Posted by: Josh Lehner | November 30, 2021

Pandemic Poverty and Progress

This morning the Census Bureau released “experimental” estimates for the 2020 American Community Survey. It’s a rather limited number of published tables available at the state level. It’s better than nothing, but this is what we get since all of us did such a terrible job filling out our surveys last year. The hope is the underlying microdata will allow our office to dig a bit deeper into the numbers which aren’t currently published, in particular this includes breakdowns by geography and race and ethnicity. All that said, let’s go over the headline numbers which are broadly in line with expectations and are continued good news.

It’s important to keep in mind what this data really shows versus how we have all felt during the past year and a half. The pandemic has been a personal, social, and health struggle to say the least. But it has not been a financial disaster, thanks to the federal aid which effectively more than offset the economic-related income losses.

Incomes for the typical household increased last year. Now, Oregon’s 1.3% increase was slower than the nation’s 2.5% gain. Even so, Oregon’s median household incomes are still 0.9% above the U.S. median, continuing the pattern seen in recent years. You have to go back to the 1960 Census to see a time, other than recent years, when Oregon’s median incomes were higher than the U.S. And of course given the size of the economic hole caused by the pandemic, incomes being up and not down is great news. Up is up.

While the typical income’s in Oregon grew a hair slower than the nation, Oregon’s poverty rate declined a hair more than the nation. Oregon’s poverty rate in 2020 stood at 10.95% which was a decline of 0.45 percentage points. This is the lowest poverty rate in Oregon since the 1970s. Nationally, poverty stood at 11.94%, a decline of 0.36 percentage points.

Given the available data we cannot easily update our office’s standard look at income trends across the distribution or poverty by race and ethnicity. We will work on those. However one item we can look at today is the issue of deep poverty. Deep poverty is typically defined as those with incomes less than half of the poverty threshold. We know the poverty threshold is an imperfect measure, so our friends, family, and neighbors in deep poverty really struggle.

What the latest data show is that not only did overall poverty decline last year, but we saw continued improvements among Oregonians in deep poverty as well. Both the total number of Oregonians in deep poverty, and measured as a share of the overall population fell. This matters economically and socially, but also in terms of demand for needs-based programs.

Bottom Line: The pandemic blew apart our world in terms of public health, social activities, consumer spending patterns, employment and the like. However, thanks to the federal aid last year, the direct financial losses were minimized. In fact, incomes grew and poverty declined. Federal fiscal policy more than accomplished its mission.

Now, one thing the pandemic did do was lay bare were some of the structural, or historical inequities in society. For example, the need for rental assistance is always there. Pre-pandemic renters in Oregon had a poverty rate greater than 20%, in the best economy we have experienced in decades. The issue was only about 1 in 4 households who qualified for rental assistance actually received help due to the chronic underfunding of federal programs. Funding for direct rental assistance increased considerably during the pandemic, helping to bring to light just how large the need truly is. The good news is twofold, first that the funding increased and more households can be helped. Second, that thanks to the overall general income situation, the need for such aid did not really increase during the pandemic, as confirmed by rental surveys throughout the pandemic, and by the poverty and deep poverty numbers released today.

Looking forward, income growth will be all about local economic conditions as the federal aid is gone. The good news is that labor income is booming, more than offsetting the fading federal aid. Now, it is possible income growth rates will be fairly moderate in 2021 and even 2022, just due to the math of the expiring federal funds weighing on the totals, but underlying income momentum today is very strong. This cycle is different.


Responses

  1. Was thinking about this and the OR median income article you wrote. Since it had me wondering (I guess a lot of wanna-be economists here) and had a theory.

    In 2010 incomes in the dumps. This prompted the in-migration from Cali. People that could leave Cali had jobs, money and skills. In-migration continued thru late-mid 2010s and then tailed off as more went to NV, AZ, UT. Now our growth is really flattening which’ll affect our income growth also.

    Sound reasonable? Worth a free cookie?

  2. Why does FRED median household Income differ? https://fred.stlouisfed.org/series/MEHOINUSA672N

    Context on poverty and explaining the difference between Federal Guide Lines and Census Statistical Thresholds may and how little they both have changed may provide a clearer picture. Making less than $12,880 a year for a single person household before being considered to be in poverty just seems ridiculous to me. What am I missing?

    https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references/2021-poverty-guidelines#guidelines

    • The difference is twofold. First is the data source. Fred is using CPS and our office uses ACS. I believe Census says ACS is best to state income and poverty given the better sample size. Second is the deflator. Fred is using CPI-U-RS while the income chart here uses PCE. Those will have small differences, whereas regular CPI and PCE have larger.

      Now I do suspect the real difference is what’s counted as income. I think that’s how you go from negative to positive at US level, depends on if you count federal aid. It counts in ACS. I know nationally if you look at official poverty rate vs supplemental poverty rate you see the impact. So I suspect the Fred income measure doesn’t fully take that into account, given the data source.

      Finally, all the poverty related measures are moving in tandem. Yes $12,000 isn’t a useful barometer of being able to make ends meet. But things like 150%, or 185% of poverty threshold are declining as well.

  3. […] Source: Pandemic Poverty and Progress | Oregon Office of Economic Analysis […]

  4. Hello,

    I’d be interested to know what is the finest geographic scale (county, zip code, precinct, or address) at which the ACS makes this data publicly available. Thanks!

    James

    • Hi James. The 2020 ACS is only currently available at the state level. Normally single year estimates are available at the PUMA level (geographic groups of about 100,000 people). The 5 year ACS data, basically averaging 2015-2019 for example, should be available down to the tract level if not further. Another source is the SAIPE data which I don’t believe is out yet but should be available at the county level and even more details, provided the 2020 data is released. It has been a huge problem during the pandemic in terms of response rates.


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