In 2008, economist Harry Holzer estimated that child poverty was costing the United States more than $500 billion annually, because of increased health-care costs and criminal-justice expenditures, along with lost economic productivity when children in poverty reach adulthood. No one disputed the findings, but there was no groundswell of support for a legislative response, either.
In 2015, policy analyst Rachel West put the annual cost at $672 billion. Despite clear policy options by that point to better address the problem, there was once again no significant increase in legislative activity around child poverty.
Now, a two-year study by the nonpartisan National Academies of Science, Engineering, and Medicine (NAS) finds the annual cost of child poverty is $800 billion to $1.1 trillion, or 4 to 5.4 percent of the US gross domestic product. Equally important, the authors demonstrate that income poverty causes great harm to children and adults, particularly when it “occurs in early childhood or persists throughout a large portion of childhood.” That harm includes changes in brain structure, lower educational attainment, reduced adult earnings, and greater need for public assistance.
Congress instructed NAS to find a way to reduce child poverty by half over 10 years, and the policy options outlined in this report do just that. But do people care enough to respond?
If presidential candidates are looking for big ideas to take on economic inequality, they would be hard-pressed to find a more useful goal than cutting child poverty in half. A recently launched advocacy campaign is already laying the groundwork for action around the NAS proposal as well.
Through sophisticated modeling, the NAS authors considered the impacts of an assortment of 20 policy and program options, examining them individually and in combination with one another. The baseline assumption of the report is that more than 9.6 million children were living in poverty in 2015 (the latest year they could use to generate accurate estimates), which is equal to 13 percent of the nation’s children. More than 2 million children were living in “deep poverty,” defined as living below half of the poverty line. The authors used the Supplemental Poverty Measure (SPM), which takes into account the benefits some families receive such as tax credits and food stamps, and costs such as childcare and regional differences in housing. Under the SPM, the poverty line for a two-parent, two-child family in 2015 was about $26,000 in annual income.
The United States ranks 32nd of 38 industrialized nations on child poverty, according to the OECD. Climbing up the list shouldn’t be hard: The report notes the United Kingdom set its sights on cutting child poverty in half and did it in seven years between 2000 and 2008; Canada is on track to do it even more quickly since creating its child benefit in 2016. In the United States, child poverty was cut nearly in half between 1970 and 2016 through some of the very same policies that the report now recommends strengthening.
The authors discovered two “packages” of policies and programs that would meet the goal of cutting child poverty and deep poverty in half over 10 years—one they call the “means-tested supports and work package,” the other the “universal supports and work package.” The annual tab comes to about $91 billion and $109 billion, respectively—a wise investment when one considers that the status quo costs $1 trillion annually, or that trillions in revenues could be restored by reversing the Trump tax cuts.
Both packages combine policies that boost employment and reduce poverty. The “means-tested supports and work package” expands both the Earned Income Tax Credit (EITC) and the Child Dependent Care Tax Credit (CDCTC) along with the Supplemental Nutrition Assistance Program (SNAP) and housing voucher programs. At a cost of $90.7 billion per year, it would also add 400,000 people to the workforce and generate $2.2 billion in additional earnings.
The “universal supports and work package” adds a monthly child allowance, which most industrialized nations have, of $225 per month to families of all children under age 17, and a new child-support assurance program of $100 per child per month if a parent isn’t paying child support. The package also expands the EITC and CDCTC, concentrating benefits of the latter on the lowest incomes with the youngest children, while increasing the minimum wage to $10.75 and indexing it to inflation. (This wage level was chosen because there is more research around its effects than for example, a $15 an hour wage.) The package also restores benefit eligibility to documented immigrants who were barred from SNAP, Medicaid, SSI, and other means-tested federal programs under the Clinton-Gingrich welfare bill in 1996. At $108.8 billion per year, this package would add 600,000 jobs to the economy and increase earnings by $13.4 billion.
The authors also found that “work requirements”—the kind currently being pushed by conservatives for Medicaid and SNAP—“are at least as likely to increase as to decrease poverty.” Moreover, the marriage-promotion efforts that design programs to encourage two-parent families—such as those implemented during the George W. Bush administration—“failed to boost marriage rates [or] achieve most of their other longer-run goals” such as strengthening child well-being.
The report unfortunately does not examine how the recommended policy reforms would impact American Indian and Alaska Native children, whose poverty rates are very high, or children in Puerto Rico and other territories. The authors were not able to include them because of the limited sample size of current data, which they say needs to be expanded and better collected with improved coordination between agencies.
“It’s worrisome, since the child poverty rate in Puerto Rico is about twice the rate of any state in the US,” noted Cara Baldari, vice president of family economics, housing, and homelessness at First Focus, a bipartisan children’s-advocacy organization. “And that’s in part because they have limited access to our public-assistance programs—they’re capped, or they’re not eligible at all.”
But Baldari praised the report for showing a clear and cost-effective path for cutting poverty in half and improving child and adult outcomes for millions of Americans. First Focus, along with more than 20 other similar groups, have now launched a campaign to establish a target to cut child poverty in half within a decade and to eliminate it within 20 years. The coalition is currently focused on creating resources for individuals advocating on behalf of children on their own time, and also for state and local organizations that are working on the ground in almost every state.
In Congress, the Child Poverty Reduction Act also aims to meet the child-poverty-reduction target called for in the report, and the legislation will likely be unveiled within the next few months. The bill will also highlight the report’s findings and make recommendations on how to measure progress at the local, state, and federal levels. Also this week, Senators Michael Bennet (D-CO) and Sherrod Brown (D-OH) and Representative Rosa DeLauro (D-CT) are expected to introduce their bills to establish an even more generous benefit for parents than the child allowance called for in the report.
And as the 2020 presidential candidates pursue big ideas—to make college affordable or free for everyone, establish universal childcare, or create a single-payer health-care system—why not adopt this course laid out by some of the best (and bipartisan) antipoverty researchers in the nation? Senator Cory Booker (D-NJ) is one logical possibility, given his “baby bonds” proposal that would help low-income children build wealth for adulthood, and his emphasis on “civic grace” and “courageous empathy.” What could be a clearer sign of grace and empathy than bringing attention to the struggles of children in poverty and leading a nation to respond?
You can check out the impact the proposed policy packages would have on your state here.