In 2021, the U.S. expanded the child tax credit to support families’ financial needs in raising children and, in so doing, to relieve financial stress and worry. American families were suffering from pandemic-related economic shocks such as increased prices for many goods, employment and earnings loss, death and concerns about health, and school and child care closures.
The expanded child tax credit was generous: Nearly all families with income less than $150,000 for single-parent households or $250,000 for married households were eligible for the credit. A family with two children and an income less than $60,000 was eligible to receive about $500 per month depending on the ages of their children.
More financial support, the argument went, should help relieve this economic suffering and financial stress. Having more money to pay bills, get food on the table and financially cope with the range of material needs should also help Americans feel better and have more psychological space to do their jobs as workers and parents.
This logic has merits, but it did not play out.
Although the emerging evidence is pretty clear that the expanded child tax credit did, in fact, increase income and reduce material hardship, our analysis shows that it did not improve parents’ psychological well-being.
Parental stress — and psychological well-being more generally — is a multitude of things. The expanded credit might have addressed some of them but not all.
In some cases, when looking at how families were doing over this unprecedented expansion of direct cash support, families reported less financial worry. But more often than not, study after study shows no clear pattern of improvements in stress or how parents feel.
Parents were not less anxious or less depressed; they were generally not feeling happier or more satisfied with life. It’s also true that parents were not necessarily more anxious or less happy. They were basically feeling about the same as before.
This seems like a puzzle, but is it? A broad look at the U.S. labor market and economy, and how government and public investments have shifted over time offers some clues. Even though economic resources and the potential to capture those resources, have expanded over the last several decades, the risk and uncertainty of financial resources also increased.
On the one hand, the U.S. social safety net — providing government support for families with low incomes — has expanded over the past several decades, including greater access to health care via Medicaid expansion and greater financial support for those who are working through more generous earned income tax credits.
On the other hand, over this same period, jobs and the labor market became more precarious, and without reliable and accessible child care, earnings are a more volatile source of income.
More economic risk is now being put on families at a time when social and economic cushions from extended family and community networks are getting weaker. Many American families are priced out of housing near schools and in neighborhoods that they prefer.
Getting by in this environment is not the same as thriving. Even when economic resources are available, stress and psychological well-being might not improve.
In came the 2021 expanded child tax credit: While it was an especially large infusion of cash, especially to the lowest income families — and for many, the first time money was received from the government with no conditions — many features might not have addressed financial or emotional stress.
It was temporary; a source of economic support for families, but not one that they could be sure to rely on for the future. And it was not a force that could alter the state of the labor market, prices of goods, child care or housing stability.
Adding to this complicated picture is the fact that psychological well-being and stress themselves are complex.
Stress can spur focus and drive, but it can also be overwhelming. Sadness can be a temporary emotional state, but it can also be a symptom of clinical depression. Stress can be a response to the environment and it can also be negative feelings about fulfilling social or normative expectations about one’s identity or role.
Parents can be financially stressed and not feel happy about themselves as parents; at the same time, parents can feel happy for or about their children and buffer financial stress from their children.
No U.S. economic policy has the primary goal of improving the social or emotional well-being of American families. Even though these same policies may improve economic resources, it’s too much to expect each family to respond in the same way when gaining those resources.
What alleviates financial stress and supports psychological well-being in one family might not be the same as in another family. It’s too much to expect unreliable direct income support to have brought confidence to families’ budgeting Tetris.
This does not mean that the government should not get behind economic support for families as it did in 2021. Many American families have been getting by for a long time: gaining skills in absorbing, adjusting, adapting and juggling with and through economic shocks, health shocks, and emergencies.
But, maybe it is time to weave in social with emotional well-being as direct goals and turn a lens back to the role of government, social and community cushions. Maybe we’ll be surprised at how this affects other aspects of families’ lives that show returns on economic growth.
This op-ed is part of The Hill’s “How to Fix America” series exploring solutions to some of America’s most pressing problems.
Lisa A. Gennetian, Ph.D., is the Pritzker Professor of Early Learning Policy Studies at Duke University’s Sanford School of Public Policy and an affiliate of the Duke Center for Child and Family Policy. Anna Gassman-Pines is a professor of public policy and psychology and neuroscience at Duke University. She is also a faculty affiliate of Duke’s Center for Child and Family Policy.