Skip to main content

The federal budget plays a critical role in our government. It determines how much money the government can spend and where resources are allocated. Watch SEAP, CLASP, CPCC, and ProsperUS host a webinar discussing appropriations, federal-state-local budget connections, and the impact on essential programs, featuring Congresswoman Rosa DeLauro from Connecticut, Rricha deCant of CLASP, Catherine Rowland of CPCC.

>>Share on Facebook

By the CLASP Income & Work Supports Team

5 min read.

The Income & Work Supports team at CLASP works to advance public benefits justice, and Black History Month has us thinking about the history of economic injustice in this country. The economic injustices caused by slavery, segregation, mass incarceration, and continued racism profoundly affect Black families today. Reminder: the time in America’s history without slavery or legalized segregation is relatively short.

Every time I see this “timeline” I want to fight. On sight. Several things are terribly wrong. And then someone tweets that it still makes great points. #StudyingSegregation pic.twitter.com/5qkSKEAZ1d

— Blair LM Kelley, PhD (@profblmkelley) May 2, 2021

To truly achieve racial economic justice, we need to be honest about the root causes and do the work: first, a comprehensive reparations strategy that accounts for the economic potential that has been stolen from Black Americans. We also need an anti-racist system of public benefits that truly cares for all people when they experience financial emergencies and supports long-lasting economic security. Just as anti-poverty efforts aim to end or remake structures, systems, and institutions that help create and sustain poverty, anti-poverty efforts that are also anti-racist aim to remake those structures, systems, and institutions that contribute to poverty and racial injustices alike. Read on to better understand how programs have racist foundations and inequitable impact, and what can be done to reverse that legacy.

Stereotypes and false narratives, in particular about Black women, have been used to justify forced labor, bolster white supremacy, and encourage public support of substantial cuts to public benefits programs. Similar false narratives have been wrongly used to justify the exclusion of other populations, including formerly incarcerated people, immigrants, and students. We need to see policy decisions on a federal level that remove exclusions and diversionary methods which discourage people from applying to public benefits.

For immigrants, accessing public benefits can be particularly fraught. Federal restrictions and fear of immigration complications mean that Black immigrants face additional hurdles despite their high rates of participation in the labor force. Historical context shows that anti-poverty policy in America is intertwined with anti-Blackness, xenophobia, and other forms of racism.

Housing

The United States’s first housing programs excluded most Black people from federally-backed loans that made homeownership more affordable, which is a key reason why the racial wealth and homeownership gaps are so wide today. These programs also created segregated public housing. Black people are 30 percent less likely to be able to afford a home than white people, relegating over half of Black people to the rental market. One-third of Black renters spend more than 50 percent of their incomes on rent.

Racial disparities in homeownership rates and housing insecurity are born from decades of the federal and local governments failing to invest in Black homes and neighborhoods, or, in the worst cases, actively sabotaging or demolishing them. As the Black Panthers wrote: “[…] if the White Landlords will not give decent housing to our Black community, then the housing & the land should be made into cooperatives so that our community, with government aid, can build and make decent housing for its people.”

We can’t keep depending on the private rental market to supply enough affordable housing. In fiscal year 2025 appropriations, Congress must prioritize a reinvestment in public housing and begin to build a federal infrastructure to support social housing.

Cash Assistance and Tax Credits

Temporary Assistance for Needy Families (TANF) provides monthly cash assistance to families with very low incomes. TANF can help parents afford essentials like food and diapers. But many of the program’s eligibility requirements are rooted in racist stereotypes. TANF work requirements are rooted in paternalistic, anti-Black stereotypes about people living in poverty needing to be forced to work. State and federal lawmakers should remove the program’s work requirements to better promote access and equity. The origins of work requirements hark back to slavery and the white backlash to Reconstruction. It is thus unsurprising that research shows that Black TANF participants are more likely to be sanctioned than white participants. The size of TANF monthly benefits vary on a state-by-state basis, and Black children are more likely to live in the states that provide the lowest benefits. In all states, TANF benefits are not enough to meet a family’s monthly expenses.

Nineteen million kids don’t get the full Child Tax Credit (CTC) because their parents earn too little. Due to factors like the wage gap and job discrimination, Black children are more likely to be among those 19 million children. Congress must fix this inequity by making the CTC fully refundable. A fully inclusive and equitable CTCt that is available to families with little to no earnings would reduce child poverty and promote race equity. CLASP will continue advocating for expansions to the CTC to make it more inclusive.

