Last week, the U.S. Census Bureau released new data revealing no change in the official child poverty rate from 2020 to 2021. However, when using the supplemental poverty measure, which accounts for most government benefits, child poverty decreased by almost half. This has caused many media outlets and researchers to champion pandemic-related expansions to safety net programs, most of which were not conditioned on employment. What this narrative ignores, however, is that long-term declines in child poverty were mostly driven by increased employment among low-income families largely due to conservative-led policy changes in the 1990s — underscoring the importance of a safety net that supports work, rather than discourages it.
The long-term trend is visible in another study published last week through Child Trends using a slightly different version of the Census Bureau’s supplemental poverty measure where the threshold adjusts for inflation rather than expenditures. The Child Trends report showed a child poverty decline of 59% from 1993 to 2019 reaching an all-time low of 11.4% before pandemic-related aid.
The child poverty trends documented by these recent reports are a policy success, but not for the reasons hitting the headlines. Opinion writers in the Washington Post concluded that the child poverty trends “undercut conservative arguments that such government help must be accompanied with work requirements,” but only after they also argued that, “much of the credit [for the poverty decline] goes to the earned income tax credit and the child tax credit.” What the authors fail to acknowledge, however, is that the Earned Income Tax Credit (EITC) and child tax credit have always had a work requirement, except for a temporary six-month expansion to the child tax credit in 2021. Much of the reason why these programs have been so effective at lifting children out of poverty is because they have encouraged many low-income parents to work.
Commentators mislead the public when they suggest that the child poverty declines are due to expansions in government benefits alone and that conservative policies played no role. Conservative-led welfare reform in 1996 replaced a no-strings-attached cash welfare system with a system that conditioned assistance on work. Combined with expansions to the EITC in 1993, welfare reform led to dramatic increases in labor force participation among single mothers, which translated into increased income and lower poverty. Suggesting that conservative-led reforms of the 1990s had no impact on child poverty trends over the past three decades stretches credibility.
The way the Census Bureau presents the poverty rate also underestimates the effects of conservative-led reforms. Officials try to show the effects of government benefits on the supplemental poverty rate by calculating changes to the number of people who would have been considered poor without the various programs. But this conceals the importance of employment incentives in benefit programs. For instance, the Census Bureau reports that refundable tax credits like the EITC lifted 9.6 million people out of poverty, implying that EITC income alone brought many more people above the poverty line. However, this ignores a key point. Without the employment gains from welfare reform and the EITC, the income from the EITC alone would not have the same poverty-reducing effects.
Attributing declines in child poverty to the right policies is crucial because getting it wrong risks all the progress that children have made. It can often take many years before policymakers and the public fully understand the implications of certain policies. It can take even longer for them to accept it. For instance, we have known since at least 2012 that policies implemented in the 1990s, including welfare reform and expansions to the EITC, had cut child poverty by one-third, yet this success did not enter the mainstream media until the New York Times reported on it last week — fully one decade after researchers first started identifying these trends. If policymakers ignore the lessons from child poverty trends and disconnect government programs from employment, it might take years before we fully understand the consequences.
Pandemic-related aid showed us that sending money to low-income households through the federal government can push children above the poverty line in the short term. Long-term trends, however, confirm that benefits that supplement earnings and thereby encourage employment are the primary drivers of decreases in child poverty. Ignoring the behavior changes associated with unconditional government assistance misapplies these lessons learned. Conservative policies that favored work over welfare have been the primary contributor to reductions in child poverty in the U.S. over the past three decades. Failing to acknowledge this truth risks future progress for children.
This article originally appeared in the AEIdeas blog and is reprinted with kind permission from the American Enterprise Institute.
