year.”
“This is part of why the monthly [child tax credit] is a big deal: that drop you see in July will likely stay low and stable through the end of 2021,” he wrote.
The first advance child tax credit payment went out to millions of families on July 15. Eligible families started receiving the second one on August 13 and can expect four more monthly payments this year.
The temporary expansion included making the credit fully refundable, having 17 year olds be eligible, and half of the amount going out as monthly installments. The credit increased from up to $2,000 per child to up to $3,000 per child for children age 6 to 17 and $3,600 for children under 6. There also isn’t a minimum income requirement of $2,500, allowing families who didn’t qualify be included.
Families are using the checks to pay off debt and buy food
The Census Bureau’s Household Pulse Survey can also give some insight into how the child tax credit payments have been beneficial so far. Results from data collection from July 21 through August 2 showed 67.6% of adults in households that received a child tax credit in the past four weeks mostly spent it or to mostly pay down debt.
For now, the boost will only last a year, but Congress could extend it
Although the report notes 59.3 million children received the first payment, the child poverty rate could have dropped even more if all those that were supposed to receive it did.
“Expanding coverage to all eligible children is key to achieving the Child Tax Credit’s full anti-poverty potential, with the greatest gains to be realized for Black and Latino children,” the authors wrote.
Right now the expanded child tax credit is only for a year. As Insider’s Joseph Zeballos-Roig reported though, Democrats are looking to extend the expanded child tax credit to at least 2025.
“We’re talking, I keep pushing for permanence, but we’ll see where it goes,” Rep. Rosa DeLauro, the chair of the House Appropriations Committee and an architect of this measure, told Zeballos-Roig.
The Urban Institute recently estimated how much the child poverty rate could drop with the expanded child tax credit and found “4.3 million fewer children would be in poverty in a typical year, representing over a 40 percent decrease in child poverty.”
Gregory Acs, one of the author’s of the Urban Institute report and vice president for income and benefits policy at the Urban Institute, told NPR’s Kelsey Snell that if the program continues beyond the expiration of other pandemic aid, the US could see a fall in child poverty by more than 40%.
“The changes to the child tax credit is a new fundamental approach to reducing child poverty and to help families who are struggling in the long run move more permanently out of poverty,” Acs told Snell.
The federal government embarked on a $6 trillion spending spree to keep individuals, businesses, and state governments afloat during the coronavirus pandemic – and it seems to have succeeded in lifting a lot of people out of poverty.
Much of that cash led to the biggest expansion of the social safety net in generations, helping people keep food on the table and make rent payments.
New research from the Urban Institute shows how the emergency relief programs led to one of the biggest major reductions in poverty.
Their analysis finds that without government programs such as stimulus checks and enhanced unemployment insurance, the poverty rate this year would be 23.1%. But these programs caused it to drop to a much lower 7.7% instead. Around 20 million fewer Americans in poverty now compared to 2018.
The Urban Institute’s projection represents a 45% decline from previous levels in 2018. That would make it the largest drop in poverty on record, per the New York Times.
This can be seen by looking at changes in rates from one year compared to three years earlier. The following chart, as replicated from The New York Times’ reporting of the historical Supplemental Poverty Measure poverty rates and Urban Institute’s projected rate, highlights the percent change in rates from three years prior.
Three-year percent changes have varied over time and have mainly seen declines in the 2010s. But if the Urban Institute’s projection is correct, it would mean the biggest drop in poverty rates from three years earlier, as seen in the chart.
Aid during the pandemic has given some Americans much needed assistance to get out of poverty. As Insider’s Juliana Kaplan reported, poverty rates fell from December 2020 to January 2021 in part because of stimulus checks and federal unemployment benefits.
Stimulus checks lifted 12 million people out of poverty
Americans used the no-strings-attached checks from the government to pay off debt and cover expenses, and it also seems to play a big role in cutting the poverty rate.
“The federal stimulus checks have a larger antipoverty impact than any of the other programs; if all other programs were in place but the stimulus checks had not been paid, we project 12.4 million more people would be in poverty in 2021,” the Urban Institute researchers wrote based on the programs used in their projections.
Programs helped Black Americans the most
The projected poverty rates from the new report for 2021 further vary by race and ethnicity, where the rate for non-Hispanic white Americans is 5.8% and 11.8% for Hispanic Americans. The researchers write that the government programs and benefits have the largest impact on non-Hispanic Black Americans. Without these programs, the projected rate for non-Hispanic Black Americans is 36.0%, but with these programs it is reduced to 9.2%.
Many of these programs ended or are set to expire
Many economists credit the stimulus payments and federal unemployment benefits with playing a major role powering the nation’s recovery from the pandemic. The nonpartisan Congressional Budget Office forecasted last month the US would undergo its fastest pace of growth this year since the Reagan administration.
However, the end of these programs are nearing and its unclear whether Democrats will renew them given they were designed as pandemic relief.
Twenty-six states – mostly Republican-led – have already ended $300 weekly federal unemployment benefits for laid-off workers in an effort to encourage more people to head back to work. Early research suggests hiring hasn’t picked up in many of those states.
People have largely spent their $1,400 stimulus payments from March, and enhanced unemployment insurance will expire just over a month from now. That’s in addition to the end of the temporary 15% increase to food stamp benefits that were part of the stimulus law – those expire on Sept. 30.
The COVID-19 crisis has been devastating for much of the global economy. Yet while the effects on established markets have been well-documented, less is known about the pandemic’s impacts on low- and middle-income countries, which account for the majority of the world’s population. This is partly because official statistics generally fail to capture the impact on informal markets, such as street-vendor sales, in which large sections of those economies participate.