Health Care

Medicaid is a vital program for more than 80 million people. This is especially true for the 60% of Black children insured by Medicaid. Without Medicaid, millions of children – disproportionately children of color – wouldn’t have access to affordable health care, well-child visits, routine immunizations, and other wellness needs. Medicaid is absolutely essential to children’s well-being in America. But it’s also a program often fraught with administrative burdens, cumbersome paperwork, and judgment. Many of these obstacles to enrollment are rooted in systemic racism that has been embedded in Medicaid throughout the program’s history.

Progress is being made, but there’s still work to do. Ultimately, achieving health equity depends in large part on equitable access to health insurance. We must work toward everyone having access to health care without unnecessary administrative burdens and stigma attached.

Food

Public benefits such as the Supplemental Nutrition Assistance Program (SNAP) provide critical resources and support for families with low incomes. Yet even as public benefit programs mitigate the hardships caused by economic and social exclusion, they also reinforce the underlying structures of oppression. Adequate access to food is economic and racial justice. People of color often live in neighborhoods impacted by food apartheid, where access to healthy and affordable food is limited. Grocery store chains are less likely to invest in Black communities.

The Way Forward

Our team is ready to return to the bold approach that civil rights leaders called for. We are working to make public benefits more equitable and effective, but we are also calling for policies like guaranteed income and the Child Tax Credit, which had an enormous impact on poverty in recent years. We’re also fighting to make programs like SNAP and Medicaid anti-racist. We envision a future with true economic justice for all–where everyone’s basic needs are abundantly met and everyone has the opportunities and resources to flourish. We envision a system of public benefits that is accessible, equitable, reparative, responsive, easy-to-navigate, and co-created with directly impacted people.

As we reimagine public benefits, we must center restitution, repair, trust, dignity, and equity. We will continue this work at CLASP to make public benefit programs anti-racist, while also pushing forward the larger goal of economic justice, which includes meaningful reparations for past and ongoing racial injustice.

By Priya Pandey

3 min read.

Lead is a potent neurotoxin and is particularly dangerous for the brain development of infants and young children. Health experts agree that any amount of lead exposure is unsafe for human health. Yet more than nine million homes in the United States still receive their water through lead service lines. In November 2023, the Environmental Protection Agency (EPA) issued a new rule that mandates that every lead pipe in America be replaced. This new proposal represents the culmination of a tireless half-century of advocacy to get the EPA to meaningfully address the crisis of lead-contaminated drinking water. The Lead and Copper Rule (LCR) was first introduced in 1991 in response to an amendment to the Safe Drinking Water Act (SDWA) of 1974. The LCR was created to reduce lead levels in tap water caused by corrosion and to prohibit new installations and sales of lead pipes for drinking water use, but it didn’t  require pipes to be replaced. It is abundantly clear that the public has not been adequately served and protected by these regulations,  from Flint, Michigan, to Newark, New Jersey. 

Replacing lead pipes is an equity issue, as lead exposure does not impact all households evenly. In 2021 the Centers for Disease Control and Prevention published a study indicating that non-Hispanic Black children were at particular risk, as well as children living in areas with higher-than-average poverty rates. But lead pipes remain disproportionately concentrated in low-income communities and communities of color, in part due to decades of federal home ownership policies that have concentrated families of color in low-income communities. People in these communities are more likely to live in older housing where lead pipelines can still be found. For example, a 2020 Illinois study found that 65 percent of Black residents lived in areas that contained 94 percent of the state’s lead service lines, while only 30 percent of white residents lived in those communities. Unlike their higher-income counterparts, residents in these communities cannot afford to replace the lines themselves; and in most places, landlords are not required to replace lead service lines or even notify renters about them. These factors have combined to create lasting disproportionate exposures to environmental health hazards for families with low incomes and people of color.  

The federal government has attempted to improve the country’s clean drinking water infrastructure by providing funds directly to state governments through programs such as the Clean Water State Revolving Fund. However, the program has fallen short. Systemic racism and disinvestment haves worsened environmental crises in certain communities, and many communities have had to rely on local sources of revenue to fund improvements in infrastructure. Federal programs and state governments have also failed to distribute funds equitably, with studies showing that white communities are more likely to receive federal funding than communities of color. In Jackson, Mississippi, a majority Black city, the water system collapsed as a result of freezing temperatures, leaving more than 150,000 residents without access to clean water. The state, which had received more than $75 million in federal funds for water projects, did not disburse those funds to localities like Jackson.    

