The U.S. Cannot Afford to Ignore Child Poverty

The U.S. has a child poverty problem. One in five children live in poverty (U.S. Census Bureau, 2018), translating to 12.8 million children or a third of all impoverished people in the U.S. Each year, 2.5 million children are homeless (National Center on Family Homelessness), and nearly 40% of children spend at least one year in poverty before they turn 18 (Urban Institute). Perhaps not surprisingly, the U.S. child poverty rate is consistently among the highest in developed countries (Academic Pediatrics Journal).

Despite--and likely contributing to--these staggering numbers, we spend increasingly less of the federal budget on anti-poverty programs than we did decades ago. In fact, the U.S. consistently spends three times less per capita than other developed countries on children’s health and wellbeing (OECD). This stagnation can partially be explained by ideological ambivalence among American politicians and citizens about whether the government should invest precious financial resources to substantially reduce poverty.

This lack of political will has been perpetuated by the tendency for conversations about poverty to be grounded in political ideology, rather than in scientific analysis. Child poverty advocates call for government intervention on the basis of moral imperatives, arguing that all children have a right to sufficient food, safe housing, and healthcare. The rebuttal relies on the long-running narrative that government funded anti-poverty measures, such as nutrition or housing assistance, are diametrically opposed to the core American belief that government power should be limited and that people can “pull themselves up by their bootstraps”.

Apart from the ideological morass that has limited efforts to invest in poverty reduction strategies, there is a pragmatic rationale to aggressively invest in reducing childhood poverty: the U.S. simply cannot afford not to. The impact of child poverty on children’s development diminishes their potential to contribute to their communities, and ultimately results in massive losses in human capital: Impoverished children are significantly more likely to develop behavioral, mental and physical health issues that exact exorbitant costs to society through outcomes such as unemployment, criminal justice involvement, and chronic disease. This white paper outlines evidence from empirical research that documents the effects of childhood poverty on individuals, communities, and, ultimately, on the economic health of our nation. It is in the best interest of everyone—rich or poor—for the government to take a more active role in combatting child poverty.

Effects on Individuals

In the last two decades, there has been an explosion of research on the impact of poverty on children. We now know that children living in poverty, on average, fare worse than their peers in virtually every category by which we measure success and wellbeing. They are more likely to develop mental health problems, such as depression and anxiety (National Health Interview Survey), and to have academic problems, including lower reading and math scores (Achievement) and higher rates of high school drop-out (HS Drop-out). Children living in poverty are much more likely to end up in the juvenile and criminal justice system (Children's Defense Fund). Children living in poverty have worse physical health than their more affluent peers, suffering from treatable conditions such as asthma (CDC Child Asthma Rates), obesity (CDC Childhood Obesity Rates), and other chronic diseases at much higher rates. Children living in poverty also have an unintentional injury-related death rate that is 5 times higher than children in higher income brackets (Ballesteros et al., 2018). These problems are exacerbated by the fact that children living in poverty have far less access to quality healthcare than their peers (Poverty and Child Health in the United States).

Emerging research in neuroscience and epigenetics points to a reason for the lasting impacts of child poverty on these and other negative outcomes--the effects of poverty on the developing child’s brain and body. Children living in poverty have decreased volume and surface area of brain structures that support cognitive functions such as attention, problem solving, and school readiness (Neural Development). Children living in poverty are also more likely to have impairments in nervous and endocrine systems involved in regulating stress and emotions (Shonkoff et al., 2012), and experience heightened inflammation that is predictive of chronic diseases (Miller et al., 2011).

Taken together, the evidence for the toxic effects of poverty on multiple aspects of child development is overwhelming. Poverty becomes embedded in children’s biology and stays with them for a lifetime. Notably, individuals who grew up poor are more likely to have physical (Wise, 2016) and mental (Evans, 2016) health problems in adolescence and adulthood even if they are no longer poor.

Effects on Communities

Child poverty damages the basic capacities that serve as the foundation for success and wellbeing throughout the lifespan. Individuals depend on these skills to make and maintain relationships, succeed in school, and participate in the workforce, for example. As a result of these long-lasting effects, not only are individuals are cheated of their potential, but communities are drained of valuable human capital.

For example, research suggests that individuals who had mental health problems in childhood earn less money in adulthood than their peers (Kawakami et al., 2012). Consistent with this, children from impoverished households earn less as adults than their peers: in one study that followed individuals across the first 30 years of life, those who grew up poor made around $30k per year, compared with the $52k per year of their more economically privileged peers (PSID). Similarly, children with mental health problems are more likely to enter the juvenile justice system (Assink et al., 2015), and children who grow up in poverty are more likely to be arrested as adults (Panel Study of Income Dynamics). Criminal justice system involvement is costly for communities, both in the direct costs of incarceration and indirect costs such as decreased workforce participation (National Institute of Corrections, 2016).

These problems are compounded by the dearth of opportunity available to children who grow up in poor families. Schools in high poverty neighborhoods receive less funding, decreasing the quality of education and the resources at their disposal (Rank, Hirschl & Foster, 2014). As a result, children living in poverty attend schools with fewer qualified teachers and a shortage of books, computers and other learning materials. Furthermore, children living in poverty are more likely to attend unsafe schools and are more likely to be victims of violent crime (DOJ Poverty and Crime) than other children.

