How Congress could have prevented the upcoming spike in child poverty rates 

In 2021, federal policy action helped to cut child poverty in half and achieve the lowest child poverty rate in the country’s history. In a matter of weeks, however, the Census Bureau is poised to reveal that child poverty rates increased dramatically from 2021 to 2022, likely climbing back to their pre-COVID levels. What lessons should policymakers have learned from COVID-19 for maintaining low child poverty rates moving forward? This is the core question I ask in “Poverty in the Pandemic: Policy Lessons from COVID-19,” and I emphasize three of the many lessons here.

First, if Congress wishes to get back to its record-low child poverty rate, it should return to the policy that made it possible: the expanded Child Tax Credit that, in 2021, provided cash payments to nearly all families with children regardless of parents’ employment status. The consequences of the temporary CTC expansion were vast: it immediately cut monthly child poverty rates by around one-third, contributed massively to the record-low child poverty rate in 2021, temporarily brought the U.S. child poverty rate in line with Germany’s, had the American welfare state cutting child poverty at the rate of Norway, cut food hardship among families with children by around one-fifth, had no meaningful short-run consequences for employment, and increased low-income families’ consumption at child care centers and grocery stores.

The pandemic not only provided evidence on which policies work to reduce children’s exposure to poverty, but also the urgency of doing so: at the start of 2020, the average Black adult who was in poverty had also spent 57 percent of her childhood in poverty, compared to 20 percent for the average White adult in poverty. These disparate experiences of poverty, accumulating from birth onward, contributed directly to racial/ethnic disparities in health and employment outcomes at the onset of the COVID-19 pandemic. Cumulative exposure to poverty from childhood onward helps to explain why adults in the highest poverty counties in the U.S. had a COVID-related death rate nearly twice that of adults in the lowest-poverty counties, equivalent to the gaps in death rates between Germany and Romania in the EU.

Poverty, after all, is not merely a point-in-time state, but an economic condition that, once experienced, often lingers throughout one’s life, inflicting costs that range from poorer health conditions to reduced long-run economic opportunity. The 2021 CTC expansion worked in reducing those costs, but its discontinuation ensures that child poverty is poised to rise again.  

Second, if cross-party compromise is necessary to achieve an expanded, 2021-like CTC, then Democrats should be ready to meet prior demands to trade-in the Temporary Assistance for Needy Families (TANF) program.“Welfare,” as the program is commonly known, provided very little direct support for families during the pandemic: cash support from TANF reduced child poverty rates in 2020 by a mere 2.9 percent; the expanded CTC, in contrast, cut child poverty rates by 44 percent the next year — 15 times the magnitude of TANF. Meanwhile, state governments target fewer TANF resources toward Black families relative to White families, exacerbating racial differences in poverty targets. And TANF itself is shrinking each year: the program’s annual funding level is not updated for inflation, ensuring that its overall cost, and also its trade-in value, decreases by the year. There are costs to abandoning TANF, but should the political balance of Congress require that it need to identify cost offsets in order to fund an expanded CTC at 2021 benefit levels, TANF should not be excluded from consideration. 

A third lesson: Congress should Invest more resources into the Census Bureau’s data-collection capabilities to better track, in close to real-time, the well-being of households across the country. The pandemic revealed that our public data infrastructure is not prepared to inform month-to-month trends in poverty and hardship. As a result, researchers like me have had to get creative to track poverty on a monthly basis, to measure exposure to school and child care closures across the country, and more. But knowledge of how low-income households are faring on a month-to-month basis should not be a result of researchers’ data innovations; instead, adding four questions – one each on total resources received during the prior month, food insufficiency, mental health, and housing hardship – to the Census Bureau’s and Bureau of Labor Statistics’ monthly household surveys would offer representative and real-time measures of the well-being of the nation moving forward. The COVID-19 pandemic has taught us the importance of having timely and comprehensive data on poverty and well-being to guide policymaking decisions; these small changes would allow for that beyond the pandemic.

There are several other key policy lessons that emerge from COVID-19 and that “Poverty in the Pandemic” elaborates on. To name a few: we should learn from the Pandemic Unemployment Assistance and expand access to Unemployment Insurance (UI) among jobless adults, even before prioritizing UI benefit increases. We should build the administrative capacity to convert the Paycheck Protection Program into a targeted work-sharing program. And we should convert some lump-sum, refundable tax credits to monthly payments to better help households with their everyday needs.

The COVID-19 pandemic offered many lessons for improving economic well-being in the U.S. beyond the pandemic. We witnessed the menacing consequences of poverty, but also the enormous power and capability of the state to reduce poverty and improve well-being among households going through difficult times. To not apply these lessons moving forward would be a detriment to all those who happen to experience life in low-income America.

Zachary Parolin is an Assistant Professor of Social Policy at Bocconi University and a Senior Research Fellow at Columbia University’s Center on Poverty and Social Policy. He has published widely on topics related to the measurement, sources, and consequences of poverty. His research on poverty during the COVID-19 pandemic has been featured in The New York Times, Washington Post, The Economist, The Atlantic, CNN, in a U.S. presidential debate, and in other outlets.