Work requirements for the Child Tax Credit must be a line in the sand
As congressional Democrats begin their internal haggling over how much of President Biden’s Build Back Better agenda to enact via budget reconciliation, pivotal Senator Joe Manchin seems intent on making one of the administration’s signature achievements worse.
On Sunday, Manchin floated the idea of attaching a work (or education) requirement to the advance Child Tax Credit. “Let’s make sure we’re getting it to the right people,” he insisted. “There’s no work requirements whatsoever. There’s no education requirements.. Don’t you think if you want to help the children, the people should make some effort?”
Manchin’s position would needlessly over-complicate what could become one of the Biden administration’s legacy programs, and turn back the clock on a generation of Democratic fighting against attaching work requirements to social welfare programs. It ought to be a nonstarter for Democrats in Congress.
As part of the American Rescue Plan COVID-19 relief legislation, Congress expanded the Child Tax Credit to pay out between $250–300 dollars per child to most American families every month this year. What was a tax reduction for some families has morphed into a powerful program resembling Social Security for kids.
The advance CTC is already making historic strides against child poverty and hunger. After the first payments rolled out to families this summer, child poverty in America dropped by 25 percent, keeping 6 million children out of poverty. Similarly, the number of families reporting not having enough food to eat fell by 24 percent after the first CTC payments hit families’ bank accounts.
It has been a rousing success so far — but the Rescue Plan only authorized the advance CTC for one year. Democrats are widely expected to extend the program for at least several additional years in the Build Back Better bill — but they need Manchin’s vote to do so.
Manchin appears fixated on substantially reducing the topline cost of the Build Back Better bill, from its current $3.5 trillion. By imposing work requirements on the advance CTC, he appears to be aiming to reduce costs by reducing the number of children receiving monthly benefits — either by penalizing them because their guardian doesn’t meet those requirements, or by cutting them off from benefits because their guardian is unable to manage the new paperwork burdens that would follow from work requirements.
Those administrative burdens alone would change the advance CTC for the worse. Right now, 88 percent of children live in families that automatically receive CTC payments each month — meaning the government just mails them a check or directly deposits the money into their bank accounts without any action required on their part.
The remaining 12 percent is largely composed of families who are not required to file taxes, and therefore must take active steps to enroll in the CTC. This enrollment process is somewhat complex and overwhelming. Families must marshal a lot of the information that would be required to file a bare-bones tax return. So it will already be a feat to get these families enrolled. (The Children’s Defense Fund of New York recently ran an excellent step-by-step tutorial on how to get enrolled.)
Work requirements would mean no families would get the CTC automatically, and all would have to go through some kind of cumbersome enrollment process. It would neutralize one of the biggest selling points of a monthly child benefit — its simple arrival. Those joyous TikTok videos of families celebrating their first CTC payments? Those would become only possible after families first go through the rigamarole of filling out government paperwork and supplying the requisite evidence of employment or enrollment in higher education. And that would be a drag.
And the fact is that nearly all of the families receiving the CTC are already working. The Bureau of Labor Services reported that in 2020, “[a]t least one parent was employed in 88.5 percent of families with children.” We don’t have good data on the remaining 11 percent — but undoubtedly many of them are either pursuing education or full-time caregivers for other family members.
So Manchin’s work-requirements proposal would put all families through a needless hassle to solve what he perceives as a problem (the horror of families receiving government benefits without working) that more or less doesn’t exist. And it also goes against the general thrust of the Democratic Party’s modern policy commitments. The Obama administration spent years resisting attempts by Republican-run states to attach similar work requirements to Medicaid eligibility. It was the Trump administration that (illegally) tried to greenlight Medicaid work requirements — and Democrats sued against, campaigned on, and repealed them.
(The story with Medicaid was quite similar to the story now with the CTC. As I wrote in 2018: “[N]early 80 percent of Medicaid recipients are in families where at least one adult is already working, according to the Kaiser Family Foundation. Of those who are not working, most are ill, disabled, or caring for their families. Of all non-working Medicaid recipients, only 9 percent — 882,000 people — are unemployed because they could not find work or for other reasons. Work requirements will inflict demeaning new administrative supervision, along with burdensome new paperwork, upon millions of people to solve a problem that barely exists.”)
What’s more, if Manchin’s goals are to promote gainful employment and to shore up the federal budget, saddling the advance CTC with work requirements is a short-sighted and ultimately counterproductive way to pursue them. Growing up in poverty is extremely detrimental to children’s future work prospects. A 2015 Urban Institute report looked at how childhood poverty affects adult life milestones. It found that among those people who never experienced childhood poverty, 70 percent were consistently employed between the ages of 25–30. But among children who experienced at least one year of poverty, only 57 percent are consistently employed at that age. Among persistently poor children — those who are poor for at least half of their childhood — only 37 percent go on to consistent employment.
That means cutting child poverty today — such as with the advance CTC — enables more children to hold steady employment tomorrow. More steadily employed workers, of course, means more tax revenue and fewer social services expenses tomorrow too. A 2005 study found for children under the age of 5 in families earning less than $25,000 per year, an annual income boost was associated with an increase in increase in the number of hours they go on to work as adults, higher earnings in adulthood, and a reduced likelihood of receiving food stamps.
The gains in human dignity from cutting child poverty ought to be self-evidently compelling enough to continue the advance CTC. But even if that’s not enough, Senator Manchin’s idea of imposing work requirements on the advance CTC is still self-defeating for his own aims. Work requirements will saddle the program with more frustrating red-tape and bureaucracy, inevitably cutting out children in eligible families. And children who lose benefits will go on to work less and earn less in the future.
Let’s hope that Manchin’s work-requirements idea was just half-baked Sunday show spitballing. They are bad for children — especially those who need the advance CTC the most. Work requirements should be a line in the sand that the Biden administration and the Democratic Party refuses to cross.