Since July, more than 36 million households in the United States have received a payment from the federal government on the 15th of each month from the child tax credit, worth up to $300 per child.
Those funds, however, will not arrive until the 15th of January.
They were part of a one-year extension of the child tax credit, which boosted the benefit’s size and made it more accessible to the poorest households. So far, no action has been taken by Congress to prolong such adjustments.
The monthly payments have proved significant for many low- and middle-income parents, such as Jessica Morrison.
There were times when she had to put groceries on credit until the $550 from the government started appearing dependably in her bank account every month.
“There were also unforeseen bills, such as a car repair, a plumbing issue, or anything that needed to be done around the house,” she explained.
Morrison works for the state of Pennsylvania as a caseworker, and her husband works for Uber and Lyft. They have two children, ages 2 and 7.
“There have undoubtedly been months were we were living paycheck to paycheck due to a series of poor luck, and it seemed like it would take forever to get back on our feet,” she added.
The child tax credit’s monthly instalments changed that.
Morrison added, “I can honestly say that I haven’t experienced the feeling of living paycheck to paycheck.” “In terms of our family’s finances, I’ve definitely felt a lot more stable.”
It provided them enough wiggle room to pay those unexpected expenses, and for the first time, they felt they could afford to send their 7-year-old daughter to dancing classes for $65 per month.
Morrison remarked, “Which is something she’s wanted to do for a long time.” “It’s extracurricular, she gets exercise, and she meets new people.” That’s just the cherry on top.”
It’s not required, but witnessing how much her daughter enjoys dance has been “wonderful,” she said.
Nura Moshtael, a single mother in Atlanta, has been able to do things for her son that she would not have been able to do otherwise because of the tax credit. “He’s always loved going out to coffee shops and dining out,” she said of her 13-year-old son, who has Down syndrome.
Other expenses, on the other hand, tend to eat up a significant portion of her income.
“My son receives speech therapy and occupational therapy since he has unique needs, and these are extra expenses that we’ve had since he was born,” said Moshtael, who works as a restaurant waiter.
She’s been able to budget for the occasional supper out and field excursions for her homeschooled son thanks to the $250 she’s been receiving every month.
Early research suggests that most families have spent their child tax credit payments in the same way as Moshtael and Morrison did: on food, household necessities, and enrichment for their children. According to Mark Stabile, an economist at the renowned business school INSEAD, it also aligns with research on how parents in other countries use child benefits.
“They spend more money on education, more money on home meals, more money on transportation, and they spend less money on alcohol and smoke,” he explained.
Germany, the United Kingdom, Ireland, Sweden, and the Netherlands are among the countries that provide parents monthly cash payments.
Megan Curran, director of policy at Columbia University’s Center on Poverty and Social Policy, said, “The United States has really been an outlier in terms of not providing this type of regular help for children.”
“It’s a common aspect of how governments realise the cost of raising children while also recognising that assisting parents in raising children in a healthy and well-supported manner benefits society as a whole.”
The best place to turn for a sense of how an increased child tax credit would operate in the United States in the long run, according to Curran and other experts, is Canada.
“There are multiple reasons why Canada is the closest analogy,” Hilary Hoynes, an economics and public policy professor at the University of California, Berkeley, explained.
For starters, Canada’s child benefit has a similar amount and structure to the United States’ child tax credit in 2021.
And two, according to Hoynes, Canada’s social safety net, aside from its health-care system, is more similar to that of the United States than that of many European countries.
“Many other rich nations with child benefits also have a lot more access to other kinds of family-based benefits, like lower-cost child care and preschool, as well as family leave and other kinds of benefits,” she said.
Even without them, statistics show that after expanding the child benefit in 2016, Canada’s poverty rate fell by 20% in two years. The payments have also contributed to “a remarkably broad increase in family outcomes,” according to Hoynes.
“Kids are more likely to attend school, parents are more likely to indicate that their children are in better health, and parents are more likely to report that the family can meet their dietary demands,” she explained.
Other financial aid programmes for parents in the United States, such as the earned income tax credit and SNAP (food stamps), have had comparable results.
“A wide range of data suggest that government spending on families with children provides extraordinary returns to society, relative to the expenses of those payments,” Hoynes added.