In sum, child poverty interrupts the normal development of children’s brains, bodies, and potential, limits the opportunities available to them and, in turn, diminishes their abilities to contribute to their communities.

Effects on Society

The effects of child poverty on society are, by far, the most straightforward; the most recent cost-measurement analysis concluded that child poverty costs the U.S. over 1 trillion dollars per year, or 5.4% of the GDP (McLaughlin & Rank, 2018). Put another way, the annual cost of child poverty equals 25% of annual U.S. federal spending (Congressional Budget Office, 2018). This recent estimate results directly from the negative effects of poverty on individuals and communities detailed above: Nearly 50% of these costs comes from increased health costs and decreased earnings, while over 30% results from increased crime and incarceration.

McLaughlin and Rank estimate that an investment of only $70 billion would save the U.S. $515 billion in the costs associated with child poverty. That is, for every dollar directed towards combatting child poverty, the U.S. gains seven dollars in return.

Put simply: “It is not a question of paying or not paying. Rather, it is a question of how we want to pay, which then affects the amount we end up spending.” (McLaughlin & Rank, 2018, p. 79).

The bottom line is that the U.S. cannot afford to ignore childhood poverty and still remain economically competitive globally. Therefore, based on this research, we offer the following recommendations for the state and federal governments to simultaneously achieve mitigation of the effects of childhood poverty and meaningful decreases in childhood poverty and, as a result, maximum economic returns.

Policy Recommendations

There is no one cure-all to reduce child poverty – instead, a combination of policies and programs is needed. Below are policy recommendations taken from prominent organizations dedicated to the wellbeing of children and the overall health of American society (see the reports: Brookings Institution/American Enterprise Institute, American Academy of Pediatrics, The National Academies of Sciences, Engineering, and Medicine).Three categories of recommendations are highlighted: those that 1) seek to ameliorate the health consequences of childhood poverty; 2) increase caregivers’ capacities to earn their own income; and 3) supplement the income of the poor families. Each recommendation has been rigorously vetted by empirical research.

1. Address the physical and mental health consequences of poverty

  1. Make a national commitment to fully fund home visiting programs for all children living in low-income or poor households. The Maternal and Child Health Bureau has identified 18 programs, including but not limited to Nurse-Family Partnership, Early Head Start, Healthy Families America, and Parents as Teachers, that target families with pregnant women or children younger than 5 years.

  2. Provide support and training for state Medicaid offices and Health and Human Services departments to optimize use of Family First Prevention Services Act (FFPSA) funds to prevent and treat childhood trauma. FFPSA funds can be used to deliver trauma prevention services in the home and in children’s primary care offices, and therefore offers a unique opportunity to reach children living in poverty who are disproportionately exposed to trauma and its consequences.

2. Remove barriers that prevent caregivers from working or from earning a living wage

  1. Raise the federal minimum wage to $15 an hour. Families with two children and two parents working full-time at minimum wage jobs still fall below the federal poverty level. According to even the most cautious estimates, this increase would lift 1.3 million people—nearly half of whom are children—out of poverty.

  2. Provide free childcare to children ages 0-5 in families making less than 200% of the federal poverty level. Depending on state, current childcare costs equal between 10-28% of the median household income. For families in which parents work minimum-wage jobs, childcare costs between 34 and 99% of total household income. In short, childcare is simply not affordable to the average U.S. family. Estimates show that subsidized childcare low-income families would increase the number of parents in the workforce and lift hundreds of thousands of children out of poverty.

3. Supplement the income of families living in poverty

  1. Convert the Child and Dependent Care Tax Credit (CDCTC) to a fully refundable tax credit with a focus on low-income families with young children (<5 yrs.)

  2. Increase the Earned Income Tax Credit (EITC). A $3,000 annual child allowance would have the single largest impact on child poverty rates, and would decrease deep child poverty in half within a decade

  3. Expand access to the Supplemental Nutrition Assistance Program (SNAP). SNAP is the single most effective program for reducing deep child poverty; without it, the NASEM study estimates that the deep poverty rate would double.

National Benefits of Federal Investment in Childhood Poverty Reduction

The U.S. has a serious child poverty problem. Fortunately, it is a problem not without hope of solution. On the contrary, with the right investment, children who grow up in poverty demonstrate extraordinary resilience. Investments in children’s wellbeing, regardless of their socio-economic status, measurably benefit individuals, communities, and society as a whole. Moreover, targeting programs and policies to disadvantaged children and their families have potential to exert even more profound effects by helping them to lift themselves out of the cycle of poverty, thereby more than replenishing the coffers that pay for them. Financial investment, in particular, in children living in poverty is an approach that will lead to significant improvements in children’s wellbeing and in turn, reduce costs to our mental health, criminal justice, welfare, educational systems that are currently strained by the weight of the problems these children suffer for a lifetime.

The infrastructure already exists to carry out most of the recommendations in this white paper. The programs described above have kept the child poverty rates far lower than they would be otherwise, but are seriously underfunded and often offered to only a fraction of families living in poverty. Expanding such programs would significantly reduce childhood poverty and, together, would save the U.S. billions of dollars.

Alex Busuito ( is a doctoral student in the Child Clinical Psychology program at The Pennsylvania State University and a member of the National Prevention Science Coalition to Improve Lives ( Alex is a Doris Duke Fellow committed to using developmental research to inform public policy that fosters resilience in the nation’s most at-risk children.

Child Poverty White Paper 9.24.19
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