NEWS
US Poverty Rate Spiked in 2022, Spurred by Inflation and The End of Covid Tax Credits
Courtesy of foodbank4nyc/Instagram
The U.S. poverty rate increased significantly in 2022, especially among children, largely due to the expiration of an enhanced child tax credit implemented in response to the Covid-19 pandemic.
The Supplemental Poverty Measure (SPM) rate in 2022 was 12.4%, up from 7.8% in 2021, and still higher than in 2019, before the pandemic, according to data released Tuesday by the U.S. Census Bureau. The SPM, implemented in 2009, accounts for needed expenses along with certain non-cash government assistance and tax credits.
According to the agency, it was the first increase in the overall SPM poverty rate since 2010. The official poverty rate of 11.5%, around 37.9 million people, was unchanged from 2021, the bureau said.
“In 2022, there were key changes in federal tax policy, including the expiration of temporary expansions to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) as well as the end of pandemic-era stimulus payments which lead to increases in SPM poverty,” the agency said.
Real median household income was $74,580 in 2022, down 2.3% from $76,330 in 2021, and down 4.7% from before the pandemic, after adjusting for inflation.
The agency said it had to change its calculations this year to account for a massive jump in inflation. It was the first reports in which the Census Bureau used the Chained Consumer Price Index to adjust prior year income estimates for inflation.
“Between 2021 and 2022, inflation rose 7.8%; this is the largest annual increase in the cost-of-living adjustment since 1981,” the agency said.
“This is just simple math. The growth of wages for Americans especially at the lower levels of income simply hasn’t kept up with the cost of inflation. This gap will continue to widen,” said Ted Jenkin, founder and CEO of Atlanta-based oXYGen Financial.
“People need to remember, when the government said inflation is coming down it doesn’t mean prices are coming down. It just means they are going up slower. The problem is that wages are growing slower than inflation, so people can’t keep up with the cost of living,” Jenkin said.
TMX contributed to this article.
