What’s Behind the Spike in Child Poverty in the U.S.

The number of children living in poverty in the United States more than doubled in 2022, according to new figures released by the U.S. Census Bureau on Sept. 12, the biggest increase since it began using its current method to count them. In 2021, 5.2% of children were living in poverty. In 2022 that figure was 12.4%, or about 9 million children. This hike was part of a wider rise in poverty recorded by the Census, some of which can be attributed to inflation. But advocates for children say the leap was particularly stark for kids—and was avoidable.

An uptick in the number of children living in poverty had been widely expected, because of the expiration of the enhanced version of Child Tax Credit program (CTC) that had been instituted in July 2021 as a means of defraying the financial burden that the stay-at-home measures had imposed on parents. The CTC gave parents a historically high yearly tax credit of up to $3,600 per child, depending on age, which was often paid upfront monthly and did not have to be paid back if the parents' tax bill didn't reach a certain amount.

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Those credits, along with the stimulus payments and increased unemployment insurance and Supplemental Nutrition Assistance Program payments, had sent child poverty to a historic low. It fell from 9.7% to 5.2% between 2020 and 2021. In fact, it was 2021 that was the unusual year, according to statisticians. "Our child poverty rates are back to their 2019 level," said the U.S. Census Bureau's Liana Fox in a conference announcing the new figures. "We did see that that child tax credit—making it fully refundable, expanding it to all individuals—had a substantial decrease in child poverty."

The Census Bureau uses two methods to count people in poverty. One is an absolute measure that, put simply, counts raw income without taking the vagaries of expenses and benefits into account. By that metric, there was no great fall in the poverty rate during the pandemic and thus no big bounce in 2022. The other, newer metric, known as the Supplemental Poverty Measure, which has been used to estimate child poverty since 2009, is widely considered to offer a more accurate picture because it colors in the details of how much it costs families to live, rather than just sketching out how much they earn. And that's the data set that shows the bounce most clearly.

While an increase was expected, advocates for children were surprised by the size of the jump and seized on the moment to trumpet the effectiveness of the policy and to mourn its expiration at the end of 2021, after Congress failed to extend the CTC expansion. “This data once again highlights that poverty in our country isn’t a personal failing, but rather a policy choice," said Melissa Boteach, vice president of income security at the National Women’s Law Center in a statement. "Lawmakers have the power to lift millions of women and children out of poverty if they would just choose to prioritize families over their wealthy donors. We know what works."

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The Tax Foundation, a nonpartisan think tank, estimated that maintaining the enhanced credits would cost taxpayers $1.6 trillion over 10 years and cautioned that if the current administration moved ahead to make the expansion permanent "it should be financed in a way that doesn’t create significant headwinds to economic recovery." Child advocates such as Bruce Lesley of First Focus on Children think that number could be reduced with a few alterations, such as lowering the cutoff age for eligibility, and not making the payments monthly, but as an actual credit at tax time. But he also believes it would be worth it to keep the whole enchilada. "[Poverty] really does affect every aspect of the lives of kids," says Lesley. "It affects kids' education, their health, their nutrition, and then has negative consequences on things like child abuse and homelessness."

Other policy advisory organizations, however, worried that the benefits were too generous and would provide a disincentive for parents to work and thus push children further into poverty. The Joint Committee on Taxation estimated in 2022 that extending the benefits would shrink GDP and reduce tax revenues by $1.3 billion for the decade after they were introduced.

The U.S. Census figures also showed that the number of Americans not covered by health insurance had stayed steady among all age groups, except among children, where it had risen, further concerning child-welfare groups. And as of Sept. 30, the funding boost that the federal government had been offering states to help offset childcare costs will no longer be available. That could result in the loss of 70,000 programs and more than 3 million childcare spots, according to the Century Foundation, a progressive public-policy think tank.

Read More: Sneakers, Rent, and Childcare: How Seven Families Plan to Spend the Expanded Child Tax Credit

Those developments and the shrinkage of Medicaid coverage look like a perfect storm to those working in the child-welfare sector. "As families are struggling, we're now compounding that by making access to childcare harder and more unaffordable," says Lesley. "There's also the Medicaid unwinding that's happening right now and so kids are getting kicked off of health care coverage."

Many of the advocates see the new figures as proof of concept. "The expansion of the child tax credit in 2021 led to the most significant decrease in poverty on record," noted Boteach. "Congress must act to reinstate the improvements to the child tax credit, invest in childcare, and take other steps to ensure that women–and the families who rely on us–have the supports we need to thrive.”

Others believe that now the credits have been slimmed down, voters who were beneficiaries and have seen their income drop will start to pay attention, and the issue could have bipartisan support. Several Republicans offered up versions of a CTC bill before the 2021 version, and in an election year, everyone needs a win with women, who still bear most of the childcare burden. "This is the No. 1 thing on the agenda for the Democrats, and a lot of Republicans have introduced bills to expand the child tax credit," says Lesley, who worked on Capitol Hill for 12 years. "I do believe we'll see an extended version of the child tax credit in the next few years, and maybe even this year."