Feb. 28, 2019

Child Poverty Rate Could Be Cut in Half in Next Decade Following Proposals in New Expert Report

WASHINGTON – In light of the many costs generated by child poverty for the United States, a new report from the National Academies of Sciences, Engineering, and Medicine provides evidence-based policy and program packages that could cut the child poverty rate by as much as 50 percent while at the same time increasing employment and earnings among adults living in low-income families.

“Capable and healthy adults are the foundation of any well-functioning society, but because millions of American children are in families living below the poverty line, this future is not as secure as it could be,” said Greg Duncan, chair of the committee that wrote the report and distinguished professor of education at the University of California, Irvine. “Evidence suggests a lack of economic resources compromises children’s ability to grow and achieve in adulthood, hurting them and the broader society.”

Child poverty costs for the U.S. range between $800 billion and $1.1 trillion annually, based on the estimated value of reduced adult productivity, increased costs of crime, and health expenditures associated with children growing up in poor families. The committee found that more than 9.6 million children lived in families with annual incomes below the poverty line in 2015, based on the Supplemental Poverty Measure (SPM). The 2015 poverty line for two-parent, two-child families was about $26,000 for renters and homeowners with a mortgage. That same year, roughly 2.1 million children lived in “deep poverty,” defined as having family resources below half of the poverty line. The highest rates of poverty and deep poverty were found among Hispanic, African American, and American Indian/Alaska Native families.

Poor children develop weaker language, memory, and self-regulation skills than their peers. When they grow up, they have lower earnings and income, are more dependent on public assistance, have more health problems, and are more likely to commit crimes. Robust research evidence has shown that low income itself, rather than other conditions poor children face, is responsible for much of these negative impacts on children’s development.  Given the evidence that poverty harms children’s well-being, policies designed to reduce poverty by rewarding work or providing safety-net benefits might be expected to have the opposite effect. The report confirms this supposition, finding that many programs that alleviate poverty – either directly by providing income transfers, or indirectly by providing food or medical care – have been shown to improve child well-being.

Both the U.S. historical record and the experiences of peer countries demonstrate that reducing child poverty is an achievable policy goal. Child poverty fell in the United States by nearly half between 1970 and 2016, and rates of deep poverty declined as well over that period, both overall and across subgroups of children defined by race and ethnicity. This was in part due to government tax and transfer programs and increases in government benefits, such as the Earned Income Tax Credit (EITC). In 1999, the United Kingdom enacted measures that made it possible to meet a 50 percent poverty reduction goal by 2008 – a year earlier than anticipated. More recently, the Canadian government introduced the Canada Child Benefit in its 2016 budget. According to government projections, this will reduce the number of Canadian children living in poverty by nearly half by just one full year of implementation.

To generate estimates of poverty reduction from a range of program and policy changes, the committee commissioned research from the Urban Institute’s Transfer Income Model, version 3 (TRIM3), a microsimulation model that applies the rules of benefit and tax programs to each of the households in a survey data file, one by one. The model can simulate the outcomes of either the actual rules of programs (“baseline” simulations) or potential alternative policies, showing whether a particular policy lifts a family’s income above the poverty line and whether family members work more or less under an alternative policy than under baseline circumstances.

To explore whether program and policy changes could reach the goal of reducing child poverty and deep poverty in the United States by half within 10 years, the committee developed four policy packages. Simulations by TRIM3 showed that two – a "means-tested supports and work package" and a "universal supports and work package" – could meet the 50 percent poverty reduction goal.

At a lower cost of about $44 billion per year, a promising third program package combined expansions in the EITC and CDCTC with a child allowance, and was estimated to reduce child poverty by a third, rather than a half. It too increased employment and earnings substantially.

Any policies aimed at reducing child poverty would be implemented in complex societal and individual contexts, and these contexts can influence the policies’ success. The report identifies six major contextual factors that policymakers and program administrators should consider when designing and implementing anti-poverty programs – stability and predictability of income, equitable and ready access to programs, equitable treatment across racial and ethnic groups, equitable treatment by the criminal justice system, positive neighborhood conditions, and health and well-being.

Assuming that Congress, federal and state agencies, and the public agree that further reduction of child poverty is a priority goal for U.S. policy, the report recommends that a coordinating mechanism be put in place to ensure that well-considered decisions are made on new anti-poverty programs and policies. This mechanism would also ensure that the associated research and data needed for monitoring, evaluating, and further improvement are supported as well. The report recommends that the White House Office of Management and Budget coordinate an assessment of the report’s conclusions and put together an implementation plan.

The study — undertaken by the Committee on Building an Agenda to Reduce the Number of Children in Poverty by Half in 10 Years — was sponsored by the Doris Duke Charitable Foundation, Foundation for Child Development, Joyce Foundation, Russell Sage Foundation, W.K. Kellogg Foundation, William T. Grant Foundation, and the U.S. Department of Health and Human Services. The National Academies are private, nonprofit institutions that provide independent, objective analysis and advice to the nation to solve complex problems and inform public policy decisions related to science, technology, and medicine. They operate under an 1863 congressional charter to the National Academy of Sciences, signed by President Lincoln. For more information, visit nationalacademies.org.

Kacey Templin, Media Relations Officer

Office of News and Public Information
202-334-2138; e-mail news@nas.edu

Follow us:

Twitter @theNASEM
Instagram @thenasem
Facebook @NationalAcademies


Appendix E: TRIM3 Summary Tables

A Roadmap to Reducing Child Poverty: Data Explorer