Federal aid caused child poverty nationwide to drop significantly in 2021, according to the U.S. Census Bureau, but organizations working to help low-income families in Lancaster County say they’re seeing evidence that many of their clients are struggling this year as federal aid programs launched during the pandemic have ended..
The Supplemental Poverty Measure (SPM), a comprehensive metric that accounts for expenses and non-cash benefits, nearly halved for children from 2020 to 2021, plummeting to its lowest level on record. The decrease was largely a result of the expanded Child Tax Credit and federal stimulus payments to taxpayers, the Census report concluded.
“What has felt like the most significant for families has been the Child Tax Credit,” said Vanessa Philbert, the chief executive officer of Community Action Partnership of Lancaster County, the county’s largest anti-poverty organization. “Because those are real dollars in, and families can then prioritize how to effectively think about their financial needs.”
The tax credit was engineered to send monthly payments to families in advance of their annual tax filings. From July through December 2021, the IRS said families received $300 per month for each child age 5 or younger, and $250 per month for children ages 6 to 17.
Julie Kennedy, the community initiatives manager at United Way of Lancaster County, anecdotally observed that pandemic stimulus checks paid directly to taxpayers resulted in reduced demand for services from low-income families and individuals. The American Rescue Plan Act provided up to $1,400 for eligible individuals and qualifying child and adult dependents in March 2021, which came on top of a $600 payment at the end of 2020 and the $1,200 payment in April of 2020.
“It definitely showed that those low-barrier government assistance programs, where the hurdles that we often see folks having to go through to get that assistance, by removing those, just how impactful that was,” Kennedy said.
Further eroding gains in lifting children out of poverty is inflation. The costs of goods have increased this year, with consumer prices increasing by 8.3% in the year ending August 2022, according to the Bureau of Labor Statistics. Low-income families are affected most by inflation, as they are required to devote a larger share of their budgets to afford basics like housing, transportation and food.
“Families are anxious about what the future looks like … trying to resource themselves to understand what's available, what they qualify for, what will be available to them in tax credits, and really what the needs of their families are going to be with increasing inflation rates,” Philbert said.
Interpreting the data
Local Census Bureau estimates show that the official child poverty rate, which is based on income and family size, decreased in Lancaster County last year. But because the data does not provide exact population counts, it is hard to say by how much.
On its face, the data from the American Community Survey (ACS), an annual survey of demographic trends nationwide, show that the level of child poverty in the county dropped by more than a third, from about 19,300 children in 2019 to about 12,800 in 2021.
The survey, however, comes with large margins of error, meaning the estimates could vary by thousands and provide starkly different portraits of how much the child poverty rate actually changed.
Margins of error are regular features of any poll or survey, like the ACS, that rely on a sample of a population rather than a count of every person. The margins represent a range of possible values based on how many people responded to it and how closely the demographics of the respondents match those of the population, among other factors.
The Census data indicates there is strong statistical evidence that the child poverty rate in Lancaster County declined last year. Whether that decline was by a fraction of a percent or by more than 10% is difficult to say without a larger sample size.
The other challenge in estimating the decline of child poverty is the limited measures used to determine the official poverty rate, which accounts for only cash income and ignores differences in the cost of living across the nation.
Some experts say the way the official poverty rate is measured is outdated: The thresholds are calculated as three times the cost of a minimum food diet in 1963, when the measure was developed, and are only adjusted for family size and composition, the ages of householders and inflation over time.
“It certainly doesn't capture the extent of economic hardship,” said Evan Gentry, a research specialist at Franklin & Marshall College who co-authored a report on poverty in Lancaster city in 2015. “The way it was calculated was based on a basket of goods from decades ago.”
The newer, more comprehensive SPM does account for geographic differences and a family’s household expenses and non-cash benefits, but the measure is currently only applied at the national and state level.
Holding all else equal, the expanded Child Tax Credit in the second half of last year kept 2.9 million children out of poverty and lowered the SPM by 4 percentage points nationwide, according to the Census Bureau.
The third round of stimulus payments sent directly to American adults in March 2021 also played a crucial role in reducing child poverty nationwide – with all else equal, it accounted for a 3.1 percentage point decrease in the SPM in 2021, according to the Census report.
Brad Peterson, the executive director of the Power Packs Project, which provides low-cost meal ingredients to families experiencing food insecurity, said his organization’s weekly distribution of packs in Lancaster has increased from about 550 in 2021 to about 850 in 2022.
“We’re seeing first-time people coming to us asking for assistance because they’re being stretched so thin, and we’re seeing numbers that are higher than we’ve ever seen before,” Peterson said.