Yahoo Finance’s Denitsa Tsekova joins Kristin Myers to break down the impact of stimulus checks and enhanced unemployment benefits.
KRISTIN MYERS: All right, so stimulus payments and expanded unemployment benefits have been helping millions of Americans climb out of poverty. We have Yahoo Finance's Denitsa Tsekova here with us for more details on that. Hey, Denitsa.
DENITSA TSEKOVA: Hey, Kristin. So yeah, what we saw after the passage of the $900 billion stimulus packages in December, we saw 1.6 million Americans being lifted out in poverty in January. And this was due to stimulus checks. We saw the $600 stimulus checks being distributed at the end of December and the beginning of January. And then we saw the extra $400 of weekly unemployment benefits being distributed in the second half of January.
So this drop comes after six months of continuous growth in poverty. And that growth in poverty came after many of the provisions we just spoke about expired. So the unemployment benefits we had during the spring and the summer expired. The first round of stimulus checks, which we had last spring, that was pretty much it. It was distributed in April and May.
So for the rest of the summer and through the autumn and the winter, Americans were left with little-- little government support, and poverty continued to increase during those months. And when we go back to January and that particular increase-- that particular drop in poverty, the group that benefited the most was Black Americans. But they also happen to be the group that was hit the hardest during those six months of growth.
So we saw poverty for Black Americans dropping by 2.1 percentage points in January. But the overall poverty rate for that group remains very high at 21.3%. For example, white Americans saw a smaller drop in poverty, less than a percentage point. But their overall poverty rate is at 9.6%, so much lower.
And what we saw previously is in March when we got that big government relief, when we got the $1,200 stimulus checks, the $600 of weekly unemployment benefits, we saw that quickly translated into drop in poverty. So what we are looking at going forward is, will there be more government support? And will that translate into a bigger drop in poverty?
KRISTIN MYERS: So I'm really glad you mentioned that, Denitsa. And I'm hoping you can kind of make something clear for everyone at home. Just because the charts there that we were seeing actually seemed to precede really, a lot of the economic slowdown that we saw because of the pandemic here in the United States, this chart's starting from February 2020
So can you just make clear for us, those folks that were lifted out of poverty, were some of them in poverty prior to the pandemic? Or was it really just helping folks who, because of the pandemic, backslid into poverty? And I guess just as a second point, are there any indications on how much additional stimulus is going to help even more Americans make that same climb?
DENITSA TSEKOVA: Yeah, that's a great question. So we still have 4 million people who fell in poverty during the pandemic that's remaining to poverty. So while that 1.6 million is good news, there is much more to be done. And going forward, yes, we have a potential of another stimulus deal. And this time the price tag is really high.
We have $1.9 trillion. It includes, so far, the highest stimulus checks we've seen, $1,400 stimulus checks. And seeing what they've done before, this could mean a drop in poverty again. And then we are also seeing expansion of some important tax credits, which will also potentially lead to a drop in poverty.
And of course, the unemployment benefits will be increased from $300 a week to $400 a week. Again, this could be a big lift to poverty. And we actually have one analysis saying that if Biden's $1.9 trillion plan is implemented, poverty can fell-- can fall to 9% in 2021, which before the pandemic, we had 9-- we had 11.7%. So we can see 11.6 million people being lifted out of poverty in 2021 if this plan is implemented. So we'll be looking at what happens for stimulus when it comes to poverty.
KRISTIN MYERS: Just another one here for you, Denitsa. You know, we were chatting, of course, with our chief political correspondent Jess Smith a little bit earlier in the show about the latest in stimulus. And of course, House Democrats were being dealt a blow by the Senate parliamentarian, because they're not allowed to include that $15 minimum wage hike as a part of the stimulus bill. But what are you hearing from how much that could also be an economic boost for Americans, and perhaps even Black Americans, as you're highlighting here Black Americans being disproportionately benefited because of some of the impacts they've faced throughout the pandemic from some of these stimulus and unemployment benefits?
DENITSA TSEKOVA: Yeah, so what we know is that the $15 minimum-- $15 minimum wage won't be included in the package that will be passed through reconciliation, which requires only 51 votes compared to 60 volts. But what is important for the minimum wage is that the $15 minimum wage would actually take effect into 2025. And what we're seeing with some of those provisions that remain in the package and that-- that is the good news, a lot of them could be distributed fairly quickly.
So we know that stimulus checks could be sent out-- the last time it happens in terms of days. It can happen in just a few weeks. So this is a very quick way to lift people out of poverty. And similar unemployment benefits, $400 a week can kick in very quickly. This can happen in just a few weeks.
And similar with the tax credits. We're in the tax season, so people may see their refunds being increased fairly recently. So while the $15 minimum wage may be bad news for a lot of those people in poverty, some of the provisions that are still left in that bill are definitely good news for them.
KRISTIN MYERS: All right, Yahoo Finance's Denitsa Tsekova, as always, thanks so much for bringing us all of those personal finance updates.