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You Really Can Fight Poverty With One Weird Trick: Giving People Money

New numbers from the Census Bureau show that even as the US economy collapsed last year, the poverty rate actually went down. There’s no mystery why: the government gave people money.

Queens residents line up for a food bank on June 19, 2021, in Cambria Heights, New York. (Bennett Raglin / Getty Images)

An essential feature of the capitalist age is the tendency of extreme wealth to organize, perpetuate, and protect itself. This tendency has naturally given rise to all kinds of creative justifications for hierarchy and, in particular, the right of those at the top to remain there. The flip side, of course, is the vast industry committed to what might be called the mystification of poverty — represented in a seemingly endless series of efforts to represent poverty as the result of something other than a lack of money.

In this respect, few societies have managed to innovate quite like the United States, where neo-Victorian social attitudes and myths of moral desert are regularly weaponized against any effort at redistribution. For the political tribunes of wealth, poverty will always be about anything and everything else — inadequate work ethic, the corrosion of the nuclear family, bad personal judgment — and the policy remedies every bit as ethereal.

It’s hard to think of a stronger rebuttal to these mystifications than the stream of data to emerge from the United States’ momentary experiment in mass cash transfers during the COVID-19 pandemic. As per new numbers released this week by the Census Bureau, the share of Americans living in poverty was about 9.1 percent in 2020 — down from nearly 12 percent the previous year, and lower as a share of the general population than at any time since 1967. The context for this drop in poverty was the single biggest economic contraction since the Great Depression: a national calamity that saw the economy hemorrhage millions of jobs. When the same thing occurred during the last recession, poverty rose to 15 percent.

What accounts for this difference isn’t complex or obscure. The Census Bureau estimates that unemployment benefits stopped 5.5 million people from falling into poverty, while direct cash payments lifted nearly 12 million out of it. This doesn’t mean, of course, that the pandemic relief measures passed during the Trump and Biden administrations were adequate. Since official definitions of poverty can be incredibly conservative, plenty of struggling people were still far from secure even after receiving their cash benefits.

But the basic point very much stands. As has been the case all along, the best remedy for poverty is simple economic redistribution — either through direct payments or social programs financed with progressive taxation. The problem is that poverty will always be useful to those at the commanding heights of economic power, a reality made all too clear by the recent — and successful — big business campaign against unemployment benefits.

For precisely this reason, eliminating economic deprivation is difficult — but it’s anything but complicated.