When the COVID-19 pandemic first touched U.S. land, it sparked a major wave of unemployment so severe that lawmakers had to pump out stimulus cheques to the general population. Thankfully, the economy has improved significantly since the spring of 2020. Not only has the unemployment rate dropped dramatically, but the labor market is bursting at the seams with job openings for those willing to look.
Despite this, the United States is still in the midst of a significant poverty problem, much of which is due to a lack of aid. Here are a few reasons why poverty rates are likely to rise shortly.
1. There will be no stimulus checks this year.
About a year ago, the last round of stimulus cheques arrived in Americans’ bank accounts. However, due to the economy’s growth, there are no plans for a second round.
However, this is problematic because many people have yet to recuperate from the financial hit the pandemic brought them. Many people are still owing rent to their landlords, are behind on their mortgage payments, and are frantic to pay off their credit card debt. With stimulation checks no longer an option, it’s unclear how those in that boat are expected to avoid regressing.
2. The Child Tax Credit has not been increased.
The Child Tax Credit received a significant rise last year. Its maximum value increased from $2,000 to $3,600 for children under the age of six, and from $3,000 to $4,000 for those aged six to seventeen.
The credit was also made completely refundable, allowing more low-income families to receive the full amount. Moreover, half of the credit was distributed in monthly installments, allowing users to receive the funds sooner.
President Biden planned to extend the increased Child Tax Credit until 2022. However, lawmakers failed to pass a funding bill that would have allowed this to happen. Many families with children are likely to struggle if they do not have access to improved credit. Indeed, due to the increased credit, the number of children living in poverty in the United States increased by 3.7 million in January alone.
3. Nothing has been done to alleviate the high level of inflation.
In the world of economics, inflation is not a new notion. The inflation we’ve seen in recent months, on the other hand, has been out of control.
The Consumer Price Index increased 7.9% on an annual basis in February, reaching a 40-year high. The situation has lately been exacerbated by a sharp increase in gas costs in the aftermath of the Ukraine crisis.
Despite a significant increase in living expenditures, policymakers have remained silent. A group of Democratic lawmakers in Congress is proposing a gas-specific stimulus that would provide Americans with $100 per month to help offset increasing gas prices. Even though it is specifically tailored to solve a very specific need, the chances of that measure passing are slim.
The U.S. poverty situation would have gotten much worse much sooner in the pandemic if it hadn’t been for stimulus checks and increased credit, which helped millions of families stabilize their finances and make ends meet. It will not be surprising to see poverty levels rise over the year in the absence of commensurate aid.
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