US Census Data Shows Child Tax Credit Promotes Work, Entrepreneurship

The results of a new study utilizing Census Pulse Data reveals that the expanded, monthly Child Tax Credit (CTC) is encouraging low-income parents to start new businesses, while reducing child care as a barrier to employment. The study conducted by researchers at the Social Policy Institute at Washington University in St. Louis and Appalachian State  also concludes that the expanded CTC has not affected the labor rate, dispelling concerns raised by some critics that direct support to low- and middle-income parents could reduce incentives for employment.

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Among the key findings in the study, since the CTC payments began in July:

• Employment. There are no significant differences in rates of employment between parents and non-parents.
• Entrepreneurship. Lower-income parents (less than $50K each year) showed the largest growth in self-employment, with an estimated 300,000 more Americans starting or working at their own businesses.
• Child-Care Barriers. Three million fewer CTC-eligible parents are facing child care as a barrier to employment – and it keeps dropping.

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“As the costs of raising children have grown, parents have been saddled by rising costs. Providing them with financial assistance frees them to work, innovate, and contribute more to our economy,” said Greg Nasif, Chief Spokesperson for Humanity Forward. “This latest study confirms our optimistic view that families are using the restructured monthly disbursements of the Child Tax Credit responsibly, covering child care, transportation, and family expenses. By easing the burdens of raising children, the expanded monthly CTC has freed millions of parents to start new businesses and work more hours even while our economy and supply chains emerge from a pandemic. That helps all of us, not just parents or kids.”

The expanded benefits provided by the CTC as part of the American Rescue Plan Act are set to expire at the end of December. Humanity Forward urges Congress to act to extend this pro-business, pro-work, pro-family policy before it’s too late.

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