Nearly 1 Million More Children Were in Poverty in 2023 Than 2022, Despite Economic Growth

Source: Poverty estimates are from the U.S. Census Bureau’s Annual Poverty in the United States report series, the most recent of which is Poverty in the United States: 2023.

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There are two main factors that influence annual changes in child poverty:

• Shifts in economic conditions: When the economy is strong, child poverty tends to be lower. Strong economies are characterized by factors like low unemployment and wage growth that outpaces inflation (i.e., “real wage growth”).
• Shifts in social policy: Social policy—such as government assistance in the form of cash and in-kind supports—can help reduce child poverty by providing families with resources to meet basic needs. Shifts in policy that influence the degree to which social programs reduce child poverty include changes to the overall size of a social program (i.e., how much assistance is given and to how many people) and the extent to which benefits are targeted to families in poverty.

Shifts in the demographic makeup of the population can also shape child poverty because some demographic groups are more likely than others to have access to resources (i.e., income, employment, economic mobility opportunities) that keep them out of poverty. However, demographic shifts—such as changes with respect to educational attainment, family structure, age of childbearing, immigration, and the racial/ethnic makeup of the population—tend to occur more slowly and have less impact on annual changes in child poverty rates.

Shifts in economic conditions in 2023. Overall, 2023 saw a moderately improving economy compared to 2022. The annual unemployment rate remained stable in 2023 (3.6%, the same as in 2022). And, while many families continued to see increases in the cost of living (especially food prices), the average annual inflation rate in 2023 (4%) was considerably lower than in 2022 (8%). Most importantly, in 2023, wages outpaced inflation and real wage growth was strongest for the lowest-wage workers. This means that, even while costs of basic necessities (especially food costs) increased in 2023, increases in wages likely offset those increased costs for many families—but not all. These offsets, however, did not prevent a substantial increase in the number of families whose incomes fell below the threshold required to meet their basic needs.

Shifts in social policy in 2023. Social safety net programs have been particularly relevant to child poverty trends since the beginning of the pandemic. The extent to which individual programs have reduced child poverty—before, during, and after the public health emergency brought on by the pandemic—have varied with each program’s expansion and reduction (Figure 2).

• Census Bureau estimates show that refundable tax credits (including the refundable portion of the Child Tax Credit) have consistently played the largest role in reducing child poverty. In 2021, both the Earned Income Tax Credit (EITC) and Child Tax Credit were expanded, along with these credits’ role in reducing child poverty. Both tax credit expansions expired at the end of 2021 and reverted to smaller payments with more restrictions in 2022 and 2023, reducing their role in reducing child poverty in those years compared to 2021.
• Pandemic-related expansions to the Supplemental Nutrition Assistance Program (SNAP) continued through 2022 for many states, expiring nationwide in March 2023. Separate from the pandemic, SNAP benefit amounts were permanently adjusted in October 2021 to provide 40 cents more per person, per meal to better align benefits with the costs required to purchase healthy meals. For most families, the cash value of the adjusted benefits amounts are higher than those provided pre-pandemic, but lower than what families received while their states offered pandemic emergency status. As a result, SNAP’s role in reducing child poverty decreased slightly in 2023.
• Federal pandemic-related expansions to school lunch programs continued into 2022, expiring at the end of the 2021-2022 school year. Some states, however, continued to offer universal free school meals into 2023, using state funds to cover the costs. The role of school lunch in reducing child poverty decreased from 2022 to 2023.
• The role of Social Security in reducing child poverty rates remained stable from 2022 to 2023. Notably, there was a significant cost-of-living adjustment to Social Security benefits in 2023 (an 8.7% increase in payments).
• The role of housing assistance in reducing child poverty increased slightly from 2022 to 2023. Emergency rental assistance (ERA) was funded in two rounds through two separate laws, the first of which (ERA-1) expired in 2022. The second round (ERA-2), which will be available until September 2025, has slightly less funding but may be used for a broader range of affordable housing and eviction prevention activities.

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Figure 2. From 2019 to 2023, individual government assistance programs’ roles in reducing child poverty varied with the expansion and retraction of each program

Source: Estimates are from the U.S. Census Bureau’s annual Poverty in the United States report series, the most recent of which is Poverty in the United States: 2023.

Notes: Within the figures above, some bars are labeled with equal values but have slight differences in height; this is due to rounding.

To evaluate the effect of an individual government program on the number of children living in households with resources below the supplemental poverty threshold, the Census Bureau subtracts the cash value of an individual program’s benefits from a household’s resources and recalculates poverty status without that program. Poverty status changes if subtracting a program benefit decreases an individual’s resources below their poverty threshold. The above graph represents the number of children who were not in poverty when the program’s benefits were included but were in poverty when the program’s benefits were subtracted from their economic resources. These additions and subtractions are done independently for each program and assume no behavioral changes such as shifts in employment status or expenses. For more on how the Census Bureau measures poverty, see here.

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While a strong economy featuring low rates of unemployment and real wage growth is critical to keeping children and their families out of poverty, recent economic growth has not been enough to prevent an increase in the number of children experiencing poverty in the United States. More than 1 in 8 children lived in poverty in 2023—a rate more than double the historic lows achieved during the pandemic. Community leaders and public officials must decide whether and how they plan to guide the nation back to these record low levels of child poverty that we know are attainable.

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Footnote

[1] All poverty estimates reported in this blog are based on the Supplemental Poverty Measure (SPM), which includes noncash government benefits (e.g., food and housing assistance) and refundable tax credits (e.g., the Earned Income Tax Credit, or EITC)—as well as cash income—in its calculation of a family’s resources. The SPM poverty threshold varies by geography to account for cost-of-living differences, but, on average in 2023, households with an income of less than approximately $37,482 (for a two-adult, two-child household that rents its housing) were considered to be experiencing poverty. For more information about how the SPM compares to the Official Poverty Measure (OPM), see How Poverty Is Measured in the United States.