The degree of childhood poverty in America is unacceptable— but positive change is apparently coming.
Here’s a prediction — the most powerful, most important, most durable outcome of the COVID-19 Stimulus bill will have nothing to do with COVID-mitigation or small business recovery or shoring up state budgets that were impacted by the economic downturn. The most enduring impact will be the largest and most significant reduction in child poverty in over 3 generations.
I’ve been waiting to write something like this for a long, long time. For nearly 15 nears, I’ve spent about 3 weeks in one of my courses focused on the role of poverty in American families. There’s a lot there — and I barely scratch the surface. As every social scientist will tell you, a family’s socio-economic status (essentially income + education level), is the single most powerful environmental variable in determining a child’s developmental outcomes, whether that’s academic performance, mental health, physical health, and even their own eventual socio-economic trajectory. We like to think of America as a meritocracy; unfortunately, the data has long shown that the economic level you are born into predicts the one you’ll stay in —especially if you are born into poverty. And perhaps most shameful is the fact that the child poverty rate in the United States is higher than in any other large, wealthy, industrialized country according to OECD statistics. Approximately 14 percent of U.S. children live in poverty, numbering over 11 million.
The crisis is even worse in my home state of California where 20% of children are raised in families at or below the poverty line.
We have to go back to the 1960s and the Lyndon Johnson led “War on Poverty” to find the last major, systematic attempt to reduce childhood poverty. There have been incremental efforts here and there, but nothing like what we are about to see in the coming years. And the results of previous inaction has been a stubbornly persistent rate of childhood poverty, changing no more than 2 to 4 percent over decades.
But that may finally change. The American Rescue plan component of the COVID-19 stimulus bill (signed into law today) would significantly expand the Child Tax Credit to $3600/year for children 5 years and under and $3000/year for those 6 and older. It also would make the credit fully refundable so that very low and no-income families would still get the full benefit in cash — rather than the more limited benefit that currently exists that tends to favor low income families who still have some tax liability. I’ve been lecturing about expanding the EITC (Earned Income Tax Credit) which works in a similar way, for over a decade, and it’s one of the cornerstone recommendations of the American Academy of Sciences A Roadmap to Reduce Child Poverty report (https://www.nap.edu/read/25246/chapter/1). And frankly, because I didn’t think it would ever be expanded to any significant degree because of the cost (approximately $120 to $130 billion a year), what I was mostly arguing for was better communication and awareness about the EITC and an easier application process because up to 25% of families that should have been getting it, weren’t. But now, I’m seeing something so much bigger and so much better, that I can hardly believe it.
Here are the astonishing numbers: The increase in size and availability of the tax credit — by itself — will cut childhood poverty by 50%. The knock-on effects of that — on child health, family functioning, academic achievement, and future employment prospects, will mark the most important quality of life improvement and driver of upward mobility in our lifetimes.
While nothing can make up for the over 500,000 lives lost to this pandemic, if these new efforts at reducing childhood poverty go fully into effect and are supported in future budgets, it will mark at least one tremendously beneficial outcome of this tragic past year.
* Child poverty rates are calculated by determining the number of children living in a family with an annual income below the Federal Poverty Line of $26,200 for a family of 4, $21,720 for a family of 3, or $17,240 for a family of 2. Definition courtesy of the U.S. Census Bureau.
*In 2018, Israel and Chile both had higher child poverty rates than the U.S. in OECD reports, and UNICEF data indicated Romania did as well, which is why I added the qualifier “large”. But by any measure, large or small, the U.S. ranks in the top 5 based on any transnational comparisons that are routinely collected.
*The greater aid to children 5 and under is based on the fact that children in this age group have the highest rates of poverty, according to the U.S. Census Bureau’s 2020 Current Population Survey, Annual Social and Economic Supplement.
*The cost of $120 to $130 billion a year is not an insignificant amount of money. However, even conservative estimates peg a return-on-investment of these initiatives at 4 times the investment (easily exceeding $500 billion) according to the American Academy of Sciences report A Roadmap to Reduce Child Poverty report (https://www.nap.edu/read/25246/chapter/1)
*Arguments that giving more direct cash aid to poor families won’t necessarily result in spending that improve children’s lives(which echoes old classist argument that have always been specious) have no empirical basis. In fact, recent studies evaluating trials of guaranteed basic income for the poor revealed that they spend their extra money in the same way middle-class parents do, on essentials and on their children ( https://www.theatlantic.com/ideas/archive/2021/03/stocktons-basic-income-experiment-pays-off/618174/)