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Millions of Americans slipped into poverty when stimulus ran out: Study

Zachary Parolin, Columbia University Post Doctoral Researcher, joins Yahoo Finance to talk about new research that shows more Americans are slipping into poverty.

Video Transcript

ADAM SHAPIRO: I'm want to turn our attention to an issue that affects millions of our country men and women. And that's the fact that there's a new study from Columbia University that the lead researcher, a postdoctoral researcher named Zachary Parolin, joins us to talk about. And it's that 8 million of our fellow countrymen have fallen into poverty.

And Zach is with the Columbia University Center on Poverty and Social Policy. This kind of mimics what we've seen in other studies. One study at another university, it was 6 million. So how is this going to play out in the election, do you think, Zach?

ZACHARY PAROLIN: You know, Adam, I can't speak to how it's going to play out in the election, but I can tell you that there's about 16 million people across the United States in poverty right now.

As you noted, that's about 8 million more than we had back in April and May, as a direct result of some of those key provisions of the CARES Act-- that $600 per week unemployment bonus, those stimulus checks that were distributed primarily over the spring-- a direct result of those no longer being available.

So my concern is this, that poverty is rising in the United States. It was high to begin with, and we have a lot of families out there right now who are struggling to get by and provide for their families.

JULIE HYMAN: Zach, what's so interesting to me about this as well is that, you know, here, on a financial news network, we focus a lot on the markets. We focus on the headline spending numbers, which have actually held up surprisingly well.

And so, the problem with the poverty numbers is that there's this sort of invisibility to them, except when we talk to people like you, right? So what do you think will be the sort of potential ripple effect on the social system, and then on the broader economy, as a result of these folks in poverty?

ZACHARY PAROLIN: Yeah, absolutely. And I mean, first and foremost, for these families who are struggling right now to keep their incomes afloat, who are being asked to take that stimulus check and carry it over month after month after month until the economy recovers, first and foremost, they're struggling immensely. We see that levels of food insecurity in the US right now are at, potentially, a record high.

And we know this is also going to have a drag on the economy. We want people spending money right now. We want people putting their dollars into the economy to keep things afloat. And when millions of families across the country don't have that income support today that they had back in April or May, we're not going to see that same level of spending from a large share of the US population.

RICK NEWMAN: Hey Zach, Rick Newman here. What are the implications of this for things such as homelessness, evictions? I am going to guess a lot of the people you're studying are not necessarily homeowners, but they're renters. They might have a car loan. Are we going to see more defaults on those types of things, or even credit card defaults? What are some of the implications?

ZACHARY PAROLIN: Yeah, Rick, it's a great question, and it's a bit scary to think about. You know, as long as the $600 week unemployment benefits, the top-up to the unemployment benefits, was around, the stimulus checks, it was helping a lot of families to get by and be able to pay the rent, despite not having a job to go to.

Now that those are gone, with some of the eviction moratoriums being delayed or being removed now, sad to say we can probably expect to see an increase in homelessness in the United States. And even if not, more families just, once again, struggling to put food on the table, struggling to provide for their families at a time when we have the means to be able to help them out.

ADAM SHAPIRO: Zach, do we have a uniform definition of poverty in the country? I realize the government has an income threshold. But there are two things with that. We only measure poverty, what, on an annual basis, and I think you're proposing it should be done on a regular, perhaps monthly, basis. But what does poverty in the United States look like? Is it just food insecurity and income? Or is there more at play?

ZACHARY PAROLIN: Yeah, Adam, you're right that it is a multidimensional problem. But I'll define it pretty simply here. The poverty line that we use in this study is the one that's preferred by the US government. It is called the supplemental poverty measure.

So if you live in Silicon Valley, your poverty rates are going to be a little bit higher than if you live in Tuscaloosa, Alabama. We take into account some of these geographic differences in living costs.

For the average family of four, the poverty rate-- the poverty line is about $28,000 if they live in an average cost city. So that's what poverty is, and $28,000 is not a lot. If you're living below that line, chances are, you are in need of more support.

JULIE HYMAN: Zach, what happens next? I don't know if there was any sort of predictive forecast in your report. But-- and do you sort of look at the scenarios of, if and when stimulus happens versus if and when it does not happen? Does it matter when it happens? For example, if Congress does end up getting it done at some point.

ZACHARY PAROLIN: Well, of course, the sooner, the better. Once again, there's families who got their last $600 a week unemployment top-up in July. And now we are in October. So they're being asked to take these payments that they received and carry them over again an uncountable number of months until the economy recovers.

So unless we see a miraculous employment recovery, which we all hope for, it's certain that families are going to need some extra income support to be able to pay the bills and put food on the table for their families.

ADAM SHAPIRO: All right, Zach Parolin is the Columbia doctoral student who led that research on poverty. We appreciate your being here to talk about that with us "On the Move."