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Child poverty also has substantial economic costs . Research shows that the reduced productivity and extra health and crime costs resulting from child poverty add up to roughly $500 billion a year, or 3 .8 percent of the GDP .10 Additionally, other studies point to the economic gains of investing in children early—before the age of five . One study found that eliminating child poverty between the prenatal years to age five increases lifetime earnings by up to $100,000 per child, equaling a benefit of $20–$36 billion for all babies born in a given year .11
What Works:
1. Ending Child Poverty Requires Boosting Resources of Poor Families with Children and Ensuring Children’s Basic Needs are Met.
Safety net programs lift many families out of poverty, giving their incomes a boost, and they can have long-term benefits . Federal safety net programs such as the Earned Income Tax Credit (“EITC”) and food stamps—the Supplemental Nutrition Assistance Program (“SNAP”)— improve child outcomes . Children from families whose income received a boost from such programs have better birth outcomes, higher test scores, higher graduation rates, and higher college attendance rates .12 Children who received access to SNAP before the age of five were also more likely to have better health as an adult and have better financial stability .
The Children’s Defense Fund (“CDF”) sought to identify policy improvements—ways to improve the economic circumstances of poor children—that would reduce child poverty and alleviate its harm and high costs immediately . With the understanding that these safety net policies lift families out of poverty and improve child outcomes, CDF asked the question: “How close could the nation get to ending poverty for today’s children by simply investing more in approaches that work?”
The CDF report, Ending Child Poverty Now,13 addresses this question . An analysis by the Urban Institute, included in the report, models the effects of policy improvements on child poverty using the SPM and 2010 Census and administrative data . The model does not limit the policy improvements to families below 100 percent poverty but is more inclusive since so many families living just above the poverty line also struggle financially and since many safety net programs are available to families above the poverty line . The model looks at the effects on child poverty if the nation were to make the following nine program and policy improvements:
n Increase the EITC for lower-income families with children; n Increase the minimum wage from $7 .25 to $10 .10;
10 harry J. holzer eT al., cenTer for american progress, The economic cosTs of poverTy: suBsTanTial effecTs of children growing up poor 1 (Jan. 24, 2007), available at https://www.americanprogress.org/wp-content/uploads/ issues/2007/01/pdf/poverty_report.pdf.
11 greg J. duncan eT al., economic cosTs of early childhood poverTy 4 (Issue Paper #4, Partnership for America’s Economic Success 2008), available at http://readynation.s3.amazonaws.com/wp-content/uploads/Economic- Costs-Of-Early-Childhood-Poverty-Report.pdf.
12 Chuck Marr et al., EITC and Child Tax Credit Promote Work, Reduce Poverty, And Support Children’s Development, Research Finds, cenTer on BudgeT and policy prioriTies, (updated Apr. 3, 2015), http://www.cbpp.org/research/eitc- and-child-tax-credit-promote-work-reduce-poverty-and-support-childrens-development.
13 children’s defense fund, ending child poverTy now (2015), available at http://www.childrensdefense.org/newsroom/ mediaresources/ending-child-poverty-now.pdf [hereinafter “CDF Report”].
Impact: Collected Essays on the Threat of Economic Inequality