Childhood poverty is a stubborn problem in the United States. About 11 million U.S. children lived in poverty prior to the COVID-19 pandemic, accounting for nearly one-third of the impoverished population in one of the wealthiest countries in the world. Upon the expansion of one of the federal government’s most effective anti-poverty programs—the Child Tax Credit—childhood poverty witnessed “a record drop” during the pandemic, according to data compiled by the U.S. Census Bureau in 2020 and 2021.

The Census Bureau reported a 46 percent decline in its Supplemental Poverty Measure—which measures poverty levels by calculating net income after payroll taxes, tax credits, and federal anti-poverty assistance such as the Child Tax Credit, housing subsidies, and the Supplemental Nutrition Assistance Program—from 2020 to 2021. A major component of this poverty measure was the increased value of the Child Tax Credit, from $2,000 to $3,600 for children under 6 years old and to $3,000 for children between the ages of 6 and 17, which lifted 2.9 million children out of poverty.

These telling results are supported by findings in a 2022 working paper, titled “The Effects of Income on the Economic Wellbeing of Families with Low Incomes: Evidence from the 2021 Expanded Child Tax Credit,” which closely examines the impact of the expansion of the Child Tax Credit on low-income U.S. families. The four researchers at the University of Michigan who co-authored the working paper—Natasha Pilkauskas, Katherine Michelmore, Nicole Kovski, and H. Luke Shaefer—dive deeper into this issue by looking at exactly how these families spent their expanded CTC benefits.

Read the full article about the expanded Child Tax Credit by Jesus Torres at Washington Center for Equitable Growth.