Americans’ incomes fell in 2020, census figures show

American incomes fell last year as the U.S. dealt with the economic fallout from the Covid-19 pandemic, the Census Bureau said Tuesday.

The new data, in an annual assessment of the nation’s financial well being, offers insight into how households fared during the pandemic’s first year and arrives as Washington debates how much more to spend to bolster the economy during the worst public health crisis in a century.

Median household income was $67,500 in 2020, down 2.9% from the prior year.

In 2019, the year before the pandemic took hold, the nation’s median household income set what was then an inflation-adjusted record going back to 1967, when the bureau began using its current methodology.

The poverty rate in 2020 was 11.4%, an increase of 1 percentage point from 2019 and the first increase after five consecutive years of declines. That translated to 37.2 million people in poverty, an increase of 3.3 million from 2019.

The threshold for meeting the definition of poverty varies by household size and makeup. For a typical four-person household, it was $26,200 in 2020.

The official poverty measure doesn’t reflect how much a household pays in taxes, and it also omits noncash government aid like tax credits, housing subsidies and free school lunches. A broader poverty measure that accounts for such expenses and income actually fell last year to 9.1%, down 2.6 percentage points from 2019.

The decrease, coinciding with an increase in the official poverty rate, highlighted the role of the government safety net, which was expanded during the pandemic. The two poverty yardsticks have tracked closely for a decade, but last year was the first time that the supplemental measure dropped below the official measure.

Without the first two rounds of stimulus checks issued last year, the broader poverty measure would have risen by almost a percentage point instead of dropping, the bureau said. Specifically, stimulus checks moved 11.7 million people above the poverty threshold if their effect was calculated alone. In the same manner, expanded unemployment programs did so for 5.5 million people. Refundable tax credits, such as the earned-income tax credit, did so for 5.3 million people. The Social Security program, however, remained the largest safety net program, lifting 26.5 million people above the poverty line.

“The increase in poverty would have been even larger if it were not for the ample fiscal support provided over the past year,” said Shannon Seery, an economist at Wells Fargo & Co.

After continued direct federal payments made to households in 2021 and enhanced unemployment benefits that expired in early September, Ms. Seery said, an improving unemployment picture should help households.

“With a robust demand for labor, exhibited by the record 10.9 million job openings in July, and average hourly earnings rising across industries, the current environment should help lure workers back to the job site,” she said.

The bureau also said the proportion of Americans without health insurance for all of 2020 was 8.6%, essentially unchanged from 2018. About 28 million Americans lacked health insurance, according to the survey.

The road ahead for the U.S. economy looks more uncertain than earlier in 2020. In recent weeks, growing evidence has built of lost momentum as Covid-19 cases rose again. Supply-chain challenges and a lack of workers for lower-paying jobs are also weighing on economic growth.

Rocky Smith Jr., a 41-year-old union worker who cuts metal parts down to size after they exit a furnace, said things are looking up for his family of four in Muskegon, Mich. After being laid off in April 2020, he said, he wasn’t hired back until July 2021.

Mr. Smith said he is now making more than $20 an hour at his full-time job. His wife, he said, resumed working during his unemployment and the family skipped meals out and other luxuries.

“We rolled with the punches,” said Mr. Smith, a former boxer. “Life hit us, but we made it work.”