Decades of Gains Over U.S. Poverty At Risk of Being Wiped Out

The escalating coronavirus pandemic could reverse decades of gains in the fight against poverty, as U.S. government aid for the vulnerable dries up.

In the early months of the crisis, the federal Cares Act, which gave an extra $600 a week in unemployment assistance and $1,200 stimulus checks, helped prevent poverty from dramatically deepening. But that lifeline for low-income earners is being cut off.

Unemployment benefits are set to expire for millions of workers in late December and talks over a new stimulus package have stalled -- just as some states reimpose job-hammering lockdowns to halt a surge in cases.

The unemployment rate remains above pre-pandemic levels

Keeping a flow of government assistance open to poorer families will be crucial to ensure that the recovery from the pandemic doesn’t further exacerbate inequality, according to James Sullivan, an economics professor at Notre Dame University in Indiana.

Economists have described this as the “K-shaped recovery”, in which wealthy Americans are seeing jobs and investments snap back, while the lower-income ranks lag far behind.

“The pandemic is likely resulting in many displaced workers who will need to invest in some retraining in order to find stable employment,” Sullivan said. “Those who are unable to do that are more likely to have to rely on the government safety net and they face greater risk of inter-generational poverty.”