Debt, eviction and hunger: Millions fall back into crisis as stimulus and safety nets vanish

One of the most successful elements of the government’s response to the coronavirus recession — protecting people on the margins from falling into poverty — is faltering as the safety net shrinks and federal benefits expire.

Major recessions are especially fraught for low-income earners, whose finances can veer from tenuous to dire with one missed paycheck. But as the economy cratered this spring, economists and poverty experts were mildly surprised to discover that the torrent of government support that followed — particularly the $600 a week in expanded unemployment benefits and one-time $1,200 stimulus checks — likely lowered the overall poverty rate.

In fact, 17 million people would have dropped below the poverty line without the $500 billion in direct intervention for American families, said Zach Parolin, a researcher at Columbia University.

Now, data show, those gains are eroding as federal inaction deprives Americans on the financial margins of additional support. If the unemployment rate stays around 10 percent and no new stimulus is delivered, “we can expect poverty rates to rise and climb higher than those observed in the Great Recession,” Parolin said. The poverty threshold for a family of four is $26,200, according to the U.S. Department of Health and Human Services.