August 17, 2021

Some really good news for kids and families

 I’m a big fan of getting quick results ... the good kind, anyway. It doesn’t happen very often and is even rarer when it comes to solving big social problems.

But it’s happening right now for millions of American families, in terms of increasing food security and reducing economic hardships.

Here’s the background: During the COVID-19 pandemic, the Census Bureau developed the Household Pulse Survey, which is designed to quickly and accurately collect information on how American households are doing and distribute it in as close to real time as possible “to inform federal and state response and recovery planning.”

One very recent survey measured the impact of the newly expanded and refundable child tax credit, which went into effect July 15 and reached about 35 million families with a monthly credit of up to $300 for kids age 5 and under and $250 for those age 6-17. The tax credit has the potential to dramatically reduce child poverty and the long-lasting damage that causes for as long as the program lasts.

The results after just one installment have been startling. The census survey found that food insecurity, defined as “sometimes or often not having enough to eat,” in households with children dropped by nearly 24%. Specifically, before tax credit benefits went out, about 11% of households with kids experienced food insecurity. After the first round, that number dropped to 8.4%, a reduction of almost one-fourth.

Households without children didn’t see any improvement in this area, so we can safely attribute the change to the child tax credit.

(As a math-challenged person, I sometimes find the difference between percentages and percentage points to be confusing, and I’ve stumbled over it more than once, but a percentage point is just the number for arithmetic difference between two percentages, while a percentage expresses that difference as a fraction of 100.)

The survey also asked families how hard it was to meet basic household expenses. Not surprisingly, households with children were more likely than those without them to report that making ends meet was “somewhat difficult” to “very difficult” before and after the child tax credit went into effect. But after just one round, the number of families with children experiencing hardships declined by 8% while it increased for adult-only households by nearly 5%, an effect not as large as that for food security but still statistically significant.

Where was the money spent? Pretty much where you’d expect: About 57% of households spent at least part of the money on educational expenses, including books, supplies, tutoring, tuition, transportation and after-school activities; 47% spent some on food; 28% spent it on internet, telephones and utilities; 25% bought clothes; and 17% of households with a child under age 5 spent the money on child care.

Diane Whitmore Schanzenbach, director of the Institute for Policy Research at Northwestern University, had this to say about the early results: “It looks like families are using this to pay for basic needs that their kids have. These are things we know many families are struggling with. This extra payment is going to reduce the number of families at risk.”

Not all the money was spent right away, however. Nearly a third of parents saved most of it — and that’s a good thing, too. Many financial experts stress the importance of personal savings for many purposes, including a cushion for emergencies, major purchases such as homes or vehicles, financial security and higher education.

About 40% spent most of the credit paying down household debt, which has nearly doubled to about $15 trillion over the past 20 years. Home mortgages make up the lion’s share of debt, but there’s also plenty from student loans, car payments, credit cards and such. Paying debt down or off is a huge stress reliever and has been called the key to financial success.

That’s a pretty impressive record for a 1-month-old program. If it’s extended beyond 2021, a measure now under consideration in the U.S. Senate, this could be a life changer and lifesaver for millions of Americans.

And our two senators will have a lot to say about that.

(This ran as an op-ed in the Charleston Gazette-Mail.)