by Edwin Quinabo
More studies are starting to confirm what millions of Americans all along have been feeling and suspected since the meteoric strike COVID-19 has had on the US economy.
Poverty. Food insecurity. Shelter insecurity. Mounting debt. Collectively characterized as extreme economic hardship, the nation is experiencing it at record-breaking level.
Economists are finding that the three COVID-relief Acts passed by the US Federal government were life-saving measures to the US economy and millions of Americans. In particular, to those heaviest hit disproportionately – the low-wage earners, service workers, and minorities.
Extensive coverage has been given to the plight of the nation’s business community and the federal government’s response of PPP loans, how to access them, and their impact in re-energizing the economy.
Less attention, however, has been given to America’s poor, working-class and how valuable the three direct stimulus checks from the COVID-relief Acts were to meeting basic needs of buying food, paying utilities bills, rent, and car-mortgage loans.
Direct stimulus checks actually were not given priority by both Republican and Democrat leaders in the second COVID relief package as PPP was. In the original second COVID relief drafts, the $600 direct payment that eventually slipped in, was not included as a final bill was about to wrap up. The two presidential candidates — Donald Trump and Joe Biden — had to strong-arm Congress to get something inserted in the last weeks leading into the General Election. The third stimulus check arguably, was “making good on a campaign” promise and it barely passed (Republicans voted the measure down universally in both the Senate and House)
Since the passage of the American Rescue Plan on March 11, there has been a boost to the economy. But that was also the case last March in the first COVID CARES Act which booster shot expired by summer’s end. Is the nation, particularly the vulnerable poor, on the right path towards at least stable footing this time?
How deep is the nation in poverty, below the Federal Poverty Level (FPL)?
Nearly 8 million Americans have fallen into poverty during the last half of 2020.
The nation’s poverty rate in November jumped to 11.8%, up 2.4 percentage points from 9.6% in June. This is the largest jump in a single year since the government began tracking the poverty rate in 1960, according to economists at the University of Chicago and the University of Notre Dame. The pandemic-era high was 17.3% poverty rate in August 2020.
Economist say the huge leap within the year 2020 showed how important the first stimulus check (passed in March) was in keeping families afloat amid the pandemic. By summer, money already started to run out from the original CARES Act. So the poverty level skyrocketed toward the end-year.
“These numbers are very concerning,” said Bruce D. Meyer, an economist at the University of Chicago and an author of the study. “They tell us people are having a lot more trouble paying their bills, paying their rent, putting food on the table.”
He adds, “the big takeaway is that for a while the unprecedented government expansion of unemployment insurance and the stimulus payments kept families out of poverty.”
In the University of Hawaii Economic Research Organization’s 21Q1 UHERO State Forecast released March 5, 2021, local Hawaii economists had similar findings.
“The crisis has had a disparate effect on high- and low-income households. Professional workers have been able to continue to work remotely, while many lower-income households are dependent on the face-to-face services that have been hardest hit. This has led to disproportionate economic hardship for these families. Income and housing support programs have been crucial in preventing economic collapse for some families and communities.”
Another study by Columbia University found the same results, 8 million Americans fell to poverty, but Columbia researchers also point out that after the first CARES Act, the poverty level actually dropped – which concurs with Meyer’s finding of how significant the federal government’s emergency response has been.Columbia University estimates without the CARES Act, the number of additional people in poverty at the outbreak of COVID could have been as high as 18 million or a 19.4% poverty rate.
“It’s really striking, despite its flaws, how successful the CARES Act was at lifting so many families above the poverty line,” Zachary Parolin, a researcher at the Center on Poverty & Social Policy and the lead author of the Columbia research.
The poverty threshold is the minimum level of income deemed adequate in the country. Statistical data is gathered by the US Census Bureau then used by U.S. Department of Health and Human Services (HHS) to determine the federal poverty level (FPL).
For 2020, poverty in real dollars is as follows: Household of 1 person $12,760; 2 persons $17,240; 3 persons $21,720; 4 persons $26,200.
ALICE Threshold in Hawaii
The poverty level is extreme and economists in recent years have come up with another measure, the ALICE threshold that they say is more telling of how large marginal communities are.
ALICE is an acronym that stands for Asset Limited, Income Constrained, Employed. ALICE represents the households with income above the Federal Poverty Level (FPL) but below the basic cost of living. It estimates the minimal cost of the five basic household necessities – housing, child care, food, transportation, and health care.
The ALICE population is typically those living paycheck to paycheck after considering these necessities spent and income earned.
Aloha United Way released a 2020 AUW ALICE Report that estimates 42% of Hawaii’s 455,138 households are struggling to make ends meet.
The report estimated that an additional 35,000 or more additional households — or 105,000 people — will end up in the struggling, just-getting-by category by the end of 2020 due to the fallout from the coronavirus pandemic.
