Families paying off rent, food, debts with child tax credit


 Christina Darling finally replaced her 2006 Chevrolet Equinox after it broke down several times while picking her children up from daycare. But the 31-year-old mother of two was struggling to keep up with the car payments.

Brianne Walker desperately wanted to take her three children and two siblings camping for the first time but wasn’t sure how she could pay for it. After all, she was behind on her rent, and daycare and grocery costs were adding up.

Then, the two women from New Hampshire got a surprise in their bank accounts this month. They qualified for the expanded child tax credit, part of President Joe Biden’s $1.9 trillion coronavirus relief package. Families on average are getting $423 this month; the Treasury Department estimates that 35.2 million families received payments in July.

“The additional money does help alleviate the pressure,” said Walker, 29, who took custody of her two siblings last year after her mother overdosed. The $800 credit will help make up for losses she incurred after quitting a kitchen design job to care for the five youngsters, ages 3 to 19.

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Biden increased the amounts going to families and expanded it to include those whose income is so little they don’t owe taxes. The benefits begin to phase out at incomes of $75,000 for individuals, $112,500 for heads of household, and $150,000 for married couples. Families with incomes up to $200,000 for individuals and $400,000 for married couples can still receive the previous $2,000 credit.

In the past, eligible families got credit after filing their taxes — either as a lump-sum payment or a credit against taxes owed. But now six months of payments are being advanced monthly through the end of the year. A recipient receives the second half when they file their taxes. The credit is $3,600 annually for children under age 6 and $3,000 for children ages 6 to 17. Eligible families will receive $300 monthly for each child under 6 and $250 per older child.

Advocates argue the monthly payments make more sense for low-income families.

“One of the problems with the big check in a year, if your car broke six months before, that is a long time to wait,” said Michael Reinke, executive director of the Nashua Soup Kitchen & Shelter, which serves many families making less than $26,000 a year.

“When people have money over a consistent period of time, it’s easier to make sure it’s going to the expenses you really need,” he said. “Sometimes, if you get it all at once, it’s hard to budget.”

Robin McKinney, co-founder, and CEO of the CASH Campaign of Maryland, a Baltimore nonprofit organization that helps low-income residents file taxes, said the credit is providing people money in their pockets now when they need it most.

“We know right now that peoples’ hours are down or they’re still struggling to get back to the same level of income than they had before, and this will create some stability for those families to know that over the next six months that they’re going to be getting this payment,” McKinney said.

If all the money goes out, the expectation is that could significantly reduce poverty — with one study estimating it could cut child poverty by 45%. And it comes at a time when unemployment benefits are being phased out and the federal eviction moratorium is set to expire Saturday.

The payments are also a test case of sorts. Biden ultimately would like to make them permanent — and the impact they have could go a long way to shaping that debate later this year.

“It infuses money into the family home,” said Suzanne Torregano, director of Family Services at Kingsley House in New Orleans, who estimated that 85%-90% of the parents the group serves are getting the monthly payments.

Still, some advocates argue the money may never reach the neediest because their incomes are so low they aren’t required to file a tax return, they don’t have a fixed address or bank account, or don’t have the internet savvy to apply.

“What we are finding is that homeless families … while many of them are eligible for the tax credit, they have significant barriers to obtaining it,” said Larry Seamans, president of FamilyAid Boston, which serves 900 families daily.

“We have some counter-intuitive struggles of families who may be unfamiliar with tax forms, tax laws, and the fact that by filing a tax return, you can actually get money to support your family,” Seamans said.

“Many families ... are not on the tax rolls. They now have to find sufficient documentation to prove that they are eligible.”

Families who do receive the credit are mostly spending it on rent, child care, and groceries, as well as catching up on cellphone and other bills. For Darling, the $550 she gets will go to car payments, more fresh produce, and a babysitter so she can attend Nashua Board of Education meetings. She is running for a seat on the board. Eventually, she hopes to put money aside to save for a home with a yard.

“Every step closer we get to a livable wage is beneficial. That is money that gets turned around and spent on the betterment of my kids and myself,” said Darling, a housing resource coordinator who had been supplementing her $35,000-a-year salary with monthly visits to the Nashua Soup Kitchen and Shelter’s food pantry.

