The Center on Policy and Social Policy at Columbia University has released an important new report that rounds up the wide range of available research about the expanded Child Tax Credit. Since the introduction of the expanded credit in July 2021, there has been a significant amount of research conducted to measure the impact on children and families, particularly looking at who has received it, how the funds are being used, and how families have fared since receiving it. This roundup looks at the evidence across eight central themes: access; income; poverty; spending; food; financial stress; employment; and equity.
At a time when the expanded Child Tax Credit is in danger of being cut from the larger Build Back Better legislation, the findings of this report are particularly relevant. Two worth highlighting, considering current criticisms of the CTC, are that families are spending the funds on basic needs and that there is no evidence to indicate that the credit is reducing employment.
First, research shows that “the vast majority (anywhere from two-thirds to three-quarters) of families spend, rather than save, the monthly Child Tax Credit payments,” and that overwhelmingly it is being spent on necessities, the most common being food. Most families reported that the monthly payments were an important source of support. See the chart below regarding CTC usage from July to August of 2021.
Second, the Columbia University Center on Poverty and Social Policy has “assessed the impact of the Child Tax Credit payments on employment to date and has found that there is no evidence thus far in the real-world data to support claims that the Child Tax Credit is negatively affecting employment.”
Additionally, survey data suggests that the CTC may allow parents to be more active in the workforce: “a nationally representative survey of parents with incomes under $75,000 saw one-quarter of families affirmatively report that the Child Tax Credit payments made it easier to work or work more.”
At this time, Senator Joe Manchin (D-WV) is calling for adding a work requirement to the Child Tax Credit, a move that would reduce the overall cost of the bill but would also reduce access for many of the poorest families. Prior to Manchin’s declaration that he would not support Build Back Better, leading Democrats were clear that there would be no work requirement included in the CTC; as negotiations have stalled on the legislation, it is unclear if this demand will be entertained as an option to win Manchin’s support of the bill.
The full list of key finds shows additional positive outcomes:
- The expanded Child Tax Credit has reached the overwhelming majority of children, but outreach to newly-eligible families with low incomes should still continue
- Monthly payments are buffering family incomes amidst the continuing COVID-19 crisis
- Monthly payments are reducing child poverty
- Families are spending the Child Tax Credit on food and other basic needs
- Monthly payments are reducing food insufficiency
- Monthly payments may be reducing financial stress and other hardships
- There is no evidence that indicates the monthly payments are reducing employment
- The expanded Child Tax Credit matters for racial equity
The Center on Policy and Social Policy has indicated that this roundup is meant to be a living document, reflecting the research available through mid-December 2021 about the immediate impact of the expanded CTC. As additional, longer-term research is available, the report may evolve over time, and researchers are invited to submit their findings to be considered for future updates. The full report can be downloaded here.