Plunging millions back into poverty: After historic reduction in 2021, some in Congress forced a painful reversal
Editor’s note: The Coalition on Human Needs issued the following news release September 12, 2023 in response to release of the Census Bureau’s poverty, income, and health insurance data:
In 2021, poverty and child poverty declined to historic lows. There were 3.37 million fewer poor children in 2021 than in 2020, a drop from 9.7 percent to 5.2 percent of children in poverty in just that one year. But in 2022, this unprecedented progress was painfully reversed. The number of poor children rose by a stunning 5.15 million children over the previous year, increasing to 12.4 percent of all children.
Poverty for all age groups also rose dramatically, from nearly 25.6 million people in poverty in 2021 to 40.9 million in 2022, an increase of 15.3 million people. These increases are shown in the Census Bureau’s Supplemental Poverty Measure (SPM), which is a more accurate assessment of sources of income and expenses than the Official Poverty Measure (OPM). The SPM takes into account the Child Tax Credit, other low-income tax credits, pandemic stimulus payments, and other benefits such as SNAP or housing assistance. In large part because the Child Tax Credit’s 2021 expansion was allowed to expire in 2022, historic reductions in poverty and child poverty in 2021 were reversed in 2022.
“In 2021, 2.9 million children were lifted out of poverty by the expanded Child Tax Credit alone, but because there were not sufficient votes in Congress to continue the expansion, in 2022 the CTC prevented only 1.4 million children from being poor,” said Deborah Weinstein, Executive Director of the Coalition on Human Needs, an independent nonpartisan advocacy group. “This was a stunning self-inflicted wound, leaving 1.5 million newly impoverished children more likely to go without enough nutritious food, to fall behind in school, and to earn less in adulthood. Restoring the expanded Child Tax Credit should be an urgent priority for every member of Congress,” said Weinstein. The most vulnerable population groups saw big increases in poverty, taking the losses in benefits into account. People of working age with disabilities saw their poverty rate rise from 15.8 percent in 2021 to 23 percent in 2022.
The U.S. Census Bureau’s annual release of poverty, income and health insurance data showed important gains in full-time workers, including record-breaking gains in women working full-time. But the 7.8 percent inflation increase reduced incomes at all income levels. Here too, taking the impact of tax policy into account, inequality rose in 2022. Post-tax income declined by a startling 14 percent for the poorest 10 percent, while the wealthiest 10 percent lost 7 percent of their post-tax income. The loss of low-income tax credits and pandemic stimulus aid hit the poorest far more than those with the most income, leading to a 3.2 percent increase in inequality from 2021 to 2022.
Black and Hispanic/Latino people remain far more likely to be poor than non-Hispanic Whites. Using the Supplemental Poverty Measure, 9.1 percent of non-Hispanic Whites were poor in 2022, compared with 17.2 percent of Blacks and 19.3 percent of Hispanics (of any race). Poverty rose steeply for all groups from 2021 to 2022 because of the loss of low-income tax credits and pandemic stimulus payments, but the percentage point differences for Blacks (up from 11.3 percent in 2021) and Hispanics (up from 11.2 percent in 2021) were especially large. The percentage of Black children living in poverty rose dramatically from 2021 to 2022, from 8.1 percent to 17.8 percent; similarly, the increase for Hispanic/Latino children (may be of any race) rose from 8.4 percent to 19.5 percent. For non-Hispanic White children, the increase was from 2.7 percent to 7.2 percent; for Asian children, from 5.1 percent to 9.9 percent. Historic gains by Black and Hispanic children because of the Child Tax Credit and other benefits have been wiped out.
Median income is also lower for Black and Hispanic/Latino households. In 2022, median income was $81,060 for non-Hispanic White households; it was $52,860 for Black households; $62,800 for Hispanic households (who may be of any race); $108,700 for Asian households.
While the 2022 data show the painful impact of the lost Child Tax Credit and other pandemic aid, it does not include further losses that are taking effect in 2023. SNAP benefits lifted 3.67 million people out of poverty in 2022, 865,000 more than in 2021. But states eliminated a significant pandemic SNAP increase by March of this year, so families with low incomes have less help from SNAP now. “We know households are hungrier now,” said Weinstein. “In survey data from this summer, 13.1 percent of people said that in the previous 7 days their households sometimes or often did not have enough to eat, up from 8 percent two years before. It’s worse for households with children.” Similarly, although the 2022 data show a decline in the proportion people without health insurance (from 8.3 percent to 7.9 percent), in 2023 and ongoing, states have returned to eligibility determinations for Medicaid, and close to 6 million people have lost Medicaid so far. Many of those terminated have lost Medicaid because of paperwork problems; high proportions are likely to remain eligible despite losing coverage. Further adding to the harm for families, the large gains in full-time employment for women will likely be eroded if an imminent loss in federal child care funds is allowed to occur. It has been estimated that one in three child care programs could close, with 3.2 million children expected to lose care. “Reversing women’s 2022 work gains will hurt future family income and the whole economy,” said Weinstein.
“Although the Biden Administration has taken steps to protect people with low incomes, the actions by Congress have resulted in a wholesale disinvestment in proven means of reducing poverty and hardship. The poverty and income data for 2022 show conclusively that more than 15 million people, including more than 5 million children, have been needlessly plunged into poverty as a result,” said Weinstein. “Congress must recognize the harm it has inflicted, and restore investments like the expanded Child Tax Credit now.”
Data cited have been compiled in the Coalition on Human Needs’ First Look at Poverty, Hardship, and Health Insurance 2023, available here.