McKinney, who is married with a 5-year-old son and qualifies for the tax credit, is getting $167 a month. She said it’s all going to help pay for child care, which costs $288 a week.

“Right now, it’s out-of-school time because it’s the summer, so people have to pay for camps and babysitting support so that the parents can go to work,” said McKinney, of Columbia, Maryland. “I know a lot of people who are like: ‘This money is coming at just the right time because this summer is more expensive for me for child care.’”

Many families in higher-income brackets who receive less money are socking it away for things like a family trip, school supplies, or Christmas gifts.

Carleigh Steele, who received several hundred dollars, said the money is giving her peace of mind a month after she moved into a house in Baltimore with the help of Habitat for Humanity.

“It’s sitting in my bank account for all the home-buying things that I need, and for the rainy day fund for my house — just to make sure that I can keep myself economically stable,” said Steele, who has a 6-year-old daughter.

Brianne Epps, a mother of four from Jackson, Mississippi, is using the money to pay bills but also to finance her dream of opening a soul food catering business. “It will help me, for one, to promote my catering business — to get that off the ground,” she said.

Molly Vigeant, of East Hartford, Connecticut, a 25-year-old single mother who works as a special needs paraprofessional in a high school, hopes to spend the money to repair or replace her car. But she’s had trouble accessing a portal aimed at helping applicants and hasn’t yet received anything.

“It doesn’t hurt yet,” she said of the delayed payment. “But, it’s a 20-year-old car with over 200,000 miles on it and I make 20 grand a year. A new one is not going to fall from the sky when your debt-to-income ratio is garbage and you know you can’t finance a car.”

Visa Inc. is considering requiring employees to get Covid-19 vaccines ahead of asking them to return to offices in the fall.

The firm has reopened most of its offices around the world, but the vast majority of staff have continued to work from home, Chief Executive Officer Al Kelly said. Ahead of a broader return, the San Francisco-based payments network has asked workers to let the company know their vaccination status, he said.

“From the beginning of this pandemic, the safety of our employees has been our top objective,” Kelly said Friday in a Bloomberg Television interview.

Millions of Americans are unemployed, millions are quitting their jobs, and employers are struggling to find workers, as the labor market poses a mismatch between an open positions and what workers want. New data suggests it's worse than a mismatch: the jobs on offer just aren't good enough. 

survey of 1,800 workers by remote and flexible jobs site FlexJobs found that workers are still dissatisfied, even amidst what should be a hot job market as openings skyrocket — alongside workers leaving roles en masse. But of those workers surveyed, 48% said they're "frustrated with their job search" — because they're not finding the right positions.

And 41% said there "aren't enough openings in their preferred professions." It could be due to a proliferation of low-wage jobs since 46% said they were only findings opening for low-wage roles.

Mismatches are a major driver of the labor shortage

It's another data point that speaks to the prevalence of mismatches in the current economy. The right-leaning Chamber of Commerce has said that labor shortages are being fueled, in part, by a mismatch between open roles and workers' skills. At the same time, job openings have been high in traditionally low-paying industries like leisure and hospitality, where workers have been quitting en masse and demanding higher wages

The disjointedness between what unemployed workers are looking for and what's available could also potentially put some pressure on wages. While 85% of the workers surveyed by FlexJobs said they'd take a pay cut if it meant getting a job, only 12% of those workers would take a "serious pay cut" — which is defined as over 20%. 

Unemployed workers who were set to lose their enhanced benefits early previously told Insider that the low wages of the open positions wouldn't be enough for them to survive on. If those wages rose enough to meet the pay cut professional workers are willing to take, it could potentially help with staffing.

In the meantime, the imminent end of enhanced unemployment benefits in September could only exacerbate the mismatch issues.

"Unfortunately, this may create an even more difficult situation for unemployed professionals," Brie Reynolds, career development manager, and coach at FlexJobs and Remote.co wrote in an email to Insider. "As our survey found, the vast majority of unemployed people are actively and consistently searching for a new job, but they're trying to navigate an unprecedented labor market with a lot of uncertainty."

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