The proposed upgrades to the LCR represent a major advancement in ensuring that households across the country have access to safe and clean drinking water and are protected from lead contamination by requiring water systems to replace all lead service pipes within the next 10 years. The proposal will also ban partial replacements of lead service lines, improve lead contamination testing methods, mandate reporting on the inventory of lead pipelines from water management systems, and include requirements for water utility companies to reach out to customers to inform them of potential contamination and provide them with a filter. This work will be primarily funded through the Bipartisan Infrastructure Law, which provides $50 billion to support upgrades to the nation’s drinking water and wastewater  infrastructure, including $15 billion dedicated to lead service line replacement.  

Unfortunately, the proposed rule will allow cities with more than 100,000 lead service lines to complete the replacements over a longer period of time. In a city like Chicago, it could potentially take up to 50 years to complete all of the replacements. This means that the problems associated with lead pipes will  persist across generations in communities that have already been dealing with the consequences of lead contamination in their water. In addition, the rule doesn’t require that water management systems cover the cost of the lead pipe replacement. This is particularly concerning considering that many low- and middle-income households are unable to afford the full cost, and water systems are not held responsible for replacing pipes if the homeowner is unable or unwilling to pay.  As a result, this new rule may only benefit wealthier households.   

It is clear that there is much room for improvement to ensure that the rule is enforced in an equitable and timely manner. Therefore, CLASP will be submitting comments on the rule, asking the EPA to mandate that water systems pay for the pipe replacement so communities that have long been  affected by this environmental racism can finally see some relief. We urge others who care about racial and economic justice to join us in commenting by February 5.   

This statement can be attributed to Indivar Dutta-Gupta, president and executive director of the Center for Law and Social Policy.

Washington DC, January 16, 2024—Given the unconscionable spike in child poverty rates after the end of the powerful enhanced Child Tax Credit (CTC) in 2021, CLASP supports the Tax Relief for American Families and Workers Act of 2024. This bipartisan tax proposal makes a meaningful step toward a fully refundable and inclusive CTC.

While the bill’s version of the CTC falls short of what children deserve, and what Congress correctly enacted for 2021, it will significantly reduce poverty and racial inequality compared to current law. About 19 million children don’t currently receive the credit’s maximum benefit because their parents’ earnings are too low. Our partners at the Center on Budget and Policy Priorities (CBPP) estimate that the bill would help 80 percent—or roughly 16 million—of those children. The changes would also promote racial equity, given that the children who don’t receive the full credit are disproportionately Black and brown. Racial inequities like those related to basic living standards for children continue to undermine our nation’s potential, costing many communities of color and our nation dearly.

CBPP estimates that in the policy’s first year, 400,000 children would escape poverty and an additional 3 million in poor households would have their families’ incomes raised.

CLASP continues to urge Congress to enact a fully equitable CTC that is even stronger than the 2021 credit, with improvements such as including children with Individual Taxpayer Identification Numbers, as I testified in July. This compromise is a down payment toward a fully refundable and inclusive CTC, one that our nation urgently needs. We’ve turned our back on millions of children who are again experiencing poverty. Passing this bill will position advocates for children and families well to fight for a truly just and evidence-based credit in 2025 when many of the provisions of the 2017 Tax Cut and Jobs Act expire.

 

—

(Photo by Drew Angerer/Getty Images)

With Indi Dutta-Gupta,

CLASP Executive Director, Indi Dutta-Gupta, will speak at the Society for Social Work and Research to discuss current events as they relate to social work research.

>>Find out more

By Alisha Saxena

A recent survey conducted by Data for Progress and CLASP paints a dire picture of the affordable child care landscape. This crisis has been years in the making; while the Child Care and Development Fund (CCDF) is the primary source of federal funding for child care in the United States, CCDF doesn’t have enough funding to reach all families with low incomes that could benefit from assistance. In fact, when all sources of funding, including CCDF, are considered, only 1 in 6 potentially eligible children receive assistance due to inadequate resources. This lack of financial support is coupled with a child care workforce crisis as providers leave the field for better-paying and less-stressful work. CCDF program data show a 5 percent decrease in the number of providers who participated in the child care assistance program between Fiscal Year (FY)19 and FY20. This comes on top of years of prior decline in participating providers, making finding affordable care even more challenging.