“These are the world’s most vulnerable people,” said Karlan, who along with Udry codirects Kellogg’s Global Poverty Research Lab. “The level of vulnerability is just fundamentally different in developing countries versus US and Europe, where even if someone is really low-income, they’re still better off than the poorest of the poor in developing countries, where the safety nets simply aren’t as strong.”
“We wanted to know the effect of the pandemic, and government policies to combat it, on individuals who rely on informal markets to sustain themselves and don’t have access to formal support mechanisms like social security or unemployment insurance,” Udry said.
Based on a phone survey of more than 30,000 people on three continents, the researchers found the pandemic’s impacts on developing regions to be deep, widespread, and negative: households across geographies and economic status reported significant drops in income and employment, as well as increases in food insecurity. And, crucially, few of these households reported receiving any kind of financial support.
As the authors write, for low- and middle-income countries, “the economic crisis precipitated by COVID-19 may become as much a public health and societal disaster as the pandemic itself.”
A global phone survey
While it’s not their normal method of data gathering, the researchers landed on a phone survey as the best method to use in a pandemic.
“It was like, ‘You want some data? This is the only way you can get it,'” Karlan said.
The method introduced a number of challenges for the researchers.
“We had to learn very quickly about how to conduct surveys by phone. You lose the trust and comfort that a face-to-face conversation engenders,” said Karlan.
To mitigate that loss, the researchers partnered with Innovations for Poverty Action to recruit local interviewers in each country, and took care to match languages, dialects, and accents between interviewers and respondents.
Another challenge: not everyone owns, or can easily borrow, a phone. “It meant we weren’t able to reach people without access to mobile phones,” Udry said. “That’s a whole set of vulnerable people we can’t get to until we’re able to go in person again.”
Due to this limitation, the study’s results likely represent a “best-case” scenario, as the interviews didn’t include those at the economic pyramid’s very bottom.
Ultimately the researchers conducted 16 surveys that were statistically representative of households in nine countries across Africa (Burkina Faso, Ghana, Kenya, Rwanda, Sierra Leone), Asia (Bangladesh, Nepal, Philippines), and Latin America (Colombia), starting in April 2020. Most of the surveys were coordinated by Innovations for Poverty Action.
In total, they surveyed 30,000 people living in both urban and rural areas, as well as in or near refugee camps. The researchers asked about changes in employment, income, food insecurity, access to markets (such as for purchasing groceries), receipt of government support, and domestic violence.
Bad news across the board
The study found that the negative impacts of the pandemic on developing regions are large and broad.
For example, income dropped for households in all settings during the pandemic. Across the 16 surveys, the median share of households that reported an income drop was a “staggering 70%,” the authors write, compared with a median of 7% reporting an income increase. The median share of households that experienced job loss was 30%.
In general, similar proportions of households across all socioeconomic levels reported drops in income and employment.
Moreover, the median share of households that reported food insecurity was 45%, with wide variability within and between countries. In Sierra Leone, for example, 87% of rural households reported food insecurity, nearly double the median value.
The crisis may have also contributed to increased domestic violence. In Kenya, for example, violence against women and children rose 4% and 13%, respectively, during the early months of the pandemic.
And, for the most part, people were on their own to weather the storm. Overall, the median share of households receiving government or NGO crisis support was only 11%.
The authors note that the scale of disruption seems to eclipse those of other global crises like the 2008 Great Recession and the 2014 Ebola outbreak. “The biggest take-home for me is the spread of the effect,” Udry said. “I expected the effects to be serious but didn’t realize it was going to reach almost everyone.”
“What we found makes clear the kind of calamity low-income households in developing countries are facing,” Karlan agreed.
To make matters worse, if other historical events are any guide, COVID’s impact will be long-reaching. For example, children in the US born soon after the 1918 influenza pandemic experienced lifelong declines in education and earnings compared with baseline expectations.
“One of the main messages of modern economics is that even relatively short-run shocks can have long-term effects,” Udry said. “Long after the pandemic is gone, there are likely consequences for the growth of kids’ knowledge and declines in the asset holdings of the poor.”
The impact, unfortunately, is likely to be felt for generations.
The best way forward
The research also points to policies that could help address the pandemic’s dire economic impacts – and mitigate the effects of future crises.
One of the most promising tactics is mobile money transfers from the government or NGOs, which are fast and require no risky face-to-face transaction. “We can reach a lot of people quickly with these innovative payment mechanisms,” Udry said.
“We’ve helped them rapid-fire implement a targeted program of cash transfers to low-income households that were in the informal market,” Karlan said. “Now we’re helping the government use cell-phone data to refine and improve targeting methods, to help find low-income households and transfer them cash.” They’re exploring expansion of the strategy to Nigeria and Bangladesh.
Furthermore, the researchers say, governments and NGOs must build robust social support systems – with short-term components like Togo’s cash-transfer system and longer-term ones like skills training programs – to anticipate the next pandemic or economic crisis.
Granted, this wouldn’t be easy for the already cash-strapped governments of the countries studied here. But richer countries have an important role to play, partly for humanitarian reasons, but also because “disease transmission does not respect national borders,” as the authors write.
“We need some multinational players, like the World Bank, to help establish the methods, procedures, and technical knowledge for doing this,” Karlan said.
In general, the researchers agree that a more proactive, preventive approach is the right way forward.
“This crisis has been disastrous and widespread, with long-term effects,” Udry said. “We do have mechanisms that can help a lot of people, but we need to strengthen social security systems to provide greater resilience and support in the future. That’s the lesson to learn here.”
Karlan agrees. “We want our work to serve as a call to arms to groups,” Karlan said, “to do things like what Togo has done, to prepare for the next crisis.”