“Everything we identified as a vulnerability, including the lack of economic diversification, the heavy dependence on tourism, the low wages and the dependence on imports, came to fruition. It was prophetic,” said Lisa Kimura, AUW vice president of community impact.
“The crisis has had a disparate effect on high- and low-income households. Professional workers have been able to continue to work remotely, while many lower-income households are dependent on the face-to-face services that have been hardest hit. This has led to disproportionate economic hardship for these families. Income and housing support programs have been crucial in preventing economic collapse for some families and communities.”21Q1 UHERO (University of Hawaii Economic Research Organization) State Forecast released March 5, 2021
Drop in income across the board
In yet another study by Bankrate, chief financial analyst at Bankrate Greg McBride, said “More than 40 percent of households are earning less now than they were prior to the pandemic. And while that’s highest among lower income households, higher income households have not been immune from that.”A recent Census survey found more than half of Hawaii residents lost income due to the pandemic.
Hawaii Filipino’s FPL could spike given high unemployment in Hawaii
Unemployment hit a peak in Hawaii last year in April and May at 24%, the highest in the nation. In September it went down to 15%. Compare that to Hawaii’s unemployment rate at 2.4% in 2019.
The state reported paying out more than $2 billion in unemployment insurance to about 150,000 people who filed claims.
Hawaii’s Filipino community is among the hardest hit during the pandemic with the second highest COVID-19 cases reported and high pre-COVID employment in tourism and services — industries that face among the highest unemployment rate.
Prior to COVID, the poverty rate for Filipinos in Hawaii was 7.5% (Japanese 4%, Samoan 15%, Marshallese nearly half). Given the Filipino’s community high employment in tourism, the next poverty report to be released is expected to go up from 7.5%.
Myrna (last name withheld) of Waipahu, a part-time cashier already was earning below the FPL of $12,760 before COVID. But as a household prior to COVID, income from her husband and two sons put them well above the FPL of four at $26,200. Her husband was making a decent income as a car salesman. Her two sons were cooks at different hotels.
Since COVID, both her sons lost their jobs and the family is relying entirely on her husband’s income that took a steep drop.
Myrna and her family represent a large group of new poverty households whose status were specifically caused by the pandemic, unlike the traditional groups of people in poverty – those with disabilities, the elderly, adults students and very low income poor.
“We are struggling. My sons have been receiving unemployment. But lately there has been a delay in processing payment. They are looking for jobs and hoping that their hotels will call them back to work soon.”
In a national survey conducted by Human Rights Watch, nearly half of adults who responded – 48 percent – said that someone in their household had experienced a job or income loss.
“If it wasn’t for my husband, I don’t know what would happen to us. But you know his income plus my small pay is not enough in Hawaii. We have utilities and health insurance and our mortgage to pay first. There is little left for other things, even food.
“Sometimes I cannot sleep at night. I get scared. I don’t tell anyone this, but I go to the Foodbank. And when they have food distributions, I go to those too,” said Myrna.
One feature of poverty is food insecurity. Filipino and Pacific Islanders are currently facing the highest rates of food insecurity in Hawaii – 43% of Filipinos and 44% Pacific Islanders.
Recent data from Feeding America, a national hunger relief organization, said Hawaii’s food insecurity rate rose by about 50% to some 233,000 people in 2020, up from 151,000 in 2018, because of the effects from COVID-19.
That’s more than 80,000 more people struggling to put food on the table.
Hawaii jumped to No. 4 among states with the highest projected percent of change in food insecurity rate, according to Feeding America.
In another study, Human Rights Watch (HRW) survey in January this year shows more than 24 million adults nationally say they have not had enough to eat “sometimes” or “often in the previous seven days.” This is five million more than their last survey in August 2020 when food insecurity was already higher than pre-pandemic times.
Those mostly reporting food insecurity (45%) are making less than $35,000 a year.
Like Myrna’s family, the HRW survey found three out of four food-insecure households have experienced job loss since the pandemic began and 58% did not have work at the time of the survey.
Among households that receive SNAP, 27% of beneficiaries say they skipped meals often.
A vast majority of those suffering food insecurity (two out of three households or about 16.5 million) do not receive SNAP.
Joseph Llobrera, director of research on food assistance at the Center on Budget and Policy Priorities (CBPP), a nonpartisan research and policy institute, said “What we’re finding in terms of food hardship is kind of off the charts right now.”
He said data and the long lines at food banks show a “staggering” need.
According to CBPP analysis of the most recent Household Pulse Survey data, collected between November 11 and November 23, 12 percent of adults in America said their household didn’t have enough to eat at some point over the last seven days.
Ron Mizutani, president and CEO of the Hawaii Foodbank, confirms what other studies have shown that the new poverty caused by COVID are driving the food insecurity numbers up.