New results from the survey conducted by Data for Progress in collaboration with CLASP demonstrate the employment and financial challenges that parents face due to inaccessible child care.

Specific to the impact of child care on parents’ ability to work, CLASP and DFP found that:

These challenges further exacerbate longstanding and systemic racial inequities in accessing care, along with income inequality and child development outcomes. Black and Hispanic families were most likely to report inadequate access to child care during the pandemic, but these inequities existed long before then due to a combination of policies and systems designed to exclude certain populations from accessing care, including white supremacist views of who “deserved” care.

Today, Hispanic and American Indian Alaska Native communities disproportionately live in areas with a low supply of licensed child care. Child care instability is most common among families with low incomes. Given that cost is the primary barrier to families accessing child care, rising costs disproportionately limit access and deepen income inequality for communities of color. A lack of access to child care, along with changes in child care arrangements, can negatively impact child development. Thus, child care affordability and accessibility are crucial for ensuring equity in participation and outcomes.

The need for additional investment is urgent. The federal government must respond to the White House’s request and invest at least $16 billion to maintain the progress made with relief funding and to allow states to better support children and families. This investment will avoid disruptions in care and prevent further inequities for many communities. Existing funding is not enough to sustain the progress made with child care relief investments over the last three years, and congressional inaction will only worsen both the rising costs and shrinking supply of child care.

 

By Sapna Mehta

1. Executive Summary

In 2021 and 2022, President Biden signed three critical bills into law—the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), and the Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS and Science Act). They provide nearly $2 trillion in federal infrastructure, clean energy, and technology funding with the potential to create millions of good jobs in local communities. Together they have the potential to revitalize the U.S. labor market and pave the way toward diversifying a range of occupations and industries. These laws stand to modernize and enhance the transportation, energy, clean water, and digital sectors by directing significant funds toward these efforts.

These laws stand to modernize and enhance the transportation, energy, clean water, and digital sectors by directing significant funds toward these efforts.

These measures hold promise to increase economic opportunity and security for workers with low incomes, people of color, and women. Yet jobs in many of the industries experiencing investment are disproportionately held by white men. Turning these investments into high-quality jobs for women, people of color, and persons with low incomes will require intentional efforts to address their severe underrepresentation in the industries where federal investments are flowing.

In this report, the Center for Law and Social Policy (CLASP) aims to support national, state, and community leaders and advocates in navigating these laws by:

To make certain that women and people of color can access and remain in the jobs being created through these new public investments, advocates can look to existing successes in advancing workforce training, including registered apprenticeship programs and sector-based strategies discussed later in this report. They can also work with the public and private sectors to develop Project Labor Agreements and Community Benefits Agreements on new projects to create equitable training pipelines for local workers, ensure the jobs created pay family-sustaining wages, and include robust labor protections.

Producing equitable outcomes will require elected leaders, advocates, workforce practitioners, and the private sector to work closely together to ensure equitable, effective, and responsive workforce development programs and pipelines to recruit, train, hire, and retain women and people of color. This includes creating access to supportive services, like funding for tools, child care, and transportation, all of which are necessary for successful job training completion and retention.

Throughout this report, CLASP spotlights state and local policy and program examples. The report also shares guidance from the federal government and resources from partners. Appendices at the end offer links to additional federal and partner resources.

2. Introduction

Over the next decade, the Infrastructure Investment and Jobs Act (IIJA), Inflation Reduction Act (IRA), and Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS and Science Act) aim to invest nearly $2 trillion to repair, rebuild, and modernize the nation’s infrastructure along with its energy and technology production capabilities. These investments hold promise to increase economic opportunity and security for workers with low incomes, people of color, and women.

Yet jobs in these industries are disproportionately held by white men. While women hold 11 percent of jobs in the construction industry, they are most frequently found in administrative roles, which make up a small percentage of overall jobs in the industry. [1] The Institute for Women’s Policy Research found that women hold just 4 percent of the jobs in construction trades—jobs like carpenters, electricians, pipefitters, and painters. [2]

The construction industry remains predominantly white, [3] and racial and gender disparities compound inequities for Black, Latina, and Afro-Latina women. Women who hold these jobs face rampant workplace harassment. Nearly a quarter of women who work in the construction trades report frequent sexual harassment. Additionally, 21 percent of women of color report they frequently face racial harassment. [4]

Without deliberate efforts, these inequities will persist. The National Partnership for Women and Families estimates that, if nothing changes, women will access only 29 percent of new jobs created by IIJA. Racial disparities are even more stark, with data projecting that:

At the same time, without thoughtful planning now, states, localities, and private companies may begin new projects only to discover they can’t find workers with the training needed to fill the new jobs. McKinsey & Company estimates that without additional investment in worker education and training, companies across industries will face a shortfall of 300,000 engineers and 90,000 technicians by the end of the decade. [6] The public and private sectors can collaborate with the workforce system, labor unions, and worker organizations to cultivate the workforce needed to make the United States more competitive and resilient and meet national security goals.

