A massive real-world experiment is taking place right now for families with children

In mid-July, many American parents opened up their bank accounts and saw a welcome sight: an extra few hundred dollars.

Reporters and researchers have since been grappling with the impacts of these payments, a child allowance of sorts that brings the United States in line with many other Western countries that give low- and middle-income families monthly stipends to help with parenting expenses.

Tucked into the $1.9 trillion American Rescue Plan passed in March was a provision that expanded the child tax credit up to $3,600 a year per child — paid out on a monthly basis — and made it fully refundable, so families get the benefit even if it’s more than they pay in taxes. In August, the federal government sent payments to the parents or caregivers of roughly 61 million children, the Internal Revenue Service reported.

As Annie Lowrey wrote in The Atlantic, “Ask poverty researchers or child advocates about the new child tax credit, and their response is likely to be rapturous: ‘Historic.’ ‘A game changer.’ ‘The single most important policy in 50 years.’ ‘Unprecedented.’”

Elisa Minoff, a policy analyst for the Center for the Study of Social Policy, told me earlier this year that the expanded credit (then just a proposal) represented a “massive” increase in investment for children. I called her recently to see how she thinks the payments have been working now that they’re enshrined in law (at least for the remainder of this year).

“It's a really huge moment for a country that has underinvested in families with children for decades,” Minoff told me. “The challenge moving forward is really to make sure that all families who are eligible get it.”

Families qualify for the full amount if they make $75,000 or less for a single tax filer, $112,500 or less for a “head of household” filer, or $150,000 or less for married couples who file taxes jointly. The credit phases out at higher incomes.

But about 4 million or more eligible children aren’t receiving the automatic payments, according to a study by the Center on Budget and Policy Priorities. Those include roughly 1.6 million babies expected to be born this year on Medicaid. As of late August, there isn’t yet a mechanism for new parents to sign up for the monthly sum.

Minoff also noted that an estimated 1 million kids are ineligible because of their immigration status, as are another several hundred thousand children who don’t live more than half the time with someone the IRS considers legal kin (such as parents, stepparents, foster parents, grandparents, siblings, aunts or uncles).

Despite the obstacles, it’s already helping struggling families, Minoff said.

“You hear a lot of parents talk about how this has reduced stress and anxiety, and allows them to not just pay the bills but do some fun things with their kids, like take them to the zoo or go out to eat, when they hadn’t been able to do that in the past,” she said.

A growing body of research has shown the enduring effects of childhood poverty. As Jason DeParle reported in The New York Times: “A landmark study in 2019 by the National Academies of Sciences, Engineering and Medicine showed that even short stints in poverty could cause lasting harm, leaving children with less education, lower adult earnings and worse adult health. Though welfare critics said aid caused harm, the panel found that ‘poverty itself causes negative child outcomes’ and that income subsidies ‘have been shown to improve child well-being.’” 

DeParle quoted a mother who said she had such bad depression after running out of money last fall that she had a panic attack while driving. “My son was freaking out” looking for her asthma inhaler, she told DeParle.

The first child tax credit stipends, in July, lifted 3 million kids out of poverty, a Columbia University study found. Families with children also reported a modest decrease in food insufficiency and trouble paying bills following the payments, the U.S. Census Bureau said.

Another benefit of the child allowance could be its potential to reduce the chances a family becomes involved in the child welfare system. In 2019, as part of a Center for Health Journalism Data Fellowship, I reported on the high number of child neglect cases in Indiana, and how many of them were tied to families’ socioeconomic statuses.

In my reporting, I found that, in general, the more child poverty a given county had the more likely families there would be investigated for child neglect. Indiana, at the time, had financial distress included in its definition of child neglect.

“A lot of the child maltreatment reporting is actually for issues secondary to poverty,” Dana Weiner, a senior policy fellow with Chapin Hall at the University of Chicago, told me recently. “So if we reduce poverty and families are better able to keep the heat on and keep their kids adequately clothed and fed, that will alleviate some of those reports that are for neglect technically, but are actually secondary to poverty.”

Weiner and some colleagues recently put out a brief compiling the research to date on how providing economic support to families keeps them out of the child welfare system. For instance, a 10% boost in refundable state earned income tax credits was associated with a nearly identical decline in rates of child neglect reports, according to research cited in the project.

As I reported on this site in 2019, increases to the minimum wage and child support payments also both reduced reports of child neglect.

That stands to reason the expanded child tax credit could have a comparable effect on the number of families involved with child protective services.

“What do I think will happen?” Weiner said. “I mean, my hypothesis would be that there would be a big impact.”

Journalists have already started documenting the real-time results of the child tax credit experiment. One father told Sarah Jones of New York magazine that he planned to use the first three months’ worth of payments to cover roughly $1,500 in outstanding medical bills from his oldest son’s seizure earlier this year.

Another mother said she would put the tax credits toward credit card debt she accumulated to pay for therapy for her son, who has autism. “I feel like there’s very few good news stories, and this is one,” she told Jones.

There are similar stories playing out in nearly every community across the country right now, and journalists would do well to tell them as Congress debates whether to make the monthly payments permanent.