What’s the Word On: Poverty Reduction
Lately, there’s been a steady stream of good news regarding poverty. It comes at an interesting point, given that the White House will host its first conference in 50 years that will focus on curbing hunger, which oftentimes is the result of poverty.
According to The New York Times, the Census Bureau reported that the aid provided to people via the American Rescue Plan–which was passed along party lines in March 2021–helped to drive down poverty to one of its lowest levels, from 9.2% in 2020 to 7.8% in 2021.
In 2021, 25.6 million people were experiencing poverty. That’s down from 30 million in 2020, and the number is significantly lower than the 50 million who were impoverished in 2011. A family of four would need to earn no more than $26,500 to be considered living in poverty.
Even more impressive, the number of children living in poverty fell 4.5 percentage points to 5.2%. Much of that decrease could be attributed to a modified Child Tax Credit, which was expanded. Specifically, the child tax credit provided a $3,600 annual subsidy for each child under age 6 and a $3,000 yearly subsidy for each child between the ages of 6 and 17.
Collectively, the tax credit programs, which also includes the Earned Income Tax Credit, have helped remove 9.6 million people from poverty.
Perhaps the biggest difference was in the reduction in poverty amongst minority populations. The share of black children living in poverty plummeted from 17.2% in 2020 to 8.3% in 2021 and, the share of American Indian and Alaska native children who were impoverished fell from 15.2% in 2020 to 7.4% in 2021.
These findings are in addition to recent data from a joint analysis between the New York Times and Child Trends, a nonpartisan research group, which found a substantial decline in overall child poverty over a nearly three-decade period. Between 1993 and 2019, a year before the pandemic, child poverty plummeted 59 percent. In 1993, some 28 percent of children were poor. By 2019, that figure dropped to 11 percent.
Progressive groups celebrated the news, saying the data show the effectiveness of government programs in driving down poverty. Luke Shaefer, who runs University of Michigan’s center on poverty believes the expanded child tax credit should become permanent (it expired several months ago).
“Americans wonder if the government can shape successful policies that address poverty. This offers incontrovertible evidence that it can.”
However, among the more conservative groups like the American Enterprise Institute (AEI), the reduction was simply the result of the federal government throwing more money at heads of household and not doing the more important work of addressing the root causes of poverty.
“OK, great, like poverty went down a lot, but it didn’t, really — not on a sustained basis,” said Michael R. Strain, AEI’s director of economic policy studies at the American Enterprise Institute. “If you think of poverty in a broader sense related to issues around self-sufficiency and earnings and upward mobility, then I think a huge reduction in poverty based on a one-time temporary income transfer isn’t really a reduction in poverty at all.”
As usual, both groups have a point. But the ultimate goal of making sure taxpayers and their children don’t go hungry or lack access to valuable services that help build a brighter future is something that should be addressed quickly. Getting to the root causes of a problem is obviously something we all want to do, but that can be a time-consuming process and risk putting people who’re already struggling in greater harm if services and programs are put on hold because they need “further study.”
There have been some valid points made about how all the federal stimulus funds helped contribute to the highest inflation in four decades. Ultimately, though, inflation is a temporary problem that can be addressed and solved within a relatively short time frame. Poverty, on the other hand, risks scarring a population emotionally and mentally, setting them behind the proverbial eight ball. If we know certain solutions work in the short-term to alleviate its immediate effects, they are worth implementing.
At the same time, we need to keep our eye on finding innovative solutions to ensure poverty is reduced as much as possible for future generations. That is where the upcoming White House conference can be beneficial in exploring certain elements associated with poverty. We look forward to it.