Where Do We Go From Here on Child Poverty?
Today’s release covered income-based poverty, which contrasts with consumption-based poverty. Plenty of reasons exist to be cautious of income-based poverty measures. Poverty is much lower when using a consumption rather than income-based measure (for a variety of reasons), raising questions about how much weight to place on today’s release. But for the most part, income-based measures are still useful when considering the financial resources that are available to American families.
The official income-based poverty rate for the United States declined in 2017, going from 12.7% of all individuals to 12.3%. With regards to America’s children, the 2017 official child poverty rate of 17.5% remains the lowest official rate for children in more than a decade. The supplemental poverty measure, which factors in all government benefits and uses a different threshold, showed that 15.6% of children were in poverty – which was largely unchanged from 2016 and remains among the smallest share of children in poverty ever using this measure.
For the most part, today’s release continues the progress of recent years, but it is difficult to feel overly optimistic. By historical standards, the 2017 poverty rates are exactly where they should be. Like the economy itself, poverty rates are cyclical, and the strong economy of 2016 and 2017 played a critical role in reducing poverty during those years. But as the rate of decline starts to slow, it reminds us that the economy can only do so much. For any substantial and permanent declines in child poverty to be realized, we need to refocus policy on children. This includes the need for reforms to ensure that more parents work and improve their own financial well-being.
Efforts to make substantial and permanent reductions to child poverty entail a two-pronged approach. The first is to make early childhood investments which will improve children’s chances of thriving as adults. Efforts to improve early learning, expand the child tax credit, enhance the earned income tax credit, and offer paid parental leave and more child care assistance are all policies that evidence suggests will improve child outcomes in the long term.
But this must be combined with an increase in the work effort of parents. With the unemployment rate at historic lows, some might wonder what more can be done. But too many parents remain out of the workforce entirely or work less than full-time, which greatly increases their children’s chances of growing up in poverty. In fact, two-thirds of children in poverty live with no working adults or adults who work less than full-time. Figuring out how to connect more parents to the labor market is the critical antipoverty policy challenge over the next several years.
While transferring income to poor families might seem like the obvious solution to raise children out of poverty, insisting on employment as the primary mechanism of attaining income for those who are capable is critical. Expanding safety-net programs in a way that makes work less necessary is unsustainable from a fiscal perspective, and flies in the face of long-held values at the very core of our society that place an emphasis on the dignity of work.
This means that work requirements in safety net programs such as Medicaid and SNAP have a role in fighting child poverty, as do reforms to disability programs that encourage work. To enable more work, government can provide child care assistance, paid parental leave, and better education and training. The Welfare Reform efforts of the mid-1990s showed that the combination of a strong economy, work requirements, and work supports can effectively increase labor force participation and reduce poverty. It’s time to see whether the same can be said for other safety net programs too.
The view that government assistance in these areas works against a free market (and family formation for that matter) is a valid concern and deserves serious consideration. So too are concerns that increases in government spending, even for children, are unaffordable. But reducing child poverty in America should be a priority, which requires compromise on both sides and perhaps a revision of government spending priorities that shifts more towards children. According to the Committee for a Responsible Federal Budget, the federal budget is on track to spend six times as much on the elderly as on children.
Today’s poverty rates remind us of the importance of a strong economy. But too many children are in poverty even when the economy is strong. Additional early investments in children, reforms to existing safety net programs that do more to encourage work among their parents, and a shift in spending priorities can make poverty less likely. And this will help ensure that more children benefit from the strong economy.
Angela Rachidi is a research fellow in poverty studies at the American Enterprise Institute.