2023 Census Poverty Data Reveal Uncertain Progress and Importance of Policy Choices

Census data paint a complicated picture of progress against poverty in 2023, as the national poverty rate fell, rose, or held steady depending on which measure is used:

• The official (cash-only) poverty measure fell because of a strong economy.
• Under the standard Supplemental Poverty Measure (SPM), which counts non-cash benefits such as food assistance and whose poverty thresholds Census adjusts annually for changes in the amount typical families with children spend on basic needs, poverty rose because of an unusual faster-than-inflation spike in those thresholds, partly tied to spending changes that had occurred before 2023.
• Under an alternative SPM that adjusts the poverty line simply for inflation similarly to the official poverty measure, poverty held steady in part because some pandemic food assistance expired early in 2023.

In other words: using inflation-adjusted measures, poverty fell under the official poverty measure, but was unchanged using the alternative SPM, which accounts for food assistance expirations.Stronger government action is needed to bring child poverty closer to the record lows it reached in 2021.

The data make clear, however, that stronger government action is needed to bring child poverty closer to the record lows it reached in 2021, thanks in large part to the American Rescue Plan’s Child Tax Credit expansion and other relief measures.

Change in Poverty Between 2022 and 2023 Differed Depending on Poverty Measure

A growing economy helped bring down poverty in 2023 under the official poverty measure, which only counts market income and cash benefits such as Social Security; this measure largely tracks the strength of the labor market. Poverty rose under the Census Bureau’s more comprehensive measure, the SPM, which counts income from non-cash programs such as the Supplemental Nutrition Assistance Program (SNAP) and rental assistance, and from refundable tax credits. The increase was driven, however, by a particularly large increase in the SPM’s thresholds — the lines used to determine whether a family’s resources meet the definition of poverty. Poverty remained statistically unchanged under a third Census measure — an alternative SPM that adjusts the poverty line simply for inflation.^[1]

Standard SPM thresholds are updated each year based partly on changes in the amount typical families with children spend on basic needs such as food and housing averaged over five earlier years. In 2023, the thresholds increased by between 6.8 and 8.6 percent, depending on families’ homeownership status. This far exceeds the 4.1 percent inflation rate measured by the overall consumer price index, or CPI.^[2] (The official poverty measure uses overall CPI inflation to adjust its poverty thresholds.) The SPM thresholds rose much faster than inflation in 2023 due in part to a rise in spending on basic needs in 2022 compared with 2017. That was in turn due partially to relief received during the COVID pandemic and its continued influence on family savings and spending.

Recent research indicates that prices tend to rise somewhat faster for rent and other goods and services that low-income households spend a larger share of their money on than higher-income households. But the increase in the SPM thresholds also significantly exceeds the overall inflation rate of 4.6 percent for the types of items that the poorest one-fifth of households tend to purchase, the Labor Department estimates.^[3]

This large increase in SPM thresholds in 2023 makes interpreting the change in SPM poverty more difficult this year. Using an alternative SPM poverty measure for 2023 that starts with the 2022 thresholds and adjusts only for CPI inflation, Census reported that poverty did not increase in 2023.^[4] This is how we know that that poverty increased in 2023 under the standard SPM due to the rise in the SPM thresholds — not because family resources lost ground to inflation.

The Census analysis using the alternative SPM measure reveals that poverty in 2023 was statistically unchanged from 2022 for children and people aged 18 to 64, and declined for people 65 years and older. Poverty declined for non-Latino white people and American Indian and Alaska Native people, and remained statistically unchanged for Black, Asian, and Latino people.^[5]

Some analysts prefer an SPM with thresholds adjusted only for inflation (often called an “anchored” SPM) over the standard SPM, which in most decades lets poverty thresholds grow slightly faster than inflation as living standards gradually rise. In previous analyses of SPM data,^[6] CBPP has principally focused on an anchored series to ensure that year-over-year changes in poverty are purely due to changes in the inflation-adjusted value of families’ resources, not changes in the poverty thresholds. The standard SPM has merit as well; it measures the share of people whose family resources are below basic living standards of the time.

