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Economy

Share of Michiganders living in poverty falls in 2020, largely due to aid

United States government stimulus check for unemployment relief
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The share of Michiganders living in poverty dropped to 8.8 percent in 2020, according to a U.S. Census Bureau update.

The Census uses the Supplemental Poverty Measure (SPM), which often averages data over three years. The SPM is sometimes referenced more than the official poverty rate in reports because it is more updated — the original poverty line was developed in the 1960s. The SPM also factors in things like government aid.

The last three year calculation from 2017 to 2019 for Michigan was 9.7%. From 2015 to 2017, 11.3% of Michiganders were living under the poverty line.

Meaning that even with the pandemic, and economic hardships that accompanied it, the share of Michiganders living in poverty went down in the 2018 to 2020 average.

Kristin Seefeldt is an associate professor at the University of Michigan's School of Social Work. She said the pandemic stimulus checks and expanded unemployment benefits were some of the largest contributors to the recent reduction.

"What we're seeing is really the effect of government programs and in the more recent years, government intervention to really buffer families against hardships they might have otherwise suffered during the pandemic," she said. "The fact that we made these payments available really helped families out and probably kept things from being worse than they could have been."

Michigan's official poverty average from 2018 to 2020 is 10.6%.

Using the SPM, D.C. (16.5%) and California (15.4%) have the highest share of people living in poverty.

The national SPM rate for 2020 alone was 9.1%, a 2.6 percentage point drop from 2019. According to the U.S. Census Bureau's analysis, unemployment insurance benefits prevented "5.5 million people from falling into poverty."

And without stimulus checks, seen throughout the COVID-19 pandemic, the poverty rate would have been 12.7%.

Seefeldt said there is cause for concern when those benefits that cropped during 2020 cease, especially if "the economy doesn't fire backup as strongly as it has been before the pandemic."

"We might worry about whether or not if folks are going to be able to survive economically, if they don't have some of the employment benefits," she said. "There are proposals to put in place a permanent expansion of the child tax credit. So that could be one area where we would see some help for families, especially those with lower income."

"This is a time where we really do see the benefits of government spending. It really did have a visible impact on on poverty rates. That's pretty profound. I think it shows that we can do something about issues of poverty by the spending choices that we make."

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