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Millions more children were in poverty in 2022 than in 2021.
That’s after Congress ended monthly checks to parents as part of the expanded child tax credit.
The poverty rate for all people also increased from where it stood in 2021.
About 5 million more children were in poverty in 2022 than in 2021 after a series of pandemic-era support measures for families came to a close.
Refundable tax credits like payments from the expanded child tax credit helped keep millions of Americans out of poverty in 2021. The end of many of those programs that year has led to a big uptick in poverty in 2022, a new Census Bureau report shows.
The Supplemental Poverty Measure rate or the SPM rate, which “includes both cash and noncash benefits and subtracts necessary expenses (such as taxes and medical expenses)” as stated in a Census Bureau blog post, climbed from 7.8% in 2021 to 12.4% in 2022. The SPM child poverty rate of those under 18 soared from the record low, starting with data from 2009, of 5.2% in 2021 to 12.4% in 2022.
That’s all while the unemployment rate remained low in 2022, ranging between 3.5% and 4.0% over the course of the year.
A press release from the Census Bureau noted that the increase in the overall SPM rate “can be attributed to key changes in federal tax policy, including the expiration of temporary expansions to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) as well as the end of pandemic-era stimulus payments.”
The expanded CTC meant up to $3,600 per child for those under 6 and $3,000 for older children, for qualified families. People could get half of this as six monthly payments in 2021, and the rest when they filed their 2021 taxes. The advanced payments helped families pay their bills, as Insider has reported.
“Congress must act to reinstate the improvements to the child tax credit, invest in child care, and take other steps to ensure that women — and the families who rely on us — have the supports we need to thrive,” Melissa Boteach, vice president of income security at the National Women’s Law Center, said in a statement.
“The sharp reductions in child poverty in 2020 and 2021 that were engineered even in the face of a pandemic-damaged economy show the importance of policy decisions,” a statement from Economic Policy Institute’s Elise Gould and Ismael Cid-Martinez said. “If policymakers were willing to maintain the pandemic-era CTC expansions, a much smaller share of children would be living in poverty.”
To be sure, the SPM is not the official measure poverty, which the Census Bureau also reports. The official measure includes things like unemployment, Social Security, and wages but doesn’t include tax credits, taxes paid, stimulus payments, or SNAP and similar noncash assistance programs, according to this year’s press kit. The SPM is measured by taking into account multiple things that aren’t in the official measure, including tax credits, and subtracting things like work and childcare expenses.
The Council of Economic Advisers, or CEA, noted in a post prior to the new data was out about what it expected for the latest measure that they focused on the SPM rather than the official rate because it is a more accurate representation of the reality of poverty in the US. That’s because of the extra sources of income and expenses used for SPM, the CEA noted, as well as because it “has updated thresholds that better reflect today’s consumption patterns.”
The official poverty rate was pretty similar to what it was in 2021: it decreased slightly, from 11.6% in 2021 to 11.5% in 2022.
2.4 million Americans avoided poverty in 2022 because of the refundable portion of the child tax credit
“Two ARP policies in particular substantially reduced poverty in 2021: the significant increase in the CTC, which included making the full credit available to the lowest-income children for the first time, and the Economic Impact Payments (EIPs) sent out in March 2021,” stated a CEA blog post.
“Taken together, the CEA finds that the EIPs and the CTC shaved almost 10 points off of the child poverty rate in 2021, reducing it by two-thirds,” the CEA said a few days before the new data was out.
“Renewing the expansion — which President Biden and many in Congress supported — would have kept about 3 million children above the poverty line in 2022, avoiding more than half of the actual rise in child poverty, we calculate using Census data released today,” a post from the Center on Budget and Policy Priorities said. “The child poverty rate in 2022 would have been about 8.4 percent rather than 12.4 percent.”