off the charts
POLICY INSIGHT
BEYOND THE NUMBERS

American Rescue Plan Act Will Help Restore Children’s Well-Being After Year of Widespread Hardship

The American Rescue Plan Act, which President Biden is expected to sign shortly, will bring welcome relief as Census Bureau data released today still show millions struggling to meet their basic needs a full year into the public health and economic crisis. The relief package will help reduce this hardship and begin to restore children’s well-being and prospects for success, which the crisis has placed at risk of long-term damage.

The relief package extends critical unemployment benefits that are helping jobless workers pay their bills and care for their families, extends and expands nutrition assistance to help people put food on the table, boosts housing assistance to help people pay rent and avoid eviction, makes comprehensive health coverage more affordable and accessible, and raises the Earned Income Tax Credit for low-paid working adults without children at home.

The package also makes the full Child Tax Credit available to all children except those in households with the highest incomes and raises the amount of the credit, which will cause a historic reduction in child poverty for all racial and ethnic groups and narrow the gap in poverty rates between white children and Black and Latino children.

Providing more supports in food, housing, income, and other areas to struggling families can make an important difference in their children’s lives now and in the long term, research shows. Conversely, financial instability, inadequate food, or unstable housing can harm children and shortchange their potential in areas such as health, school completion, and future earnings.

Hardship rates at the end of February were very high, especially among families with children. According to the latest Census Bureau data, collected February 17-March 1:

  • 14 percent of adults with children and 11 percent of all adults reported their household didn’t have enough food in the last seven days. (By contrast, 4 percent of adults with children reported their household didn’t have enough to eat at some point over the full 12 months of 2019.)
  • 28 percent of renters with children and 19 percent of all renters were not caught up on rent.
  • 41 percent of adults with children and 35 percent of all adults reported difficulty covering usual household expenses — such as food, rent or mortgage, car payments, and medical expenses — in the last seven days.

In addition, roughly 4 in 10 children living in rental housing live in a household that either isn’t getting enough to eat or isn’t caught up on rent, according to our analysis of detailed data collected February 3-15.

Labor market weakness is a major reason for these hardships; in fact, the labor market is much weaker than headline numbers suggest. The official unemployment measure omits the millions of workers reporting that they didn’t look for work due to the pandemic, or were absent from work without pay and lost pay due to the pandemic. In February, 38 million people — including nearly 10 million children — were living with a family member whom the pandemic economy has sidelined, according to our analysis of Current Population Survey data. Moreover, long-term unemployment (27 weeks or more) was four times higher in February 2021 than the year before. Some 2.5 million children were living with a family member facing long-term unemployment, we calculate.

The economy will take time to recover. Unemployment will likely remain elevated into the fall, particularly among workers of color. A larger share of Black and Latino workers experienced job losses than white workers between February 2020 and February 2021, with women getting especially hard hit. If the recovery from this recession follows the pattern — rooted in the nation’s history of structural racism — of previous crises, Black joblessness in particular will remain high longer than white joblessness.

A focus on reducing economic strain will be prudent even as the unemployment rate declines. Children who have weathered the crisis will have much ground to make up. Policies that reduce poverty and hardship can prevent additional economic strain and its consequences, begin to counter the impact of hardships children experienced, and help create the conditions children will need to thrive. The American Rescue Plan Act is a significant step in that direction, but because its provisions are temporary, longer-lasting policy advances will be needed to make sustained progress in reducing the nation’s high rate of child poverty.