Let۪s Invest in Our Future: Policy Options to Reduce Child Poverty in America
The United States remains a strong and prosperous nation even after the deepest recession in seventy years. Nevertheless, while our per capita GDP remains one of the highest in the world, economic inequality is greater in the United States than in most other wealthy countries. Fifty years after President Lyndon Johnson declared an “unconditional war on poverty in America,” it۪s clear that much more work still needs to be done. While the challenges are multifaceted, reducing child poverty is a useful starting place as we look for ways to not only help the most vulnerable but also address the larger issue of inequality and promote economic mobility and prosperity.
It is important to first understand the connection between inequality and economic growth. Low-income individuals suffer from the material hardship that accompanies very-low-wage work, and society can suffer more widely if inequality is high enough to impede economic growthespecially given that a significant portion of economic activity is based on the consumption of goods and services by a vibrant middle class. Inequality can also stifle economic mobility if low-income individuals do not have the resources to invest in their and their children۪s education and skills. This is why inequality coupled with the rising cost of college has been so troubling to many Americans. Indeed, there is less economic mobility in the United States than in a number of its peer countries.
Addressing child poverty therefore provides a clear opportunity for simultaneously reducing inequality while promoting economic growth. Despite our nation۪s deep political divisions, low-income children are typically viewed as being deserving of society۪s support because they are poor due to circumstances clearly beyond their own control. Policy has generally been more effective at reducing poverty among the elderly than among children in the United States, but many people agree that more can be done to reduce child poverty and invest in our future workforce.
What can policy do to reduce poverty and inequality? Most Americans believe that policy should be based on mutual obligations: one where the state provides services to those in need and the other where recipients strive to achieve independence through work. Americans also tend to agree that policies should not unduly hinder economic growth. Such growth determines our standards of living and material well-being over the long run.
In particular, there are several policy options that could serve to reduce child poverty that are still broadly consistent with goals of reducing hardship while not increasing dependency or stifling economic growthand which would therefore appeal to a majority of Americans.
The first policy strategy is to strengthen child care programs in order to provide more support for working parents and also address some of the intergenerational effects of poverty. The United States is one of the very few countries in the world that does not provide paid time off for new parents. In the United Kingdom, for example, all female employees are entitled to 52 weeks of maternity leave, 39 weeks of which is paid, with the first six weeks paid at 90 percent of full pay and the remainder at a fixed rate. Such leave allows parents to stay connected to the labor market while still providing needed care for their infants.
Along these lines, a second strategy is to provide universal preschool for children ages three and four. This will support parental work and invest in young children۪s education. Some of the cognitive inequalities between children of low- and high-income households are present even by the time children reach kindergarten. High quality child care has the potential to reduce these gaps.
A third possible approach to reducing child poverty is to provide a universal child allowance. Such a program exists in 70 nations. Currently, the U.S. tax code allows many families to receive a similar, modest kind of allowance in the form of a child tax credit of $1,000 per child. However, many low-income families are ineligible for the credit. Making all low-income families eligible for this credit and boosting its size would reduce material deprivation among children.
Finally, one innovative program that was adopted by New York City to reduce child poverty was $ave NYCthe program is now known as SaveUSA and other cities, such as Tulsa and San Antonio, have adopted similar initiatives. This program offered a matched savings account to low-income tax filers. Program participants receive a 50 percent match if they deposit a portion of their tax refund from the Earned Income Tax Credit into an account and maintain the initial deposit for one year. By encouraging individuals to save, it can create a path toward longer-term savings and greater financial stability.
These programs won۪t solve the entirety of our poverty problem, as the causes of poverty are complex and varied. However, their considerable benefits are twofold: they would reduce hardship among some of our most vulnerable citizens and provide an important investment in their and our country۪s future.
John Iceland is Head of the Department of Sociology and Criminology at Pennsylvania State University and is the author of Poverty in America: A Handbook, now in its 3rd edition.
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