Today, the U.S. Congress Joint Economic Committee—led by Chairman Don Beyer (D-VA)—released a new report highlighting the record-breaking decline in the poverty rate in 2021. Data show the American Rescue Plan and Biden administration actions helped lift 4.5 million Americans across races and ethnicities out of poverty from 2020 to 2021, including more than 3 million children.
As a result of new federal investments in existing economic security programs—like the Earned Income Tax Credit, the Supplemental Nutrition Assistance Program and housing subsidies—poverty in the United States fell to a record low of 7.8% in 2021. Child poverty fell to 5.2%, also the lowest rate on record, and a previous JEC report highlighted how expansion of the Child Tax Credit was the single-largest contributor to this reduction. Public investments were also effective in reducing racial and ethnic disparities in poverty, although gaps remain.
Among the new report’s key takeaways:
- Federal income support programs and tax credits lifted nearly 53 million people above the poverty line. Absent federal assistance and tax credits, 78 million Americans had incomes below the poverty line in 2021.
- The number of children living in poverty fell to a historic low in 2021. This was driven by a policy known as full refundability, which ensured that 19 million more low-income children were made eligible for the full Child Tax Credit.
- Racial disparities in poverty reached an all-time low in 2021, but persistent inequality makes clear there is more to do. Before the pandemic, Black and Hispanic Americans were more than 130% more likely to live in poverty than white Americans; today, Black and Latino Americans are nearly twice as likely to live in poverty.
These historic reductions in poverty provide a roadmap for future public investments. In 2018, more than 43 million Americans lived in poverty, including over 10 million children. In 2021, effective government investments brought this down to 25 million people living in poverty, including just under 4 million children.
With the release of the report, Chairman Beyer released the following statement:
“During an economic crisis, when we would otherwise expect poverty to increase, both overall poverty and child poverty fell to record lows. Democrats in Congress and in the White House passed policies that lifted 4.5 million people—including 3 million children—out of poverty. These public investments ensured workers and families could keep food on their tables and rooves over their heads
“We know what works. Never have there been more powerful poverty-reducing policies, which offer a clear path forward for fighting poverty permanently. We must build on this success and extend these proven investments to promote prosperity for all.”