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Summary T he strengths and abilities children develop from infancy through adolescence are crucial for their physical, emotional, and cognitive growth. And that growth in turn enables them to achieve success in school and to become responsible, economically self-sufficient, and healthy adults. Capable, responsible, and healthy adults are the foundation of any well-functioning and prosperous society, yet in this regard the future of the United States is not as secure as it could be. This is because millions of American children live in families with incomes below the poverty line. A wealth of evidence suggests that a lack of adequate family economic resources compromises childrenâs ability to grow and achieve success in adulthood, hurting them and the broader society as well. Recognizing this challenge to Americaâs future, Congress included in an omnibus appropriations bill that was signed into law in December 2015 a provision directing the National Academies of Sciences, Engineering, and Medicine to conduct a comprehensive study of child poverty in the United States. The heart of this congressional charge is to identify evidence-based programs and policies for reducing the number of children living in pov- erty in the United States by half within 10 years. This 10-year window meant that the National Academiesâ study would need to focus on policies that could affect poor parentsâ resources in the near term, rather than on investments such as improved education for poor children that might well reduce poverty for future generations. Specifically, Congress requested that the committee provide the following: 1
2 A ROADMAP TO REDUCING CHILD POVERTY 1. a review of research on linkages between child poverty and child well-being; 2. objective analyses of the poverty-reducing effects of major assis- tance programs directed at children and families; and 3. policy and program recommendations for reducing the number of children living in povertyâincluding those living in deep poverty (with family incomes below one-half the poverty line)âin the United States by half within 10 years. After nearly 2 years of work, the Committee on Building an Agenda to Reduce the Number of Children in Poverty by Half in 10 Years (hereafter, the committee) has completed a review of the research literature and its own commissioned analyses to answer some of the most important questions surrounding child poverty and its eradication in the United States. Moreover, the committee was able to formulate two program and policy packages, described below, that meet the 50 percent poverty-reduction goals while at the same time increasing employment among low-income families. WHY IS CHILD POVERTY SUCH A SERIOUS PROBLEM? Although some children are resilient to the adverse impacts of economic poverty, many studies show significant associations between poverty and poor child outcomes, such as harmful childhood experiences, including maltreatment, material hardship, impaired physical health, low birthweight, structural changes in brain development, and mental health problems. Stud- ies also show significant associations between child poverty and lower edu- cational attainment, difficulty obtaining steady, well-paying employment in adulthood, and a greater likelihood of risky behaviors, delinquency, and criminal behavior in adolescence and adulthood. Because these correlations do not in themselves prove that low income is the active ingredient producing worse outcomes for children, the commit- tee focused its attention on the literature addressing the causal impacts of childhood poverty on children. The committee concludes from this review that the weight of the causal evidence does indeed indicate that income pov- erty itself causes negative child outcomes, especially when poverty occurs in early childhood or persists throughout a large portion of childhood.1 (The full text of this and other conclusions and recommendations included in the Summary are presented in Box S-1.) The committee also reviewed the much less extensive evidence on the macroeconomic costs of child poverty to measure how much child poverty costs the nation overall. Studies in this area attempt to attach a monetary 1 Conclusion 3-8, Chapter 3.
SUMMARY 3 value to the reduction in adult productivity, increased costs of crime, and increased health expenditures associated with children growing up in poor families. Estimates of these costs range from 4.0 to 5.4 percent of the Gross Domestic Productâroughly between $800 billion and $1.1 trillion annually if measured in terms of the size of the U.S. economy in 2018.2 As we demonstrate below, outlays for new programs that would reduce child poverty by 50 percent would cost the United States much less than these estimated costs of child poverty. DO POVERTY-REDUCING PROGRAMS IN THE UNITED STATES PROMOTE CHILDRENâS HEALTHY DEVELOPMENT? Given the evidence that poverty harms childrenâs well-being, policies designed to reduce poverty by rewarding work or providing safety-net benefits might be expected to have the opposite effect. The committee examined research findings to assess whether that is the case. A number of researchers have studied the effects on children of changes in policies, such as the emerging availability of food stamps across the country in the 1960s and 1970s and expansions of the Earned Income Tax Credit (EITC) Program in the 1990s. Further expansions of some of these policies are obvious candidates for meeting the 50 percent poverty-reduction goal in the committeeâs statement of task, so it is particularly important to assess the evidence of their past impacts on children. The committee finds that many programs that alleviate povertyâeither directly, by providing income transfers, or indirectly, by providing food, housing, or medical careâhave been shown to improve child well-being.3 Specifically, we find that â¢ periodic increases in the generosity of the Earned Income Tax Credit Program have improved child educational and health outcomes,4 â¢ the Supplemental Nutrition Assistance Program (SNAP) has improved birth outcomes as well as many important child and adult health outcomes,5 â¢ expansions of public health insurance for pregnant women, infants, and children have led to substantial improvements in child and adult health, educational attainment, employment, and earnings,6 and 2 Thisis based on a Gross Domestic Product of $20.41 trillion in the second quarter of 2018. See Table 3, https://www.bea.gov/system/files/2018-09/gdp2q18_3rd_3.pdf. 3 Conclusion 3-8, Chapter 3. 4 Conclusion 3-3, Chapter 3. 5 Conclusion 3-5, Chapter 3. 6 Conclusion 3-7, Chapter 3.
