Despite pandemic, poverty in NJ declined for 7th straight year
TRENTON – Poverty declined in New Jersey for a seventh straight year in 2020 despite the economic upheaval brought on by the pandemic, according to data in a Census Bureau report issued Tuesday that paints a complicated picture of household finances in the United States.
Nationally, median household income was down 2.9% to $67,500 between 2019 and 2020. The official poverty rate was up 1 percentage point from 2019 to 11.4%, as the number of people in poverty rose 3.3 million in a year to 37.2 million.
“The 2020 poverty rate of 11.4% was the first increase following five years of decline,” said Trudi Renwick, assistant chief of the Census Bureau’s social, economic and housing statistics division.
However, the supplemental poverty measure, which includes the value of things such as government benefits and stimulus payments, was down 2.6 percentage points from a year earlier to 9.1% nationally. It’s the first time since the SPM debuted a decade ago that it was lower than the official poverty rate.
“The main driver of this difference is the inclusion of stimulus payments in 2020,” said Liana Fox, chief of the Census Bureau’s poverty statistics branch. “In the absence of stimulus payments, the overall SPM rate would have been 12.7%, which was higher than the official measure.”
“This really shows the importance of the social safety net,” Fox said. “When we see difference in trends with the official poverty rate and the SPM, and that’s really the impact of our tax system. That’s the impact of our noncash benefits.”
New Jersey is different
In New Jersey, though, the supplemental poverty rate remained higher than the official poverty rate.
The official poverty rate in New Jersey was 7.6%, covering around 664,000 people as an average over a three-year period covering 2018 to 2020. The SPM in New Jersey was 10%, covering around 871,000 people.
The other states where the SPM rate exceeded the poverty rate were California, Colorado, Delaware, Florida, Hawaii, Maryland, Massachusetts, New Hampshire, New York and Virginia, plus Washington, D.C. Only California, Hawaii and Maryland had a bigger gap between the rates than New Jersey.
“It could be a range of factors that influenced that made the SPM higher than official,” Fox said.
“It could be the difference between geographic adjustments, so the housing costs may be higher in those areas, so they would have higher thresholds,” she said. “There could be different mixes of housing tenure because you get different thresholds based on whether you own your home outright, whether you’re a renter or whether you have a mortgage. There could also be differences in demographics or discretionary expenses such as medical expenses.
“It’s hard to disentangle,” Fox said. “There’s a lot of different factors that drive differences between official and SPM rates by state.”
A steady decline in poverty rates
The SPM in New Jersey has now declined for four straight poverty reports. After rising from 15.1% as a three-year average in 2015 to 15.3% in 2016, it has gone to 15.1% in 2017, 14% in 2018 and 12.5% in 2019.
The official poverty rate has declined in seven straight years since reaching 11.1% in 2014. It went to 10.8% in 2015, 10.7% in 2016, 9.7% in 2017, 9.1% in 2018 and 8.2% in 2019.
Neither poverty rate is considered to be a good measurement of poverty in New Jersey due to the high costs in the state, particularly for housing.