Reducing Persistent Child Poverty

Economic Policy Brief #124 | By: Rosalind Gottfried | September 21, 2021

Header photo taken from: Population Review

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Photo taken from: Children’s Defense Fund

Policy Summary

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Child poverty persists in the US at a much greater rate than in other comparable countries.  Among the countries in The Organization for Economic Co-operation and Development (OECD), the US is on a par with Mexico, Chile, Turkey, and Spain on the low end of expenditures to combat child poerty.  In contrast, Finland, Denmark, Poland and Spain evidence the highest spending.  In spite of having the highest GDP of any country, and one of the highest per capita incomes, the US spends 1% of its GDP on family benefits in contrast to the 3.5% spent by France.  As a result, 14.4% of the country’s children live in poverty.  This translates into 1 in 4 Black children; 1 in 5 Hispanic children; and one in 12 non-Hispanic white children. 

The causes of this persistent poverty are found in the lack of an adequate safety net, low wages with a federal minimum wage stagnant for decades, and the high cost of childcare.  Low-income families spend 35% of monthly income on childcare as opposed to 7% spent in affluent families.  Housing costs also play a factor with only 1 in 10 households receiving housing vouchers for which they qualify.  Racist ideas regarding helping the poor also contribute to the relative stinginess of American poverty programs.  Recent reductions in the IRS funding, extending a twenty-year trend, are calculated to cost one trillion dollars in avoided taxes.

Inequality and the insufficiency of the safety net have been illuminated in the disparities emerging in the pandemic rate of survival, employment, and health. Poverty has been shone to negatively impact the essential growth of the first three years of life with respect to brain development and other mental and psychological developments.  These impact long term educational achievement, health, mental health, and income.  Yet, it has been shown that spending ofonearly childhood education and heakthresults in a 13% return.

Policy Analysis

There is no great mystery regarding the evidence-based mechanisms to address poverty and Biden and Harris have taken steps to implement these.  Biden has enacted a mandate, starting in July, to provide monthly payments for tax credits to parents, rather than waiting for tax refunds after filing for the previous year. These are paid out at $300 monthly per child under 6 to individuals earning $75,000 and couples earning up to $150,000.  This will amount to $1800 by the end of the year and will be matched by another $1800 at tax filing.  This program helps 88% of families with children.  Parents of older children, age 6 to 17, will get $250 per month.  Biden has proposed extending this payment structure through 2025 while Nancy Pelosi has proposed making it permanent.

The Republicans also have promoted programs to impact child poverty.  Most notably Mitt Romney has proposed a monthly benefit of $350 for younger children and $250 for older ones in what he is calling the Family Security Plan.  These payments would start four months prior to the due date during pregnancy. 

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Photo taken from: KUTV

 Missouri Senator Josh Hawley has proposed a Parent Tax credit of $6000 for single parents and $12,000 for married couples.  These plans, however, come with a reduction in other federal anti-poverty programs and tax credits for daycare.  

While the child poverty rate has dropped from a whopping 27% in 1959, it has not improved significantly in recent decades.  It has been noted that elderly poverty has significantly decreased during this period and is now less than the rate of child poverty.  This is due to the development of the Social Security system and to Medicare.  Comparable programs could be initiated for children.  Many low-income families suffer with childcare, housing and medical costs; all issues which have been shown to be amenable to the development of federal programs.

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