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The end of pandemic relief measures upends progress in reducing child poverty

RACHEL MARTIN, HOST:

Many economists say the expanded child tax credit helped reduce child poverty during the pandemic. Last year, Congress failed to extend it. Wailin Wong and Adrian Ma from The Indicator podcast explain that soon after the expanded benefit disappeared, the progress that had been made started to slip.

WAILIN WONG, BYLINE: Diane Schanzenbach has a book on her desk. It gets a ton of use. She's actually got two copies of it, one for her home office and one for work.

DIANE SCHANZENBACH: You can see that, you know, the spine is broken because I - you know, I use it so much.

WONG: Diane is the director of the Institute for Policy Research at Northwestern University. She studies child poverty. And this well-worn volume is a 2019 report by a group of researchers about how to cut the number of children living in poverty in the U.S. in half over the next decade.

ADRIAN MA, BYLINE: At the time of the report, their estimates showed 13% of children were living in families with annual incomes below the poverty line. And one way to think about that is that for a family of four, that would be an income below $25,000.

SCHANZENBACH: For many of us, we were convinced that an important tool would be the refundable monthly child tax credit that would help, you know, make sure that families were able to just bridge their month - you know, not run out of food at the end of the month, be able to pay their rent.

MA: So the child tax credit has been around for decades but as an annual benefit, you know, something that you can only claim once a year around tax time. Diane and her colleagues have been pushing to make this a monthly credit, and finally, in 2021, the government made it a reality. What it did was temporarily increase the size of the credit and then paid out a portion of it in monthly increments. So about 35 million families got monthly payments of $250 or $300 per child.

WONG: The first checks went out in July. Just a month later, according to the Census Bureau, households with children saw their food insufficiency decrease and also their financial hardship decrease. In other words, the money helped families put food on the table and cover their expenses.

SCHANZENBACH: It knocked my socks off to see that sharp decline. Families are struggling less because of this money that's going out.

WONG: Although there was some debate among economists about whether the tax credit was creating incentives to not work, overall, Diane and her colleagues were very encouraged by such clear progress. But about six months later, the very last checks under the expanded credit went out after Congress failed to extend it. And when the monthly checks stopped, the gains in reducing child poverty were reversed. One measure by Columbia University showed that in just one month, the child poverty rate jumped from around 12% to 17%.

MA: Yeah, that's a huge increase. And, I mean, to put it in perspective, that's about 3.7 million more kids living below the poverty line, most of them Black and Latino.

SCHANZENBACH: You know what? I feel sad about it because of what I think it means for low-income children and our national investment in them.

WONG: There may still be a shot at reviving a version of the monthly child tax credit. On Wednesday, Senator Mitt Romney and a couple other senators proposed a bill that would give working families a cash benefit every month.

Wailin Wong.

MA: Adrian Ma, NPR News. Transcript provided by NPR, Copyright NPR.

Adrian Ma covers work, money and other "business-ish" for NPR's daily economics podcast The Indicator from Planet Money.
Wailin Wong