He said, “More people from all walks of life have been impacted for the first time, on top of those who were already experiencing poverty and hunger.”He adds that in recent large-scale food distribution drives, 78% to 83% of recipients said they lost their jobs during the pandemic.
Social services experts said the US’s largest economic and health support systems are geared largely for the traditional poverty population as the elderly, disabled and parents with low income who have children.
Many of the low-income people caused by COVID do not fall under these categories and do not qualify for safety nets.
Behind on housing payments, rent; accumulating debt
The new pandemic poor are also struggling in other basic areas. Recent Census Bureau data show among households with incomes below $35,000, 47% (about 19 million adults) report being behind on housing payments. Thirty-five percent or about 7 million people fear being evicted or their homes foreclosed, according to HRW.
Falling behind housing payment is a national problem across 41 of 50 states.
The American Rescue Act 2021 (third COVID-relief bill) did not extend the eviction moratorium. But it did provide $30 billion in additional funding for emergency rent relief programs administered by states.
Besides unemployment benefits and other relief, the pandemic poor have been getting by paying for routine expenses with credit cards – 37 percent of those making below $35,000 say they have been relying on credit card.
How are stimulus checks being spent?
The federal stimulus checks — $1,200 per person approved March 2020, $600 per person in December 2020 and $1,400 per person in March 2021 – have provided a boost for a range of income-earners besides the pandemic poor (individuals earning $75,000 below get full amount, above that a tiered amount, capping at individuals earning $150,000).McBride of Bankrate said the number one use of the stimulus money have gone to paying monthly bills (45%), followed by paying down debt (32%). Higher income earners receiving stimulus used it for nonessential spending (13%) and investing (11%).
“For all the talk of revenge spending and pent-up demand for travel, you wouldn’t know it by seeing just 13 percent of stimulus check recipients indicating that any of the money would be spent on discretionary activities or nonessential items,” said McBride.
Justin Oscar, 22, Aiea, said he makes $31,000 in income and hasn’t been affected financially during COVID. But he says the stimulus helped to pay for bills and groceries, and part of it went to his computer
.Jay Madamba, 48, Kunia, works in construction. He makes well over $75,000 but says construction work isn’t consistent at times. His wife lost her job working in housekeeping. His reduced stimulus and wife’s full stimulus went to pay for their mortgage.
Kelly Cordero, Aiea, works for the City and County of Honolulu and got the full stimulus amount. Her husband who works for the federal government also received the full amount. She said they decided to put half in savings for a rainy day and the other half went to pay monthly bills.
Marissa (last name withheld) called the stimulus checks “Godsend.” She and her husband rent an apartment in Makiki. She works retail and her hours at work have been reduced since mid-last year. Her husband is an Emergency Medical Technician (EMT) and is working his way to become a paramedic. Both received the full stimulus.
“I am trying to get a better paying job, but there is little opportunity right now for retail. I want to help my husband more because he’s working full-time and doing the best to become a full paramedic.
“I get nervous for him because his line of work is high-risk for catching the virus. Then I also worry because we are renters. We’re not behind on rent. But our stimulus checks all went to cover parts of our rent. It’s like double stress for us since COVID started. We’re worrying about our health and finances at the same time,” said Marissa.
Marissa’s lost income is not unique. The Hawaii Data Collaborative has also estimated that nearly 134,000 of all Hawaii households — about 30% — stand to lose a quarter or more of their income due to the effects of the pandemic on the local economy.
Her mention of multiple stressors (health and making rent) is common, according to the HRW study. Sixty percent of households making less than $35,000 a year face at least two stressors simultaneously, compared to less than 20 percent of households making more than $150,000.
What will help with poverty?
Economists say the additional population to the FPL are caused by reduced hours, loss of job or paltry employment opportunities. A vastly improved labor market should lift the same group out of poverty, economists say.Where it could pose a problem is in some industries that have been hurt permanently and for small businesses that closed for good. This means displaced workers now would need to get retrained and compete for other jobs elsewhere.Continued federal support is the second area economists believe will help revitalize the economy and keep the poor and marginally poor afloat.
Another direct stimulus payment could be an uphill battle to get passed considering President Joe Biden’s multiple high-spending bills pending. But a group of US Senators, close to 24, have urged the Biden administration to include recurring relief payments and automatic unemployment insurance extensions in a new “Build Back Better” plan.“While we are pleased that the American Rescue Plan included a one-time direct payment and an extension of federal unemployment insurance programs, a single direct payment will not last long for most families, and we are worried about the cliff facing unemployed workers when the unemployment insurance extensions expire on Sept. 6 2021,” the senators wrote in a letter last month.
The 21Q1 UHERO State Forecast says “Hawaii is among the states furthest along in vaccination, priming the economy for renewed growth.” This is encouraging news particularly for the new pandemic poor – those new to FPL and ALICE ranks – who anxiously await better days.