Ford School experts hail reduction in child poverty, call for expansion of Child Tax Credit

September 16, 2022

As the U.S. economy stagnated during the pandemic, a surprising by-product of government assistance was the rapid decline in child poverty rates.

Ford School experts Luke Shaefer, Patrick Cooney, and Betsey Stevenson celebrate this “triumph of policy” in an article explaining the phenomenon, and calling for a revival of the Child Tax Credit.

Census Bureau data released this week shows that the federal government’s action pulled around 6 million children out of poverty. 

“Most surprising is that declines in poverty, rather than stalling with the decline of the Covid-19 pandemic, accelerated,” they wrote. “While economic conditions could have led to one of the largest increases in poverty on record, the federal government stepped in to support families as the economy ground to a halt. While the pandemic brought a new set of hardships, these federal relief efforts prompted child poverty to fall sharply.”

Shaefer, Stevenson, and Cooney attribute this success to the reinvention of the social safety net consisting of stimulus checks, expanded unemployment assistance, and an expanded Child Tax Credit.

“While the traditional safety net targets poor families and relies heavily on in-kind benefits rather than money, the pandemic safety net was largely cash-based, unrestricted, and nearly universal,” the authors say. “And it worked. Over the past two years, tens of millions of people lost work and had their lives disrupted by Covid-19. Yet amid this economic disruption, child poverty plummeted.” 

“Man, I’m just grinning ear to ear,” Shaefer told The New York Times. “Americans wonder if the government can shape successful policies that address poverty. This offers incontrovertible evidence that it can.”

Despite critics claiming these cash-based assistance programs have led to rising inflation and labor shortages, Shaefer, Stevenson, and Cooney argue that we must look to these poverty-reducing policies as the solution to these issues.

“Some see this rising hardship and argue that inflation must be controlled, no matter the cost, even though the same households struggling in the face of rising prices will be made much worse off by severe efforts to slow the pace of inflation,” they write. “We, on the other hand, see households struggling and argue that — while keeping a close eye on potential inflationary impacts — we should look to the recent policies that led to the historic declines in poverty that we see today.”

Without implementing similar policies, things could take a turn for the worse.

“In 2021, child poverty fell to a historic low. In the past two years, the United States made more progress in reducing child poverty than ever before as a result of smart, evidence-based public policies,” Shaefer told the Dallas Morning News. “However, child poverty is on track to increase in 2022 because many COVID-era anti-poverty policies have been eliminated, especially the expanded child tax credit.”

Shaefer, Stevenson, and Cooney suggest that reviving the expanded Child Tax Credit is the obvious way forward – its implementation led to child poverty, food insecurity and other measures of material hardship falling sharply.

“As we emerge from this pandemic and look back at the historic progress against poverty we’ve made over the past two years, we stand at a crossroads,” the experts conclude. “Will these historic declines in poverty be a one-time blip, an accident of circumstance? Or, perhaps, these gains will mark the start of a new era, in which policymakers realize the level of poverty and hardship we tolerate in our society is a policy choice, and that it’s possible to have much less of it.”

Read the article written by Shaefer, Stevenson, and Cooney, as well as news items featuring Shaefer: