Cutting childhood poverty in half
March 19th, 2019
When a child experiences poverty, especially at a young age for a long time, it can lead to lack of opportunity and resources which stifle a child’s ability to reach their full potential in adulthood. To combat this issue, Congress asked the National Academies, a nonpartisan research organization, to conduct a study to discover which evidence-based policy proposals would best solve childhood poverty.
On February 28, the National Academies of Science, Engineering and Medicine (NAS) released their highly anticipated report, A Roadmap to Reducing Childhood Poverty, on how the U.S. could cut childhood poverty in half within ten years. Childhood poverty rates, 17.5 percent, are consistently higher than overall poverty rates, 12.3 percent (US Census Bureau, 2017).
The report put forward four different policy packages, meaning a combination of two or more policies: 1) work-based package, 2) work-based plus universal supports package, 3) universal supports and work package, and 4) means-tested supports and work package. (The term “means-tested” was used because this policy package only includes federal assistance programs that have eligibility guidelines based on income.). However, only two of these proposals—the means-tested supports and work package and the universal supports and work package—decrease child poverty by at least 50 percent.
Before arriving at the policy packages, the researchers examined a variety of single policy solutions. These included expanding the Earned Income Tax Credit (EITC) by 40 percent, expanding the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) by 30 percent, increasing the Housing Choice Vouchers program so that 70 percent of people who need housing assistance receive it, creating a $3,000 child allowance per year, or creating a $2,000 per child per year allowance. Out of all of these single policy proposals, the most effective change was creating a $3,000 yearly child allowance. Increasing funding for housing vouchers was the second most effective change, lowering the poverty rate by 3 percent by lifting 2.2 million children out of poverty. However, these single changes were not able to reduce childhood poverty by 50 percent.
This report confirms that the priorities RESULTS advocates are pushing for, like increased funding for housing vouchers, are proven solutions to solving poverty nationwide – especially as part of a broader policy strategy.
Although single policy changes were projected to be effective at reducing childhood poverty, the researchers found that some policy packages reduced the child poverty rate by more than half. The “means tested supports and work package” as well as the “universal supports and work package” were the only two proposals that were projected to slash childhood poverty in half in the next ten years (see the chart below from the Roadmap report for a breakdown of each policy package).
The means-tested supports and work package included:
- Accelerating EITC payments for families at the lowest incomes and increasing the maximum credit.
- Making the child care tax credit fully refundable so all low-income families can benefit (the current CTC phases in starting at $3,000 in family income), while ensuring benefits are highly concentrated to families with the lowest incomes and families with young children.
- Expanding the housing voucher program. Since only one in four families eligible for housing assistance currently receives any federal housing assistance, the report suggested expanding housing vouchers so that 70 percent of all families that are eligible would get housing assistance. .
- Increasing SNAP benefits by 35 percent, increasing benefits for older children, and providing increased summer benefits for children (to offset the lack of school meals).
These are all programs that RESULTS advocates have worked tirelessly to protect and improve. According to the study, expansion of these programs would reduce the number of children in poverty by 50.7 percent, reduce the number of children in deep poverty by 51.7 percent and create 404,000 jobs all with a price tag of $90.7 billion annually.
The policy package with the greatest reduction in poverty rates was the universal supports and work package. This proposal included
- Increasing EITC payments by 40 percent
- Expanding the child care tax credit and making it fully refundable while ensuring benefits are highly concentrated to families with the lowest incomes and families with young children (this is the same policy as number two above).
- Increasing the federal minimum wage to $10.25 per hour and indexing to inflation.
- Starting a child allowance that would pay families $225 monthly per child. This support would be available to citizen children and documented immigrants, a population that is often excluded from receiving certain federal benefits
- Starting child support assurance of $100 per month per child.
- Eliminating 1996 immigration eligibility restrictions by allowing immigrants with documentation status that are currently not qualified for federal programs like SNAP, TANF, Medicaid, SSI and other federal programs to access those services.
These recommendations were projected to result in a 52.3 percent reduction in the number of children in poverty, a 55.1 percent decrease in the number of children in deep poverty and over 600,000 new jobs all for $108.8 billion annually.
High cost is often used by elected officials as a justification for their lack of support on a piece of legislation. Yet, both proposed solutions cost substantially less than childhood poverty, which is reported to cost the nation between $800 billion to $1.1 trillion, annually. This cost comparison reinforces that childhood poverty is a solvable problem that is financially feasible.
The major takeaway for RESULTS advocates is that tax and housing policies were projected to have substantial impact on the lives of children across the nation and can substantially reduce child poverty. Congress called for this report, which signals that they should want to understand the results of their efforts. The release of the report demonstrates that even though there are no silver bullet solutions, potential data-driven solutions do exist, and now Congress is equipped with the evidence-based information on potential ways to impact childhood poverty.
This chart shows the four different packages at the top, which policies were included in each package (indicated by “X”s) and the simulated effect of each policy package. The highlighted area shows the policy packages that were projected to have the most substantial effect on childhood poverty.