An extra boost in child tax credits relieved financial stress for Michigan families who used the monthly payments on the basics — food, rent, child care, utility bills and clothing.
That’s according to a March report from the nonprofit Center for the Study of Social Policy about how temporary expansions in the child tax credit and child care helped Michigan families as they faced the economic uncertainty of the COVID-19 pandemic.
The child tax credit gave families flexibility, said Elisa Minoff, senior policy analyst at the Washington, D.C.-based group.
“For many it was giving them that cushion so that they could do some of the things that they had on their bucket list and hadn’t been able to do before,” such as family outings and signing kids up for extracurricular activities, Minoff said.
Last year, federal pandemic relief legislation bolstered the child tax credit, raising the annual benefit up to $3,600 for kids under 6 and $3,000 for those ages 6 to 17.
The payments reached 61.2 million children, including more than a million Michigan kids with an average monthly payment of $455 as of December, according to the U.S. Treasury Department.
There were 3.4 million more children in poverty in February compared with December, Columbia University’s Center on Poverty and Social Policy recently reported.
Michigan also received millions of dollars in child care stabilization grants.
From September to December, the authors interviewed 15 Black and Hispanic or Latino families making between $0 to $55,000. The report also draws from a January survey of 529 parents or caregivers — with mostly low to moderate incomes — who were asked about their experiences with the child tax credit and child care. The survey was conducted with the Great Start Collaborative of Kent County and the United Way for Southeastern Michigan.
Among the findings in the report:
- A little more than half of Michigan families surveyed said they used the child tax credit on food and groceries. Meanwhile, 40% reported using the payments for their rent and mortgage; 36% for child or day care; 36% for phone, internet and utility bills, and 29% for shoes and clothing.
- Nearly 90% of Michigan families said the child tax credit made them feel “a little” or “a lot” less stressed about money, authors said. What’s more, Black and Latino families were more likely to say the payments were “a lot” more stress relieving than White families, with similar results for households making between $10,000 and $35,000.
- Half of parents with kids under 5 said they had a difficult time finding child care. Access to child care is linked to work. A staggering 80% of parents said child care related challenges disrupted their ability to work; 78% said they reduced their work hours at some point, and 49% said they had to quit a job in the past because of child care issues. That disruption is more likely for those making less than $50,000.
The payments offered “much-needed breathing room in the budgets of Michigan families” and consistency, allowing some parents to stay in their jobs, go back to work or find jobs they wanted rather than needed to make ends meet, authors noted.
“Having additional income and stable and predictable income in a time of great uncertainty is hugely helpful to families to be able to pay for those basic costs, to ensure that they’ll be able to keep a roof over their head, keep food on the table, pay for child care, pay for those little extras that are enriching to families’ lives,” said Megan Thibos, director for economic mobility initiatives at the United Way for Southeastern Michigan.
However, these investments are temporary. The authors recommend a permanent expansion of the child tax credit and monthly payments. Legislation to expand it stalled.
“Families have been struggling with higher prices for a long time but this has only been exacerbated by … the recent rise of inflation,” which only highlights why it’s necessary for payments to continue, Minoff said.
There’s still time to claim the second half of the expanded child tax credits, Thibos said, but families need to file their taxes in time. The United Way for Southeastern Michigan can help those who need assistance. Go to getthetaxfacts.org or call the 2-1-1 help line.