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It’s been one week since families started receiving the first advance payment of the child tax credit. That money will help families make ends meet and help parents care for their children.
That money will have a much bigger impact. There are more than 2 million children in Michigan, and the monthly credit will mean hundreds of millions of dollars pouring into the state’s economy.
When those families spend the money, the positive impacts will ripple through the economy and even help Michiganders without kids.
Cheikh Diop is the owner of African Nubian Hair Braiding on Detroit’s Avenue of Fashion. He said business is picking up with back-to-school right around the corner, and parents having extra cash from the child tax credit could mean big business for small businesses like his.
“The child tax credit is a good impact because right now, I got a lot of people bringing children to come in to get their hair braided,” Diop said.
Dr. Eric Scorsone, a professor of economics at Michigan State University, said when families spend the money, the gains ripple through and benefit businesses of all sizes.
“It’s certainly a benefit for businesses who can keep, you know, either keep hiring people or retaining people,” he said.
For people without children asking how this benefits them, Scorsone says a stronger, more stable economy will improve their prospects too.
“Some of them work probably for employers that were pretty hard hit during the pandemic. So if they can count on better demand for their products and services, then they’re going to hopefully be more stable,” he said.
Which businesses will see the biggest gains? Sandy Baruah, the president & CEO of the Detroit Regional Chamber, said businesses like grocery stores and retail will have huge gains.
“Any dollar that you give a working mom, she’s going to spend it on something for her kids,” he said. “Especially when you think about like back to school retail.”
Some of the money from Michigan families will leave the state when it’s spent at big retailers like Walmart, Target or Amazon.
But out-of-state money will flow into Michigan when the credit helps American families buy a new car, buy appliances or a vacation to taste Pure Michigan.
Scorsone says the implications for the state’s economy could go well beyond this year. Lower-income families can use monthly credit to stabilize their housing. That could mean no longer moving around and disrupting school.
“These kids do suffer when they have to move so much and they’re not only socially, but just educationally So I think there’s a real benefit,” he said.
For Diop, business is rebounding, and he hopes to credit will be extended – for families in the community and for businesses like his own.
Some families will save the tax credit to pay off debt or build up savings. That’s a real benefit too, since those families will be more resilient the next time the economy takes a downturn.
The expanded child tax credit was for this year only as part of the American Rescue Plan. Congress must act to make the expanded child tax credit permanent.
There are calls for that to happen in Washington but with the push for the Infrastructure Bill, the focus on Voting Rights and the 2022 campaign season picking up, Congress may not have room on their agenda
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