The poverty rate in the U.S. has risen dramatically in the year since pandemic benefits ran out — and the child poverty rate has more than doubled, according to U.S. Census Bureau's annual data on poverty, income and health insurance released Tuesday.
Just a year ago, child poverty hit a historic low of 5.2%. The latest figures put it at 12.4%, the same as the overall poverty rate. The surge happened as record inflation was rising and a lot of pandemic relief was running out, but Census officials and other experts say a key was the child tax credit.
In 2021, Congress increased the amount of the credit as part of the American Rescue Plan and expanded eligibility to include millions more low-income families. Sharon Parrott, president of the Center on Budget and Policy Priorities, says it was a big factor in initially reducing the poverty rate.
"We sometimes talk about the child tax credit as being an upside down policy," she says. "That's because the children who need it the most get the least, while higher income children get more."
Parrott says that means when the pandemic relief ended, millions of families lost out on this credit for their kids because they didn't make enough money. But married couples making hundreds of thousands of dollars a year do get the full child tax credit of $2,000 per child. While that might sound upside down, as Parrott puts it, the credit is an income-based benefit — so the more you make, the more you get.
Parents overwhelmingly used that extra tax credit money on household essentials like rent and food, according to surveys.
"I could breathe for a moment," says Jennifer Bereskin, who lives in Bothell, Wash., with her 11-year-old son. "I don't have to sacrifice ... I could get everything I needed."
Both Bereskin and her son are on disability. She says used the child tax credit for emergency car repairs, to avoid late fees on bills and to stock up on food at a time when even food pantries had periodic shortages of certain items.
Other parents spent the tax credit money to pay down debt, or on their kids. Angel Jackson is a single mom in Houston with an 8-year-old son.
"My son went to a charter school, so I bought school shirts," she says. "I got his haircut ... took him out to eat with it. It came in handy, kind of like his allowance."
When the tax credit ended, surveys found many parents had trouble paying bills and covering basic expenses like rent and groceries. Jackson, who lobbies for foster parents, says she's been doing OK. With inflation driving up prices, though, she feels worse off in some ways than at the height of the pandemic.
"Honestly, I think the child tax credit would help us right now more than ever, because everything is doubled," she says.
A push to revive the child tax credit
The dramatic effect on child poverty has fueled debate over bringing back an expanded child tax credit, although it's been at a stalemate in Congress.
Democrats are pushing it as part of broader tax negotiations this fall. Several Republicans have their own proposals, generally for a smaller credit with work requirements. Last year, Florida Sen. Marco Rubio said that after the Supreme Court decided to restrict abortion, Republicans needed a "pro-family" agenda, and listed an expanded child tax credit as part of that.
At the state level, there's been a lot of action. Adam Ruben of the Economic Security Project has been lobbying states to adopt their own child tax credit for a while. A couple years ago 7 states had done so. Ruben says that's now doubled, and just this year a total of 18 states have changed this or other tax programs to help low-income parents.
"The surge of energy that we've seen across many states, Democratic and Republican states alike, to boost tax credits, to provide economic security for families this year, has been stunning," Ruben says.
Median household income fell, outpaced by inflation
The Census Bureau also released new numbers Tuesday on income.
Median household income fell by 2.3% last year, to $74,580. Lower-income workers saw the largest wage gains, but those were outpaced by record inflation. Wages recently overtook inflation, thanks to the strong labor market. But like Jackson, many Americans might not be feeling it with the cost of rent and other things still so high.
