Posted Oct 12, 2022 8:52 AM
By Patricia Jones, Alliance Community Task Force: Creating Opportunity
We had such good news about child poverty rates in September. First we learned from the Child Trends Research Institute that the rate of children living below the poverty line had dropped 59% from 1993 – 2019. Then the Census Bureau released the figures for 2021, and the great news was that the rate had dropped again, from 9.7% in 2020 to 5.2% in 2021. However, the news for 2022 isn’t nearly as rosy.
The monthly child poverty rate increased by 5% between December 2021 January 2022. The increase in poverty represents 3.7 million more children in poverty due to the expiration of the monthly Child Tax Credit payments.
The Census Bureau reports poverty rates using two different measures. The official poverty measure has been used since the 1960s. Pretax money income is compared to a national poverty threshold based on the size of a household. The official poverty rate in the United States in 2021 was 11.6%, with 37.9 million people in poverty.
Now most experts use the Supplemental Poverty Measure (SPM). The Census Bureau in September reported that the SPM poverty rate in 2021 was 7.8%.
The Supplemental Poverty Measure was developed by the Bureau of Labor Statistics and has been used since 2011. The SPM takes into account the value of the government programs that assist low-income families. The SPM also deducts federal and state taxes and medical expenses from total earnings. Finally, the SPM recognizes that the cost of living varies for different geographical regions.
The SPM child poverty rate of 5.2% in 2021 is the lowest child poverty rate on record. Why? After the COVID pandemic hit the nation in March, 2020, Congress passed the CARES Act and later the American Rescue Plan. We all remember how people stopped leaving their houses. Schools and many businesses closed. Most transportation was shut down. We faced shortages of so many products. Unemployment soared.
Businesses received stimulus payments. For individuals, unemployment benefits were increased, SNAP benefits were increased, payments for some loans and mortgages were delayed. The Child Tax Credit was increased and could be received monthly rather than as a lump sum at tax time.
For the last six months of 2021, families with eligible children received monthly payments of $300 per child through the credit. The second half of the credit was delivered to families in the spring in the form of a tax refund.
However, that increase in the Child Tax Credit was only good for 2021. This year the monthly payments ended, so the full credit will be deducted from a person’s tax return next spring. And the full credit amount has been reduced from $3600 to $2000 per child for the year.
The benefits of the larger tax credit and its payout in monthly checks were widespread, lowering child poverty, food insecurity, and financial anxiety for millions of families with children. When we also consider the current high inflation rates, especially on food, we have to expect that the rate of children in poverty in the United States will continue to rise.
Is there anything we can do to reverse this trend? How about contacting our members of Congress and asking them to return to the Child Tax Credit amounts and monthly payments of 2021? It was obviously a successful program that should be renewed.