4 A ROADMAP TO REDUCING CHILD POVERTY BOX S-1 Conclusions and Recommendations Referenced in the Summary CONCLUSION 3-3: Periodic increases in the generosity of the Earned In- come Tax Credit Program have improved childrenâs educational and health outcomes. CONCLUSION 3-5: The Supplemental Nutrition Assistance Program has been shown to improve birth outcomes as well as many important child and adult health outcomes. CONCLUSION 3-6: Evidence on the effects of housing assistance is mixed. Children who were young when their families received housing benefits enabling them to move to low-poverty neighborhoods had improved educa- tional attainment and better adult outcomes. CONCLUSION 3-7: Expansions of public health insurance for pregnant women, infants, and children have generated large improvements in child and adult health and in educational attainment, employment, and earnings. CONCLUSION 3-8: The weight of the causal evidence indicates that income poverty itself causes negative child outcomes, especially when it begins in early childhood and/or persists throughout a large share of a childâs life. Many programs thatÂ alleviate poverty either directly, by providing income transfers, orÂ indirectly, by providing food, housing, or medical care have been shown toÂ improve child well-being. CONCLUSION 4-4: Government tax and transfer programs reduced the child poverty rate, defined by the Supplemental Poverty Measure (SPM), Â odestly m between 1967 and 1993, but became increasingly important after 1993 be- cause of increases in government benefits targeted at the poor and near poor. Between 1993 and 2016, SPM poverty fell by 12.3 percentage points, from 27.9 to 15.6 percent, more than twice as much as market-income-based poverty. CONCLUSION 5-1: Using a threshold defined by 100 percent of the Supple- mental Poverty Measure, no single program or policy option developed by the committee was estimated to meet the goal of 50 percent poverty reduc- tion. The $3,000 per child per year child allowance policy comes closest, and it also meets the 50 percent reduction goal for deep poverty. CONCLUSION 5-2: A number of other program and policy options lead to substantial reductions in poverty and deep poverty. Two involve existing programsâthe Supplemental Nutrition Assistance Program and housing vouchers. The option of a 40 percent increase in Earned Income Tax Credit benefits would also reduce child poverty substantially.
SUMMARY 5 CONCLUSION 5-3: Programs producing the largest reductions in child pov- erty are estimated to cost the most. Almost all of the committee-developed program options that lead to substantial poverty-reduction cost at least $20 billion annually. CONCLUSION 5-4: Projected changes in earnings and employment in re- sponse to simulations of our program and policy options vary widely, but taken as a whole they reveal a tradeoff between the magnitude of poverty reduction and effects on earnings and employment. Work-based program expansions involving the Earned Income Tax Credit and the Child and De- pendent Care Tax Credit were estimated to increase earnings by as much as $9 billion and employment by as many as half a million jobs. Programs such as the child allowances and expansions of the housing voucher program were estimated to reduce earnings by up to $6 billion and jobs by nearly 100,000. The bulk of the remaining program and policy proposals are esti- mated to evoke more modest behavioral responses. CONCLUSION 5-5: The 20 program and policy options generate disparate impacts across population subgroups in our simulations. Although virtually all of them would reduce poverty across all of the subgroups we considered, disproportionately large decreases in child poverty occur only for Black children and children of mothers with low levels of education. Hispanic children and immigrant children would benefit relatively less. CONCLUSION 6-1: Two program and policy packages developed by the com- mittee met its mandated 50 percent reduction in both child poverty (defined by 100% of Supplemental Poverty Measure [SPM]) and deep poverty (de- fined by 50% of SPM). The first of these packages combines work-oriented policy expansions with increases in benefit levels in the housing voucher and Supplemental Nutrition Assistance Programs. The second package combines work-oriented expansions with a child allowance, a child support assurance program, and elimination of immigrant restrictions on benefits built into the 1996 welfare reforms. Both packages increase work and earn- ings, and both are estimated to cost between $90 and $111 billion per year. CONCLUSION 6-2: The committee was unable to formulate an evidence-based employment-oriented package that would come close to meeting its man- date of reducing child poverty by 50 percent. The best employment-oriented package it could design combines expansions of the Earned Income Tax Credit, the Child and Dependent Care Tax Credit, a minimum wage increase, and a promising career development program. Although this package is estimated to add more than a million workers to the labor force, generate $18 billion in additional earnings, and cost the government only $8.6 to $9.3 billion annually, its estimated reductions in child poverty are less than half of what is needed to meet the goal. continued
