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March 3, 2021, 4:15 p.m. EST

Democrats’ relief plan could cut child poverty by 4 million

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By Karen Dolan, and Uma Nagarajan-Swenson

“If we are going to be a society that insists we have to pull ourselves up by our bootstraps, then we can’t refuse to give people the bootstraps they need to pull themselves up,” Amy Jo Hutchison of West Virginia said at a February rally organized by the Poor People’s Campaign. 

Hutchinson was speaking about the reluctance of Democratic Sen. Joe Manchin of West Virginia to support the gradual increase in the minimum wage to $15 per hour that Democrats had hoped to pass in their COVID-19 relief package—also known as the American Rescue Plan , or ARP. 

An obscure parliamentary rule in the Senate has prevented including the wage hike for now, so Democrats will need to find another way to move it. They shouldn’t give up. According to a recent Economic Policy Institute study , nearly 11 million families of workers making less than $15 per hour rely on public programs because they don’t make a livable wage.

Breaking news: Senate set to pass $1.9 trillion aid package by end of the week

Other tools

In the meantime, Democrats will have to rely on other tools to give these struggling families some bootstraps. One of the most significant of these is the expanded child tax credit (CTC)

Even before the pandemic, children made up almost one-third of all people living in poverty, despite being just one-fifth of the population. Since the pandemic, parent job loss , reduced hours , low wages, and furloughs have caused poverty to rise for children more rapidly than any other age group in this country. 

This affects every aspect of their lives—from the roof over their head to the food on their tables. According to the Center for Budget and Policy Priorities, in early 2021 renters with children were twice as likely to be behind on rent than those without. And one in seven households with children reported their household sometimes or often didn’t have enough food to eat.

The inequities facing the approximately 140 million poor and low-income people in this country have long-lasting consequences, especially for children. Food insecurity, for example, can harm children’s lifelong health and academic performance through their adolescence. Parental job loss has been found to increase the odds of students repeating grades by 15%.

Expanded child tax credit

Even without the minimum wage hike, the COVID-19 relief package could make a huge difference for these children. The proposed child tax credit expansion it includes could help cut child poverty by 45% .

This proposed expansion would not only make the current child tax credit fully refundable for those who qualify, but it would expand it by removing the earnings requirement in the current credit. It would also increase the maximum credit from $2,000 to $3,000 per child, with an additional $600 for every child under six years old. 

This policy would benefit roughly 99% of tax filers with children while providing a roughly 37% income boost to the poorest 20% of families with children. It would help lift an estimated 4.1 million children above the poverty line, including many children of color left behind by past child tax credit policies.

The American Rescue Plan contains other critical provisions necessary for the well-being of children and families, including $1,400 direct relief payments, extended unemployment insurance, direct housing and expanded nutrition assistance, increased access to child care and health care, and more funds for vaccine distribution for underserved communities.

Gift to next generation

A minimum wage hike is badly overdue and worth fighting for. But meanwhile, the child tax credit and these other provisions could lift nearly half of all U.S. children out of poverty. What a gift to the next generation after this long, painful, devastating pandemic.

Amy Jo Hutchinson of West Virginia reminds us that in order for people to be able to pull up their bootstraps, the bootstraps must be there to pull. The American Rescue Plan has smart and effective policies that will give our children what they need not just to survive, but thrive.

Karen Dolan directs the Criminalization of Race and Poverty program at the Institute for Policy Studies. Uma Nagarajan-Swenson is an IPS Next Leader.

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