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Federal Pandemic Aid Has Cut Poverty Dramatically, Study Finds


Though it's unclear whether bans on evictions will be extended past today's deadline, federal aid programs that were expanded during the pandemic are having a significant impact on poverty in this country. A study out this week from the Urban Institute found that these programs are on track to cut poverty nearly in half from prepandemic levels, bringing the percentage of Americans in poverty to the lowest level on record.

To put that in perspective, in 2018, the annual poverty rate was 13.9%. This year, it's at 7.7%. But many of these programs are set to expire. So what happens then? For that, we've called Greg Acs. He's the vice president of income and benefits policy at the Urban Institute. Greg Acs, thank you so much for joining us.

GREG ACS: Good morning.

SNELL: So poverty in America has fallen by nearly 45% over the course of the past three years. That shift, as your work points out, is due largely to a vast expansion of government aid programs, many of which were long-standing ideas that were applied or expanded during the pandemic. What shifts are you seeing?

ACS: In response to the unprecedented unemployment and dislocation that came as a result of COVID in the pandemic, Congress and the president - both presidents, actually - substantially increased support, at least in a temporary fashion, to American families, from stimulus checks to expanded unemployment to increased support through food stamps in the SNAP program.

SNELL: The drop in poverty among children specifically has been significant. The child tax credit is one of those pandemic expansions that Democrats say will cut the poverty rate even further. The program itself isn't new, but it was expanded during COVID to make it a monthly payment and allow very low-income people to access the benefits. Democrats, including Treasury Secretary Janet Yellen, want to make it permanent. What kind of effect does the child tax credit in particular have on these low-income families and on the poverty rate?

ACS: So the child tax credit was expanded in several ways. The benefit increased from $2,000 to $3,000 for kids ages 6 to 17. It increased to $3,600 a year for kids from zero to 5. And 17-year-olds can now get the benefit. Now we have some additional research that looks at what would happen in this type of expansion of the child tax credit in a normal year. And we find that this expansion would reduce child poverty by over 40% in a typical year. So if this program continues, even when all the other extra programs fade away - no stimulus checks, no enhanced unemployment, SNAP benefits go back to their previous levels - just expanding the child tax credit would reduce child poverty by over 40%.

SNELL: There is some bipartisan agreement that there should be a focus on bringing children out of poverty. But some conservatives argue that the child tax credit - the way it's structured right now, not requiring parents who receive the benefits to be employed, is an inefficient way to address the issue of poverty. How do you respond to those claims?

ACS: So it's a question of how you view what it takes to get people stably employed. And so if you are providing a basic floor of income, you know, $250, $300 a month, does that stabilize families and let parents work? Rather than saying, oh, we've got money, we don't have to work, it actually allows them to deal with all the issues that keep them from being stably employed.

If they have a car repair, if they have an emergency expense, they will have the money to pay for it now. And that can keep them employed. If they in the short term decide not to take a job that has rotating hours so they can commit to a training program or a community college course, this money lets them do that, and it can lead them to be stably employed in better and better jobs.

So, yes, we have the argument, you know, you give people money, it reduces their incentive to work. On the other hand, if you don't have a basic floor, you know, that floor provides the platform from which you can work in advance.

SNELL: So this is not just an issue of extending benefits for people during an extraordinary economic time of this pandemic. This is about, you know, creating a long-term changes for families that were struggling.

ACS: The changes to the child tax credit is a new fundamental approach to reducing child poverty and to help families who are struggling in the long run move more permanently out of poverty.

SNELL: Many of these programs, as we've said, from rent relief to expanded unemployment and the broader child tax credit we've been talking about - they're all expiring in the coming months. Does that mean that all of the progress we've seen and we've been discussing in reducing poverty could be temporary?

ACS: So we'd expect to see as these programs - the unemployment insurance, the stimulus checks, which were particularly strong at reducing poverty, go away, we would expect to see poverty go up. What we have achieved, however, is that we kept families from going off the rails. We prevented extreme hardship and extreme instability that would take potentially years to unwind. It was a life raft, and it got people through. And we'll see where they go from there.

But what this did demonstrate is that, you know, for years, we've heard that while we have more will than wallet to combat poverty, we opened up the wallet and we can see what the effects are. And we can see that even if all these programs, extra programs go away, if we maintain at least the child tax credit expansions and particularly full refundability so the lowest-income families can access the child tax credit, we can have a sustained impact on child poverty. And by reducing child poverty, we should start seeing benefits accrete as children have more stable homes, more resources, get through school and move up into the labor market and into successful adulthood.

SNELL: That was Greg Acs, vice president of income and benefits policy for the Urban Institute. Thanks so much for being with us.

ACS: Sure thing.

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