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Poverty has increased dramatically in California and the nation, a surge that new studies attribute to the expiration of pandemic-era federal relief programs such as the expanded Child Tax Credit.
The spike has been particularly steep among Black and Latino Californians and children across all ethnicities.
Researchers found 16.4% of Californians were living in poverty last year, up from 11% in 2021. The rate of child poverty more than doubled last year.
“The end of the pandemic-era investments in the Child Tax Credit and other federal policies that help families make ends meet led to a huge increase in poverty in 2022 in California,” said a report by the nonpartisan California Budget & Policy Center.
Nationally, the federal Census Bureau reached similar conclusions. And the Columbia University Center on Poverty and Social Policy estimated a 41% increase in the monthly child poverty rate nationally in early 2022 after the tax credit policy changed.
Also fueling the rise is the economy. Prices grew last year at their steepest rates in more than 40 years. A gallon of regular gasoline topped $6 a gallon in 2022, and continues to be the highest average price in the country.
“It’s not a leap of logic to understand that, when we have those kinds of inflationary pressures, and then you have an increase in poverty, which is a reduction of resources for families, that those two things don’t add up to a good ending,” said Chet Hewitt, chief executive officer of the Sierra Foundation in Sacramento.
‘It’s all garbage’
Some experts dismissed the studies’ findings.
“It’s all garbage,” said Robert Rector, senior research fellow at the conservative Heritage Foundation. “The average family they identify as ‘poor’ had around $55,000 in income and benefits before the Covid aid . They were never poor in the first place. This is a statistical con game to defraud the taxpayer.”
The government’s data, he said, don’t take into account the breadth of aid and income poorer families receive, a point other scholars have also made.
“When they go to measure poverty 95% of welfare aid is left out. That’s not an accident. The key goal is always to have lots and lots of poverty so you can have more (government) spending next year,” Rector said.
Angela Rachidi, senior fellow at Washington’s American Enterprise Institute, said the data tend to rely partly on what people tell the government, and they can be underreporting benefits or not disclosing income.
“While technically true, the (poverty) data misses the context. And when we look at other measures of well-being we don’t see the same large fluctuations,” she said.
Poverty tends to go up and down depending on the strength of the overall economy. Rates dropped steadily from the end of the Great Recession in 2009 through the beginning of the Covid pandemic in 2020.
Alissa Anderson, a Budget Center senior policy fellow and co-author of the California study, vigorously disputed the skeptics.
Her report, produced with three other Budget Center scholars, is based on the widely used Census Bureau Supplemental Poverty Measure.
The nonpartisan Congressional Research Service defined that source as “a measure of economic deprivation—having insufficient financial resources to achieve a specified standard of living.”
That data, Anderson said, are a “more accurate measure of poverty for several reasons, including that it does take into account the impact of public programs” such as housing assistance and help with utility bills, school meals, home food purchases and more.
The Budget Center’s study found that in California, the increase in poverty as measured by the Census’ supplemental rate hit Black and Latino residents notably hard. It showed that Black poverty nearly doubled between 2021 and 2022, while the Latino rate rose from 12.6% to 21.6%.
Among children of all races and ethnicities, the rate soared from 7.5% in 2021 to 16.8% last year.
The expanded child credit was the most popular of the pandemic initiatives. It was increased so that eligible families could get a full $3,000 annual credit for each child six to 17, and $3,600 for younger children. Beneficiaries could at one point receive monthly payments.
The maximum amounts began to phase out for parents with adjusted gross incomes of more than $75,000 for single filers, up to $112,500 for heads of households and up to $150,000 or less for married couples filing jointly.
The credit was fully refundable, meaning that if was more than the amount of tax someone owed, the government would make up the difference.
The pandemic-era credit ended after 2021, and is now up to $2,000 per child for qualifying families. Only part of the credit is now refundable.
While there is bipartisan support for increasing the child credit, including a push from President Joe Biden, the effort is up against several tough obstacles.
Foremost is the chaos surrounding any budget or tax legislation. The government is funded only through November 17, and there’s been no serious talk of changes in tax policy until the spending crisis is resolved.
Locally, policymakers aren’t waiting for Washington. As pandemic assistance has disappeared and poverty rates have started to climb, state, nonprofit, philanthropic and municipal leaders are increasingly experimenting with small monthly cash payments to residents living close to or below the poverty line, Hewitt said.
In the Sacramento region, Sierra Health Foundation is teaming with government leaders, nonprofits and other philanthropic organizations to run these guaranteed income, or basic income, programs:
The United Way recently opened applications for a third pilot, seeking to assess the impact of $500-a-month payments to 130 Sacramento County residents.
In Yolo County, the Health and Human Services Agency has been looking at whether monthly payments averaging $1,289 can help to improve the health and well-being of children and their parents.