Child Poverty

The strong case for child allowances to fight for racial justice & against child poverty

October 23, 2020 | National

The COVID-19 crisis has shed light on the parallel pandemics – poverty and racism – with which we are all too familiar. Right now, the ten million children who are already living in poverty and millions more are experiencing the highest amount of hardship than any other age group. From stretched household budgets to higher rates of hunger and housing insecurity, children’s needs are not being met, especially Black, Brown, and Indigenous children who are impacted by these hardships at much higher rates. According to the most recent Census Pulse Survey Data from October, 14 percent of households with children did not have enough food to eat, 21 percent of renters with children are not caught up on rent, and 40 percent of households with children have difficulty covering household expenses. These negative impacts are having significant long-term effects on our children’s development, health, and financial security. 

To combat these rising hardship trends, we must prioritize cash in families’ hands through the pandemic and beyond. Ample research shows access to cash helps children’s health, increases family income, and significantly reduces child poverty and racial disparities. For example, extending and strengthening the Child Tax Credit (CTC) into a monthly child allowance, as outlined in the American Family Act, would lift four million children out of poverty and cut child poverty for Black children by 52 percent and Hispanic children by 41 percent  — a significant step in the right direction. 

Additionally, new research released this month by Columbia University’s Center on Poverty and Social Policy also suggests that combining the progressive and bold American Family Act with a substantial increase to the Section 8 Housing Choice Voucher Program into an entitlement program, coupled with the LIFT Act, which raises the incomes of low- and middle-income workers through a refundable tax credit, would do even more. All together, these three policies would cut the child poverty rate by nearly 75 percent, which means 20 million people would be lifted out of poverty, including 7.5 million children and 1.8 million children out of deep poverty. 

Even better, this report clearly shows that combining these three legislative proposals helps reduce racial and ethnic disparities in child poverty. According to the report, if all three policies were implemented – the Section 8 expansion, the AFA, and the LIFT Act – it could “reduce the poverty rate to 5.8 percent for Black children, 4.1 percent for Hispanic children, and 2.5 percent for White children.” As outlined in Columbia’s supplemental analysis, combining the American Family Act and the Section 8 Voucher expansion would reduce overall child poverty by 64 percent, and 69 and 71 percent for Black and Hispanic children, respectively. And for children under six living in deep poverty, enacting a child allowance and a robust housing voucher program would see a 73 percent reduction in poverty. These changes would be no small victory and a marked shift from current law. In fact, these combined packages represent such a significant reduction in child poverty and racial disparities that children for generations would benefit from these progressive policies.  

Child allowances, even on their own, are increasingly seen as evidence-based and non-partisan. 

While the CTC is the largest child-related benefit, it doesn’t reach nearly enough children, and that’s a problem. The current CTC excludes one-third of all children (23 million) and 50 percent of Black and Hispanic children because their families earn too little to qualify for the credit at all. New research by the National Bureau of Economic Research (NBER) suggests similar findings of inequity gaps between the lowest income children and by race/ethnicity. According to a research paper released last week, while three-quarters of all white and Asian children qualify for the full amount of the credit, only half of Black and Hispanic children do. What’s worse, despite Black children representing only 14 percent of the population, 1 in 4 Black children are ineligible for the credit. Children under six are also less likely to be eligible for the credit than teenage children, despite young children being more likely to live in poverty than older children. In short, that means a program designed to help children, especially children in poverty, isn’t doing what it is designed to do.

But it isn’t just the vast research that speaks to the value of a permanent, monthly child allowance. Policy think tanks concerned about child poverty and our broken social welfare system have also come out in favor of a child allowance modeled after the American Family Act. According to the Nikasen Center’s Faster Growth, Fairer Growth report from this month, “child allowances solve for a number of pernicious market failures common in any modern economy” and “rather than micromanage parental choices, or promote one idea of how a family should be structured; child allowances empower parents to harness their local knowledge and scarce direct resources to their highest-valued use.” And they estimate with an even larger child poverty benefit to the American Family Act, 4.5 million children would be lifted out of poverty and deep child poverty could be cut in half. 

It is no question that Congress must consider more robust measures to assist families and boost the economy in response to the COVID-19 crisis and beyond. Right now, policymakers have an opportunity to reduce rapidly rising child poverty by expanding one of the most effective programs available to fight child poverty and racial inequities, increase family incomes, and provide a well-timed boost to the economy in 2021. As CDF has stated previously, any COVID relief package from Congress must include robust changes to the Child Tax Credit by expanding to a monthly child allowance, similar to those laid out in the American Family Act, and make them permanent in law.

Policymakers can no longer afford to temporarily help children or turn a blind eye to the cries of children demanding action. Failure to capture this moment and make meaningful policy changes will only increase the growing racial disparities in our society and hurt our children for generations to come. Our children deserve to be protected and supported during the worst economic crisis of their generation. It is time to put them front and center in our policymaking. To see our full list of COVID relief priorities, click here.