CBPP’s anchored SPM series differs slightly from Census’s anchored measure,^[7] which used 2022 SPM thresholds adjusted for inflation. Our estimates use the latest available SPM thresholds, which currently are for 2023, and adjust them back for inflation. Both approaches yield similar results. Following our usual practice, the remainder of this paper uses 2023 thresholds adjusted back for inflation.

Excluding Years With Strong Pandemic Relief, Child Poverty in 2023 Remained at Record Low Under Inflation-Adjusted Thresholds

The child poverty rate in 2023 was statistically unchanged from 2022 under inflation-adjusted SPM thresholds but lower than in any year before 2020, in data back to 1967. In the late 1960s, assistance programs were fewer and weaker, and taxes pushed a substantial number of families with children below the poverty line, making child poverty modestly higher than it would have been without accounting for taxes and government benefits.

In 2020 and 2021, in contrast, taxes and government benefits — bolstered by pandemic relief legislation — cut child poverty by 57 percent and 74 percent, respectively, both all-time highs in data back to 1967. In 2023, with pandemic relief having expired, taxes and government benefits cut child poverty by a smaller though still sizeable 37 percent, dropping the child poverty rate from 21.9 percent to 13.8 percent.^[8] (See Figure 1.)

Across All Major Racial and Ethnic Groups, Child Poverty in 2023 Was Much Higher Than 2021’s Record Low

Child poverty reached a record low in 2021 largely due to the American Rescue Plan’s Child Tax Credit expansion and other relief measures that contributed to a 46 percent reduction in child poverty from 2020 to 2021.^[9] The Child Tax Credit expansion helped bring racial and ethnic inequities in child poverty — which are driven by factors such as discrimination and governmental underinvestment — to their lowest level ever in 2021.^[10]

In 2022, though, the expiration of most pandemic assistance largely reversed recent progress both in reducing child poverty within racial and ethnic groups and in narrowing percentage point differences in poverty across those groups. In 2023, child poverty rates remained much higher than they were in 2021 across all racial and ethnic groups. (See Figure 2.)

Data suggest that further expirations of pandemic assistance continued to push SPM child poverty rates upward in 2023. SNAP and school lunch benefits lifted 3.2 percent of all children above the anchored poverty line in 2022 but only 2.8 percent in 2023, our analysis shows — a significant weakening in poverty reduction that coincided with expiration of food assistance measures put in place during the pandemic including SNAP emergency allotments, which ended in March 2023, and a narrowing of the Pandemic EBT program for children. Not counting food assistance (SNAP and school lunch), the poverty rate would have declined a statistically significant 0.7 percentage points from 15.0 percent in 2022 to 14.3 percent in 2023.

Policymakers Should Expand Child Tax Credit Expansion to Again Lower Child Poverty

19 million children 

received less than the full $2,000-per-child credit, or received no credit at all, in 2022 because their families’ incomes were too low.

After Congress let the Child Tax Credit expansion expire in 2022, the credit shrank and reverted to a less equitable design that denies full participation to families with low or no earnings. An estimated 1 in 4 children — or roughly 19 million children — got less than the full $2,000-per-child credit or none at all in 2022 because their families’ incomes were too low. This includes nearly half of Black children, 4 in 10 American Indian or Alaska Native children, more than 1 in 3 Latino children, roughly 1 in 6 white children, and more than 1 in 7 Asian children, and about 1 in 3 children of all racial and ethnic groups living in rural areas.^[11]

Making the full Child Tax Credit available to the children who need it most would lower the number of children experiencing poverty, push back against long-standing inequities, and enable more families to offer their children a stronger foundation of income security and opportunity.

Appendix: Supplemental Tables

Tables that provide overall and child poverty rates by race and ethnicity using standard and inflation-adjusted SPM poverty thresholds can be accessed here: https://www.cbpp.org/sites/default/files/SPM_poverty_1967-2023_anchored_and_standard_9-9-24.xlsx.