Federal Relief Efforts Protected Millions of Children From Poverty

New poverty data released today (September 14) by the U.S. Census Bureau highlight the enormous success of government programs in protecting children from the economic fallout of the COVID-19 pandemic. Social safety net programs and federal relief efforts not only prevented additional children from falling into poverty but also reduced child poverty in the midst of the COVID-19 public health crisis and recession—despite the fact that the country reached its highest levels of unemployment (14.7% in April 2020) since the Great Depression (25.6%), and even exceeded unemployment during the Great Recession (10.0%).

Child poverty decreased by 2.9 percentage points, from 12.6 percent in 2019 to 9.7 percent in 2020, based on the Supplemental Poverty Measure (SPM). The SPM accounts for income support that households received in the form of stimulus payments, tax credits, and nutrition assistance. Stimulus payments and refundable tax credits (such as the Earned Income Tax Credit) accounted for the largest impact on child SPM rates in 2020. The first two rounds of stimulus payments prevented 4.5 percent of children from falling into poverty, holding everything else constant, while refundable tax credits prevented 3.8 percent of children from falling into poverty. In absolute numbers, stimulus payments alone kept 3.2 million children out of poverty in 2020, and tax credits alone kept 2.7 million children out of poverty in 2020. While there was likely considerable overlap in the number of children receiving both stimulus payments and refundable tax credits, these numbers speak to the power of each policy to reduce child poverty.

The Census Bureau simultaneously released child poverty rates based on the official poverty measure (OPM), which uses a family’s pre-tax income to determine poverty status. The OPM provides a useful (albeit imperfect) baseline for comparing what the poverty rate would be with and without the social safety net: In 2020, the official poverty rate for children under age 18 increased to 16.0 percent[1] from 14.4 percent in 2019. The OPM includes a small sliver of public assistance—the expanded unemployment insurance benefits—but does not include stimulus payments or refundable tax credits.

Without a doubt, the government programs factored into the SPM disproportionately helped children: The difference between the SPM and OPM rate for children under age 18 was 6.3 percentage points, compared to 1.6 percentage points for individuals ages 18 to 64 and 0.5 percentage points for individuals ages 65 and older. The federal economic relief efforts enacted in the wake of the pandemic also reduced racial and ethnic disparities in poverty: The difference between the SPM and OPM rates was greater for Black (4.9%) and Hispanic (3.0%) individuals than it was for non-Hispanic White individuals (1.7%).

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[1] The Census Bureau’s Supplemental Poverty Measure: 2020 estimates the official poverty rate for children under age 18 to be 16.0 percent in 2020, while the Census Bureau’s Income and Poverty in the United States: 2020 report estimates the official poverty rate for children under age 18 at 16.1 percent in 2020.