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.