About 15.3% of children officially lived in poverty in 2021, but that figure fell to a record low of 5.2% when factoring in government aid, according to new reports from the U.S. Census Bureau.
“The increased difference in poverty rates for children reflects the impact of the child tax credit, which was made fully refundable for 2021,” said Liana Fox, Ph.D., assistant division chief for the U.S. Census Bureau’s Social, Economic, and Housing Statistics Division.
“These findings reflect several factors affecting households during 2021,” said David G. Waddington, M.S., chief of the Census Bureau’s Social, Economic, and Housing Statistics Division. “These include the continued response to the COVID-19 pandemic, rising inflation, shifts in the composition of the workforce, policy changes and other macroeconomic conditions that shaped the experience of households in 2021.”
In 2021, the median household income was $70,800, which is not statistically different from the 2020 median.
About 11.1 million children or 15.3% last year lived in poverty, defined as a family with two adults and two children with an annual income below $27,479. This rate for children was down from 16% in 2020.
Across all ages, 11.6% of people lived in poverty in 2021, similar to 2020. The highest rates were among people who are Black (19.5%) and Hispanic (17.1%), while rates were lower for people who are Asian (9.3%) and White (8.1%).
Looking at supplemental poverty rates, which take into account government assistance, tax credits, expenses, family composition, housing and geography, about 7.8% of people lived in poverty last year, down from 9.2% in 2020. For children, about 5.2% lived in poverty, cut nearly in half from 9.7%. Last year’s supplemental poverty rate is the lowest since the analysis began in 2009.
Fully refundable child tax credits lifted about 5.3 million people out of poverty last year, including about 2.9 million children, according to the U.S. Census Bureau. Child tax credits increased from $2,000 to $3,600 for children under 6 years and from $2,000 to $3,000 for children ages 6 through and 17, under the 2021 American Rescue Plan Act. In total, the Census Bureau estimates refundable tax credits kept 9.6 million people out of poverty based on the supplemental measure.
Rates of people who were uninsured last year also declined. About 5% of children (3.9 million children) were uninsured in 2021 compared to 5.6% in 2020, which the Census Bureau attributes to increases in public coverage such as Medicaid and the Children’s Health Insurance Program. About 35.9% of children were covered by one of these two programs last year, up from 34.7%. Across the entire population, about 8.3% of people were uninsured in 2021, down from 8.6%.
Addressing poverty and lack of insurance are important areas for the Academy. The AAP policy Poverty and Child Health in the United States calls for improving access to early childhood education and increasing parents’ income by strengthening programs like the earned income tax credit, Supplemental Nutrition Assistance Program, housing subsidies and the Special Supplemental Nutrition Program for Women, Infants, and Children.