Below is a complimentary excerpt from a Demography Unplugged research note written by Hedgeye Demography analyst Neil Howe. Click here to learn more and subscribe.
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As a result of the COVID-19 outbreak, the poverty rate in the U.S. could reach its highest level in 50 years. A new report from researchers at Columbia University projects that if unemployment hits 30% (as the Fed predicts), more than 21 million people will be added to the ranks of the poor. (Center on Poverty and Social Policy) |
NH: This is a bleak report, to put it mildly. If quarterly unemployment does indeed hit 30% and stays there, researchers predict that the poverty rate for the year will rise from 12.4% to 18.9%. This would exceed the poverty levels at the peak of the Great Recession and be the highest on record since 1967. Though it's worth noting that in 1967, LBJ's war on poverty was focused on elevating the elderly and rural blacks. But during this crisis it is working-age adults and children, particularly urban blacks and Hispanics, that could be hit the hardest. Even the best case scenario, which sees employment rates recovering quickly after the summer, predicts that the poverty rate will reach levels comparable to the Great Recession.
The authors used the Census Bureau’s Supplemental Poverty Measure for their calculations. The SPM (unlike the official measure) takes into account non-cash benefits and subtracts expenses like medical and child care costs. For a family of four who rents their home, the SPM threshold was $28,166 in 2018. In a 30% unemployment scenario, nearly 1 in 5 Americans would be under this threshold.
Big caveat: These numbers don’t factor in the CARES Act or any additional assistance programs that might be enacted in the coming weeks. It’s very unlikely that we’ll see the worst case scenario since it assumes a world in which policymakers aren’t responding at all. But this report does provide a glimpse at the hardship that we’re in for as people wait for their checks in limbo--and the extent to which the neediest Americans, who have benefited significantly from the strong economic growth in recent years, are at risk of seeing it all vanish overnight.
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ABOUT NEIL HOWE
Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.
A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.
Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."
Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.
Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.
Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.
