Giving Compass' Take:
- Oshan Jarow explains how the child allowance, which expanded on the existing child tax credit, reduced child poverty, which is rebounding.
- What role can you play in supporting shifts that address child poverty?
- Learn more about how child tax credits help reduce child poverty in the U.S.
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During the past two years, child poverty in America set new records — one for the better and one for the worse.
In 2021, the child poverty rate — as measured by the supplemental poverty measure that incorporates the value of government benefits — took a sharp drop to its lowest point on record: 5.2 percent, so that 3.8 million American children were living below the federal poverty line. Then, as a report just released by the Census Bureau found, it experienced the steepest rise in its history in 2022: a hike of 139 percent, or more than double, to 12.4 percent. Five million kids fell back into poverty, pushing the number of kids whose parents were struggling to meet their basic needs up to 9 million.
To anyone following the politics of poverty in America, the jagged rebound was entirely unsurprising. The child poverty rate was like a loaded spring being held down by pandemic-era welfare programs. Chief among them: the child allowance, which expanded on the existing child tax credit (CTC) and sent monthly payments to all parents in poverty, helping to cut child poverty by 46 percent in 2021. Release the spring — or let the expanded CTC expire, as Congress did — and of course it will shoot right back up. The child poverty rates settled right back around pre-pandemic 2019 levels.
The main innovation of the expanded child allowance in 2021 was to do away with the income requirements that kept full CTC benefits from reaching 19 million of the poorest American children whose parents had little or no earnings. When the expansion reverted back to the old CTC at the end of 2021, all those families who had received the benefit were once again excluded by the income requirements.
Which is what makes this frustrating: policymakers saw this coming, watched it happen, and were able to do nothing about it. It wasn’t for lack of effort: Sen. Joe Manchin (D-WV) was the swing vote that blocked the rest of the Democratic Party’s effort to make the program permanent, on the empirically refuted idea that unconditional cash to low-income families will get spent on drugs. The data shows that for the year the program was in effect, parents spent most of the money on food, clothes, utilities, rent, and education costs.
But politics aside, the fact that child poverty rebounded so sharply even while the economy is doing really well — even though inflation hasn’t completely settled down, wage growth at the bottom has been outpacing it since June, and unemployment is historically low — holds an important lesson. No matter how well the economy performs, generous welfare programs that reach everyone in need are our most effective tool against poverty.
Read the full article about child poverty by Oshan Jarow at Vox.