Attaining this workforce is possible through the development of robust, equitable, and accessible training, hiring, and retention pipelines. The IIJA, IRA and CHIPS and Science Act, collectively referred to in this paper as “the infrastructure laws,” incentivize the development of training plans and encourage partnerships among local and state governments, employers, labor unions, community groups, and workforce training providers like community colleges. Successful implementation of the infrastructure laws will require strategic coordination and alignment across these entities.

Advocacy is crucial to promoting equity and progress and to reversing years of systemic misogyny and racism in many of the industries receiving federal investment, the labor market, and beyond. Only when local and state advocates, community groups, worker centers, and labor unions engage local and state governments, workforce entities, and employers will the nation ensure that women and people of color access the new jobs created through investments from the IIJA, IRA and CHIPS and Science Act.

3. Overview of Recent Federal Legislation

The IIJA, also known as the Bipartisan Infrastructure Law (BIL), authorizes $1.2 trillion over the next 10 years to rebuild roads, bridges, and public transportation systems; support advanced energy technologies and clean water infrastructure; close the digital divide; and modernize the electric grid. [7] The law is estimated to create more than 700,000 jobs per year over the next 10 years. [8]

Provisions in the legislation, punctuated with additional White House guidance, enable federal agencies to implement IIJA by supporting—and often preferencing—good quality jobs with labor protections and equitable workforce training. A number of programs also have set asides for disadvantaged communities, which are discussed later in this paper.

Most construction projects are subject to wage standards under two federal laws known as the Davis-Bacon Act [9] and the Davis-Bacon and Related Acts. [10] Together, these laws require all federal and federally assisted construction projects to pay workers the prevailing wage. The Wage and Hour Division of U.S. Department of Labor (DOL) conducts surveys of local labor markets to determine prevailing wage rates. These rates are typically set to reflect the market wage for a given type of work in a given area. The prevailing wage rate reflects both the hourly wage rate and fringe benefits. It establishes a wage floor, meaning that all contractors on a project must pay at or above this rate. [11]

IIJA funds will flow through eight federal agencies largely to states, tribes, and municipalities. They will also go to
nonprofits, labor organizations, community colleges, institutions of higher education, other nonprofit training and
educational institutions, public works departments, and private for-profit companies. Federal agencies will make
these funds available through grants, loans, loan guarantees, cooperative agreements,* and tax incentives.

*Cooperative agreements facilitate the transfer of something of value from federal executive agencies to states, local governments, and private recipients for a public benefit. While similar to grants, they include substantial involvement between the federal awarding agency and the recipient.

…

>>View the full report

Note: This publication was updated on December 18, 2023.

By Elizabeth Lower-Basch

CLASP supports the language at §200.202(b) that clearly states that “Federal agencies should develop programs in consultation with communities benefiting from or impacted by the program.” CASP urges the Office of Management and Budget (OMB) to include an assessment of whether and how well agencies consulted affected communities in designing grant programs as part of its oversight of grant programs, including as part of the Paperwork Reduction Act review of grant solicitations. OMB should also encourage agencies to explain in their grant solicitations and other public materials how public engagement shaped the program, so that people can see the impact they have made.

>>Read comment

Washington, D.C., September 12, 2023—Today’s U.S. Census Bureau report shows—once again—that poverty in the United States is a policy choice. According to the Supplemental Poverty Measure (SPM), the overall rate of poverty in 2022 was 12.4 percent, markedly increasing from 7.8 percent in 2021, even as both total employment and full-time, year-round employment rose. And the child poverty rate as measured by the SPM more than doubled, from 5.2 percent in 2021 to 12.4 in 2022, the largest one-year increase on record—following the largest one-year decrease on record in 2021. While the SPM poverty rate grew for all groups of children, Black and Hispanic children continued to experience disproportionately high poverty rates, 17.8 percent and 19.5 percent respectively, compared to 7.2 percent for non-Hispanic white children. Non-citizens also experienced disproportionately high poverty, with an SPM poverty rate more than twice the native-born population (24.4 percent vs. 11.2 percent). 

