Joe Manchin Worried Child Tax Credit Would Lead to Smaller Workforce, but Job Numbers Rose

After Congress failed to extend the child tax credit payments, millions of families will not see the money hit their wallets this month.

The monthly payments, which provided an estimate of 30 million families' monthly payments since the extension in July 2021, were part of President Joe Biden's COVID-19 relief bill.

The previous expansion removed the previous work requirements, raised the maximum credit amount from $2,000 to $3,600 per child under 6 and $3,000 per child between 6 to 17. The changes also allowed eligible individuals to receive half the payments through monthly payments.

The extension was part of Biden's Build Back Better Act, but Democratic Senator Joe Manchin from West Virginia expressed concern that the extension would discourage people from working.

"My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face," Manchin said to the Associated Press, and that he was concerned with the growing size of the national debt.

However, these tax credits did not cause parents and guardians to leave the workforce. According to a Bureau of Labor Statistics report, the percentage of people with jobs increased 1.5 percent from 58 percent to 59.5 percent.

Additionally, in a study by Humanity Forward by Washington University in St. Louis Social Policy Institute, nearly 94 percent of parents planned to continue working while receiving the credit.

The same study found that the top five uses for the child tax credit would go to emergency savings, housing, housing, food and bills, essentials for their children, and contributing to or starting a college fund.

Chelsea Woody is a single mother from Charleston from West Virginia, spoke to the AP and said the extended child tax credit helped her pay for her son's daycare and extra clothes for him.

"It truly helps out a lot. It's an extra cushion, instead of me worrying how I'm going to pay a bill or if anything comes up," Woody said.

Child Tax Credit Joe Manchin
Senator Joe Manchin expressed concerns over extending the Child Tax Credit saying it would lead to parent exiting the work force. Above, Manchin speaks to reporters after a meeting with President Joe Biden and Senate Democrats in the Russell Senate Office Building on Capitol Hill on January 13, in Washington, D.C. Drew Angerer/Getty Images

Katherine Michelmore, an associate professor of public policy at the University of Michigan, who spoke to the AP said her research found roughly 350,000 parents would exit the workforce. Still, the long-term effects of the tax credit would positively affect the economy.

"It might be 50 years down the road, but there will be more cost savings in the future," Michelmore said.

In October, the Becker Friedman Institute for Economics at the University of Chicago published a paper predicting the work requirement change from July "would lead 1.5 million workers (constituting 2.6 percent of all working parents) to exit the labor force," which would lead to a 22 percent reduction of child poverty.

Without accounting for a behavioral response change, the institute predicted the CTC expansion would reduce child poverty by 34 percent and deep child poverty by 39 percent.

For Democrats to pass this bill, they use a budget reconciliation process, but they need all 50 Democratic senators to support it.