Child poverty drops to historic lows, Census reportsPoverty & Family Economics Tax Policy
Decline proves “child poverty is a policy decision”
U.S. child poverty dropped to the lowest rate ever recorded, according to government figures released today, dramatically illustrating the power of poverty-fighting initiatives. Yet much of the assistance responsible for this historic impact in 2021 has since expired, creating hardship that is already evident and expected to increase if Congress does not act.
According to the Supplemental Poverty Measure, which includes government assistance — such as tax credits, income support and nutrition assistance — U.S. policies cut the national child poverty rate nearly in half in 2021, dropping it 4.5 percentage-points from 9.7% in 2020 to 5.2% in 2021.
“This astounding decline proves that child poverty is a policy decision,” said First Focus on Children President Bruce Lesley. “The census figures provide yet more evidence that we know exactly how to reduce child poverty and that we have the tools to end it completely — if we choose. As Congress moves toward the end of its session, we urge lawmakers to reinstate meaningful improvements to the Child Tax Credit, improvements that lift as many children as possible out of poverty. Our baseline for child poverty should not be what is, but what is possible.”
The Census Bureau primarily credited the 46% drop in child poverty to temporary but significant improvements to the Child Tax Credit, and in particular, to changes that allowed households with little or no income to receive the full CTC for the first time. Changes to the CTC also:
- Increased the credit amount
- Offered payments monthly
- Extended credit to 17-year-olds
In particular, in 2021, the CTC lifted 2.9 million children out of poverty, according to the census data, with 1 million of them under the age of 6. The CTC reduced Black child poverty by 6.3 percentage points, according to the data, from 14.5% to 8.1% when included in SPM resources. Overall, this amounted to approximately 716,000 Black children lifted out of poverty by the inclusion of the CTC. The CTC also reduced the Hispanic child poverty rate by 6.3 percentage points, representing 1.2 million Hispanic children. The CTC also removed 820,000 White, non-Hispanic children and 110,000 Asian children from poverty.
The numbers dramatically illustrate the impact of tax credits and other assistance on the child poverty rate by posting the largest gap in history between the Official Poverty Measure — based on pre-tax cash income — and the Supplemental Poverty Measure for children. In 2021, government assistance delivered a child poverty rate (SPM) of 5.2%. Without that assistance, the child poverty rate (OPM) climbs to 15.3%.
Child poverty dropped across demographics, the Census Bureau reported, with SPM rates falling for non-Hispanic White (2.7%), Black (8.1%) and Hispanic (8.4%) children, also the lowest rates on record. Between 2020 and 2021, Black child poverty rates slid by 8.8 percentage points, according to the census. Similarly, Hispanic child poverty rates fell by 6.3 percentage points in that one year.
It is critical to note that poverty thresholds remain unrealistically low, and the SPM for children between 100-200% of the poverty threshold — roughly $60,000 for a family of four — remains high, at 31.4% in 2021, a statistically insignificant change from 2020. This figure represents millions of low-income children experiencing hardship and deprivation.
Since policy improvements to the CTC and other programs expired in January, roughly 3.4 million children have slipped back into poverty. Congressional negotiators must accept nothing short of complete restoration of these improvements going forward. Congress also must codify a national child poverty reduction target to build the political will to end child poverty.