Pandemic Aid Cut Child Poverty by More Than Half

When the pandemic hit in 2020, large parts of the economy shut down and millions of people lost their jobs, but, paradoxically, poverty plummeted for the next two years.

In fact, as the chart below shows, by one measure, both the overall and child poverty rates dropped to all-time lows in 2021, according to data released by the Census Bureau Tuesday. The Supplemental Poverty Measure (SPM)—which takes taxes into account, and which has only been measured since 2009—showed dramatic declines for both children and all ages, even though the official poverty rate (not SPM) remained above the record lows set in 1969.

The sharp decline in SPM poverty was a result of pandemic aid such as child tax credits and stimulus payments, which went on the books as tax windfalls. Tuesday’s official numbers confirm what poverty researchers have been saying for several years now—the widespread aid distributed by the government was extremely effective in fighting poverty, especially among children. However, now that those pandemic polices have ended, it’s likely the progress is being undone, economists say.

“Unfortunately, this will likely prove to be a historic aberration,” Kathryn Edwards, an economist at think-tank RAND Corporation, wrote on Twitter. “The expanded child tax credit ended in 2021, just as cost of living (as measured by inflation) increased. Both would [predict] large jumps in poverty, in particular child poverty, in 2022.”

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