Child poverty dropped dramatically. The number of children without health insurance declined by nearly 4 million. Government assistance pulled 45.4 million people out of poverty. And yet, income inequality increased for the first year since 2011.
The U.S. Census Bureau issued a flurry of reports this week on its national findings on income, poverty, and health coverage in 2021. Its data contribute to documenting the economic conditions of Americans in the second year of a pandemic.
What’s more, the Census findings advance an understanding of the value and potency of government so often at issue in this era of partisan polarization and distrust of institutions, including public education. The data provide evidence that recent direct assistance and tax policies have made a difference in the lives of millions of hard-pressed families.
In reporting on child poverty, the Census Bureau used two calculations – the official poverty measurement based simply on cash income and the supplemental poverty measurement that takes into account housing subsidies, SNAP food assistance, and such.
By the standard measure, child poverty declined modestly from 16% to 15.3%. By the supplemental measure, says the Census, child poverty “fell to its lowest recorded level in 2021, declining 46% from 9.7% in 2020 to 5.2% in 2021.”
The one-year expansion of the federal child tax credit proved especially effective, though it has not been renewed. The American Rescue Plan, a Biden administration initiative to offset pandemic-induced economic harm, increased the value of the child tax credit and allowed families to receive it in monthly installments. According to the Census, this credit pulled 5.3 million people out of poverty, among them 1.2 million Hispanic children, 820,000 non-Hispanic white children, 716,000 Black children, and 110,000 Asian children.
Earlier this year, the Brookings Institution, a Washington-based think tank, published an evaluation of the child tax credit by a team of seven scholars, including Leah Hamilton of Appalachian State University and Mathieu Despard of the University of North Carolina at Greensboro. Families surveyed reported using the tax credit mostly for utilities, clothing, and food, as well as child care and extracurricular activities.
“Overall, we find that families used the CTC (child tax credit) to cover routine expenses without reducing their employment,” says the Brookings report. “Eligible families experienced improved nutrition, decreased reliance on credit cards and other high-risk financial services, and also made long-term educational investments for both parents and children.”
In its annual report on health insurance coverage, the Census Bureau says that the nation had 3.9 million people under age 19 without health insurance. “That’s 475,000 fewer children without coverage than in 2020,’’ says the report.
More than three out of five children have private coverage primarily through their parents’ health insurance. The Census points to an increased reliance on Medicaid and the Children’s Health Insurance Program (CHIP), estimating that the number of children covered by these public programs increased by 752,000 over the past year.
The Census Bureau reports that, while real median U.S. household income held steady at $70,784 in 2021, income inequality widened – largely because people in the bottom 10% lost ground during the pandemic’s disruption to commerce and schools. And yet, the Census reports that “2021 illustrates how the tax system can reduce inequality,’’ which was 12.9% lower when calculated using post-tax income compared to pretax income.
Of course, persistent poverty and excessive income inequality have proved stubborn societal blemishes in the United States. Political fights over taxing and spending are hardy perennials in a diverse republic where anti-poverty policies encounter arguments over inflation and work. Jason DeParle, a correspondent for The New York Times, produced two reports this week that illuminate how poverty has yielded, though not disappeared, over time to government initiatives.
He went to West Virginia to interview people living in and near poverty. He explored trends dating back to President Bill Clinton’s signature promise to “end welfare as we know it.” The 1996 reform law reduced traditional welfare benefits and added work requirements. Since then, the federal government enlarged the safety net with CHIP, SNAP, school meals, and earned-income tax credits. Some states raised minimum wages.
Thus, DeParle reports, “that safety net is less the product of a unified vision than a series of ad hoc programs that reflect both liberal and conservative ideas. Over the past quarter-century, tough welfare laws cut cash aid to nonworking families, but tax credits for low-wage workers expanded and overall spending grew.”
“About 25.6 million people experienced poverty in 2021, down from 30 million in 2020 and 50 million in 2011,” DeParle reports. This is not flimsy breaking news but big news that has played out over time.