Poverty rates are affected far more by decisions made in Washington D.C., and in state capitals than any decisions made by families and communities. In fact, the primary factors contributing to U.S. poverty rates are policies that create or reinforce structural and systemic challenges like structural racism and patriarchy, enhance or undermine worker power, strengthen or weaken the social protection system, and generally ensure a strong economy that delivers widespread prosperity.  

The historic decline in child poverty two years ago was the result of COVID-era policies, including an expanded, enhanced, and more equitable Child Tax Credit (CTC) and other federal programs to support people with low incomes, particularly children. Yet policymakers decided not to extend the enhanced CTC, turning their backs on children by rejecting a proven tool to fight poverty that offered Americans a return of more than $9 on each dollar of investment in families experiencing the lowest incomes. And 18 states prematurely ended SNAP emergency allotments despite elevated food prices last year, declining millions of federal dollars in nutritional support. 

“Too much is at stake in both the lives of children and families, and the health of our communities for politicians to do nothing or even actively undermine them. Mountains of research make unequivocally clear that poverty hurts children, youth, and families, while also holding back the U.S. economy,” said Indivar Dutta-Gupta, president and executive director of the Center for Law and Social Policy (CLASP).  

Parents with low incomes work hard every day to meet their children’s material and developmental needs. Poverty acts as a weight, pulling them back and making it harder—sometimes impossible—to overcome common challenges and setbacks. As a result, children growing up in poverty are at higher risk of developmental delays, behavioral challenges, and a lack of school readiness. First and foremost, all children deserve an opportunity to meet their highest potential. But the costs of not addressing child poverty aren’t just felt by the children themselves. One study estimates that child poverty costs the U.S. economy just over $1 trillion per year, or 5.4 percent of GDP.

Abundant evidence demonstrates that income support programs can improve the rates of child poverty. Cash supports for families lead to better birth outcomes, greater educational attainment, and improved overall health. Research also shows that this assistance reduces child welfare system involvement, lowering the risk of children being separated from their families. “As the expanded CTC revealed in 2021, we have the tools to end child poverty in this country. We just need the political will to use them,” said Dutta-Gupta.

The Census report also found that the share of people without health insurance in 2022 dropped by 0.4 percent to 7.9 percent, tying the previous low. This also reflects a policy choice to establish the continuous coverage provision under Medicaid that began in 2020. Unfortunately, this provision ended in 2023, and we know that at least 5.9 million people, including many children, have already lost Medicaid coverage. When we see the 2023 figures, the uninsurance rate will likely be much higher. We need a permanent system offering affordable, continuous health insurance coverage to all, without forcing people to navigate a paperwork maze to keep their coverage. Continuous coverage reduces administrative burden and prevents delays and gaps in treatment that can lead to worse health outcomes. 

Congress has an outsized role in reversing the country’s increased poverty. And September is a pivotal time, as Congress must pass bills by the end of the month to fund the continued operation of the federal government. This is an opportunity for policymakers to provide adequate funding to fight poverty and promote well-being, free of harmful “riders.” This includes addressing the child care funding cliff threatening families and our economy, passing a Farm Bill that improves SNAP and makes it more equitable, and enacting a CTC that’s paid to families regardless of their specific federal income tax liability and that applies to families without regard to immigration status.  

By Indivar Dutta-Gupta

This is the second in a series of commentaries from CLASP experts that explore dimensions of poverty ahead of the U.S. Census Bureau’s annual release of poverty and income statistics from the previous year. On September 12, we’ll get a snapshot of the economic hardship children, youth and young adults, and families experienced in 2022. Ahead of the release, CLASP experts will offer key insights on the long-term effects of child poverty, promising policy solutions for ending child poverty, links between poverty and mental health, why it’s important to have a more accurate measurement of poverty, and what trends we expect to see in this year’s poverty data.

A family’s income during the prenatal and early years of a child’s life plays a significant role in her health, well-being, and cognitive development, all of which shape her future outcomes. Yet, early childhood is also the time when household incomes can become more volatile, particularly in those headed by single mothers. Evidence abounds on the positive impact that income support programs—especially cash transfers—have on children.

