CHN: Federal investments pay off and lift millions out of poverty
Editor’s note: The following statement was released Tuesday, September 13, 2022 by Deborah Weinstein, Executive Director of the Coalition on Human Needs.
“In 2021, families saw the benefits of federal investments in their well-being. The Child Tax Credit, improved nutrition assistance, and other benefits aimed at helping people cope with the economic dislocations of the pandemic worked to lift millions of people out of poverty. The Census Bureau’s Supplemental Poverty Measure, which takes many federal benefits into account in calculating poverty rates, found that 9.6 million fewer people were poor because of low-income tax credits, and 8.9 million people were protected from poverty by the stimulus payments sent out. Other forms of assistance also lifted millions out of poverty, including SNAP and school lunch food aid (3.4 million) and housing subsidies (2.4 million).
“The importance of these forms of assistance is made especially clear when comparing poverty estimates that take benefits into account to the official poverty numbers, which do not count these forms of income. While the Supplemental Poverty Measure found that child poverty continued a decline from 12.6 percent in 2019 to 5.2 percent in 2021 (a record low), the Official Poverty Measure saw child poverty rise from 14.4 percent in 2019 to 15.3 percent in 2021 (although there was a slight decline in the official child poverty rate compared to 2020, when it was 16 percent). Overall poverty also declined to a record low when taking government benefits into account, from 9.2 percent in 2020 to 7.8 percent in 2021. As in previous years, Social Security benefits lifted the most people out of poverty (26.3 million in 2021); these cash benefits are counted in the official poverty measure. It is important to note that while the Supplemental Poverty Measure shows greater poverty reduction for children and for people aged 18 to 64 years, it shows slightly less for people 65 or older (10.3 percent using the Official Poverty Measure and 10.7 percent for the Supplemental Poverty Measure). This is likely because increased costs outpaced any increases in benefits for people 65 or older.
“While progress was made in most major racial groups, painful disparities continue. Using the Supplemental Poverty Measure, Black and Hispanic poverty rates were nearly two times the rate for White/Non-Hispanics (11.3 percent, 11.2 percent, and 5.7 percent, respectively). American Indian/Alaska Native poverty was 12.4 percent by the Supplemental Poverty Measure, more than twice the White/Non-Hispanic rate. Poverty rates for all racial groups except Asians were lower using the Supplemental Poverty Measure than the official measure, again demonstrating the importance of public benefits.
“In addition to helping people escape poverty, government investments in health insurance coverage led to substantial reductions in the number of uninsured people down from 8.6 percent in 2020 to 8.3 percent in 2021, or 1.1 million fewer people without insurance. The decline in uninsured people occurred because more people were signed up for public insurance such as Medicaid and Medicare. The percentage of adults aged 19 to 64 with private insurance declined from 28 percent in 2020 to 27.1 percent in 2021.
“The Child Tax Credit helped millions of children and families escape poverty because the Biden Administration and a majority in Congress enacted substantial improvements in it. The CTC was increased from $2,000 to $3,000 for children six and older, and to $3,600 for children under six. Half was made available in monthly installments between July and December of 2021, with the rest provided in 2022 during tax filing season. Especially important in reducing poverty, the full CTC was extended to eligible families even if they had no earnings. These improvements led to an increase in the number of people lifted out of poverty by low-income tax credits from 5.3 million in 2020 to 9.6 million in 2021.
“But in a painful example of ‘if it ain’t broke, break it,’ all Republicans in the Senate plus Democrat Senator Joe Manchin refused to extend the poverty-fighting CTC into 2022. While the Census survey release does not go beyond 2021, researchers at Columbia University’s Center for Poverty and Social Policy have calculated monthly poverty estimates using methodology similar to the Supplemental Poverty Measure. They found that child poverty was 12.1 percent in December 2021, the last month in which Child Tax Credit monthly payments were made, and surged to 17 percent in January 2022.
“Congress’ failure to extend the Child Tax Credit came at a time when food prices were rising steeply. In August of 2022, food at home prices were 13.5 percent higher than a year earlier. It is disheartening but not surprising that 15.7 percent of people with children reported that they sometimes or often did not have enough to eat in the previous 7 days in a period ending on August 8 of this year, up from 10.4 percent in August of 2021, an increase of 4.1 million people with children. A year ago in August, families were receiving the Child Tax Credit; a year later, it had been allowed to expire, and rising food prices were making it harder to make ends meet.
“The Census Bureau’s experimental Household Pulse survey series, undertaken to provide timely results during the pandemic, does not estimate poverty, but instead asks people whether they are experiencing hardship. In addition to showing how many people are unable to get enough to eat, it shows people’s difficulties paying for usual household expenses. Even in August of 2021, when the Child Tax Credit was being received, more than one-quarter of people reported it was somewhat or very difficult to pay their regular bills. A year later, over 40 percent said it was similarly hard to pay their regular expenses. This shows inflation taking its toll, with the situation worsening in the absence of the benefits initiated during the pandemic. It also shows that people can climb above the poverty line but still find it very difficult to make ends meet. The 2021 Official Poverty Measure threshold is only $27,479 for a family with two adults and two children (for the Supplemental Poverty Measure, the threshold for the same size family is $31,453 if they are renters). The most recent Household Pulse data (to early August of this year) show that about two-thirds of people with household incomes below $25,000 were finding it somewhat or very difficult to pay for their usual household expenses, as were nearly 60 percent of those with incomes between $25,000 – $35,000. In August of 2021, before inflation kicked in and while the Child Tax Credit was being received, still more than half of people with incomes below $25,000 were finding it similarly hard to pay their bills.
“Looking at all these sources of information, it is absolutely clear that our investments to help people cope with the pandemic’s economic undertow worked; millions of people rose out of poverty. It is also clear that our goal must be to lift incomes enough that people no longer experience hardship. Restoring the expanded Child Tax Credit and extending the reach of nutrition and housing programs are essential investments in providing the economic security that Americans need. That, plus initiatives to raise pay and help people stay at work through child care and paid leave, will help move people well out of poverty and into the middle class.”
CHN compiles key data from the new reports and from other sources in its First Look summary, which is located here. For more information and background, please visit CHN’s 2022 Census Poverty Data Resource Library, located here.