As long ago as the Mother’s Pension program in the early 20th century, we saw that providing cash to families affected by disability resulted in greater longevity and educational attainment as well as higher incomes in adulthood among boys. More recently, a study found that families who received $1,000 more in child tax benefits from 1999 to 2020 had fewer interactions with child welfare and fewer placements in foster care. Yet another study found that a $1,000 increase in income raised children’s math and reading scores. And just in the last few years, we saw that pandemic-era cash transfers reduced the incidence of low birthweight, which can result in adverse health outcomes later in life.

Two years ago, the Congress and the Biden Administration pursued a bold evidence-based experiment by boosting family incomes as part of the pandemic-era relief package, the American Rescue Plan. The expanded Child Tax Credit (CTC) came as close to a universal child allowance as it had in its 24-year history. Unlike previous iterations, the 2021 CTC was fully refundable, meaning it was available even to families with no reported earnings or federal income tax liability. It also increased the annual credit per child to $3,600 for children under age 6 and $3,000 for children ages 6 to 17. Families generally received half the credit through monthly payments from July to December 2021 and the other half in a lump sum after filing their tax returns in early 2022.

A historic reduction in child poverty and material hardship

The expanded CTC achieved something monumental: it kept 2.9 million children out of poverty, cutting the child poverty rate by nearly half—from 9.7 percent in 2020 to 5.2 percent in 2021, the largest one-year decline in the child poverty rate on record. Black and Latino/Hispanic children disproportionately benefited in part because previous versions of the CTC did not allow families with low to no earnings to claim the credit. Black and Latino/Hispanic families are more likely to have low incomes due to labor market discrimination, occupational segregation, systemic racism, and other structural barriers. As a result of the expanded CTC, child poverty rates among Black and Latino/Hispanic children shrank by a stunning 8.8 percentage points and 6.3 percentage points, respectively, from 2020 to 2021.Unfortunately, Congress let the expanded version of the CTC expire, and we have reverted to the policy that was passed as part of the 2017 Tax Cut and Jobs Act (TCJA). This less-effective version offers up to $2,000 annually per child and is not fully refundable, meaning higher-income families are more likely to benefit and working-class families who need the income boost the most aren’t benefiting at all or as much. The Center on Budget and Policy Priorities estimates that 19 million children under 17 do not receive the full credit, including 45 percent of Black children, 39 percent of Latino children, and 38 percent of American Indian/Alaskan Native children, because of a lack of full refundability. The TCJA also denied the CTC to children who have Individual Taxpayer Identification Numbers (ITINs) instead of Social Security numbers, a blatantly xenophobic and racist departure from the pre-2017 CTC that undermines our own communities and national potential.

How did the expanded CTC help parents?

In an October 2021 survey conducted by CLASP, polling firm Ipsos, and other organizations, parents reported spending the extra income from the CTC on meeting their basic needs and paying grocery bills, rent, or mortgage payments. Nearly 70 percent of respondents said the payments made them feel less financial stress. Black respondents were twice as likely as white respondents to say that the CTC payments helped them work more. Notably, these trends reversed and families faced greater financial strain once the monthly payments ended, according to a July 2022 survey CLASP and partners conducted with parents.

Next steps: Make the CTC fully refundable and inclusive

Although the 2021 expanded CTC didn’t end child poverty for good, it made a significant dent by making it easy for families with the lowest incomes to claim the credit. It was as close to unconditional guaranteed income for families as we had ever come as a nation—and it worked.

I urge Congress to make the CTC fully refundable on a permanent basis. A fully refundable credit is important not only because it reaches families with the lowest incomes, but also because payments are automated and predictable. Monthly payments are important for helping families meet ongoing basic needs, like paying rent, food, and utilities. By one estimate, every dollar spent on a CTC that is more like a universal child allowance generates a return on investment of nearly $10 to society. In addition, for the CTC to reach its full potential to reduce child poverty, it should be accessible to those who are excluded, including children with ITINs and youth either in foster care or otherwise ineligible to be claimed as dependents. We should also ensure families with newborns receive a monthly advance payment.

I also urge the IRS to make the CTC more accessible to families who don’t need to file a tax return or struggle to file one. The IRS should continue experimenting with simplified portals that include free e-file tools, features for reporting new children in the household, and other forms of taxpayer assistance.

But we can’t tell what’s working if we don’t use a poverty measure that reflects the value of public supports, including tax credits, health care, and child care. We’ll explore this topic in our next post.

>> Read Next: A Better Poverty Measure Shows the Impact of Public Policies