6 A ROADMAP TO REDUCING CHILD POVERTY BOX S-1â Continued CONCLUSION 7-1: Increasing both awareness of and access to effective, safe, and affordable long-acting reversible contraception (LARC) devices reduces the incidence of unplanned births, which could in turn reduce child poverty. In contrast, policies that reduce access to LARC by cutting Medic- aid, Title X funding of family planning services, or mandated contraceptive coverage appear to increase the number of unintended births and thus also child poverty. CONCLUSION 7-2: Although increasing the proportion of children living with married or cohabiting parents, as opposed to single parents, would almost certainly reduce child poverty, the impacts of existing social programs designed to promote such a change are uncertain. Evidence from these programs is inconclusive and points to neither strong positive nor negative effects. In the early 2000s, an ambitious attempt to develop programs that would improve couple-relationship skills, promote marriage, and improve child well-being failed to boost marriage rates and achieve most of their other longer-run goals. CONCLUSION 7-4: There is insufficient evidence to identify mandatory work policies that would reliably reduce child poverty, and it appears that work requirements are at least as likely to increase as to decrease poverty. The dearth of evidence also reflects underinvestment over the past two decades in methodologically strong evaluations of the impacts of alternative work programs. RECOMMENDATION 9-10: The U.S. Office of Management and Budget (OMB) should convene working groups of appropriate federal program, research, and statistical agencies to assess this reportâs conclusions about program packages that are capable of reducing child poverty by half within 10 years of adoption. OMB should also convene working groups charged with as- sessing the reportâs recommendations for research and data collection to fill important gaps in knowledge about effective anti-child-poverty programs. These working groups should be tasked to recommend action steps, and OMB should work with relevant agencies to draw up implementation plans and secure appropriate resources. The working groups should consult with relevant state agencies and outside experts, as appropriate, to inform their deliberations.
SUMMARY 7 â¢ evidence on the effects of housing assistance is mixed, although children who were young when their families received housing benefits that allowed them to move to low-poverty neighborhoods had improved educational and adult outcomes.7 HOW MUCH DO CURRENT PROGRAMS IN THE UNITED STATES REDUCE CHILD POVERTY? Mindful of the evidence that links childhood poverty with problems in adulthood, as well as studies showing the benefits for children from some of the nationâs anti-poverty programs, the committee sought to understand how child poverty has been affected by current programs and policies. In 2015, the latest year for which the committee was able to generate estimates that took full account of benefits from federal tax credits and other safety net programs, more than 9.6 million U.S. children (13.0%) lived in fami- lies with annual incomes below a poverty line defined by the Supplemental Poverty Measure (SPM).8 That same year, some 2.1 million children (2.9%) lived in âdeep pov- erty,â defined as having family resources below one-half of the Â overty-based p line. Child poverty rates were much higher for Black children (18%) and Hispanic children (22%) than for non-Hispanic White children (8%); for children in single-parent families (22%) than for those in two-parent fam- ilies (9%); for children in immigrant families (21%) than for those in nonÂ immigrant families (10%); and for children in families with no workers (62%) than for those in families with part-time workers (28%) or with full-time workers (7%). Poverty rates also appear to be much higher among American Indian children; however, precise rates are unavailable. The committee examined the poverty-reducing impacts of the current set of major federal assistance programs by estimating how child poverty rates would have changed had each of these programs not been operating (see Figure S-1).9 The two refundable tax creditsâthe EITC and the refundable portion of the Child Tax Creditâare the most successful at alleviating poverty, as shown in Figure S-1. We estimate that the elimination of these 7 Conclusion 3-6, Chapter 3. 8 The committeeâs child poverty estimates are lower than those in official statistics. Its esti- mates were produced by a widely used microsimulation model, TRIM3, which corrects for the underreporting of a number of important sources of income in household surveys. The 2015 SPM poverty lines for two-parent, two-child families were about $22,000 for those owning a home free and clear and about $26,000 for renters and homeowners with a mortgage. 9 It is important to note that these estimates of the poverty-reducing impact of current pro- grams do not account for the extent to which eliminating a given program might also affect work and other decisions that would in turn affect a familyâs market income.
8 A ROADMAP TO REDUCING CHILD POVERTY FIGURE S-1â Changes in child poverty rates if each current income support program FIGURE S-1 Changes in child poverty rates if each current income support program were were eliminated. eliminated. CTC = Child Tax Credit, EITC = Earned Income Tax Credit, SNAP = SuppleÂ NOTE: SOURCE: Estimates from TRIM3 commissioned by the committee,Income, the Supplemental mental Nutrition Assistance Program, SSI = Supplemental Security using UC = PovertyUnemployment Compensation,Population Survey Annual Social and Economic Supplem Measure with the Current WC = Workersâ Compensation. SOURCE: Estimates from TRIM3 commissioned by the committee, using the Sup- with income corrected for underreporting. plemental Poverty Measure with the Current Population Survey Annual Social and NOTE: Economic Supplement, with income corrected for underreporting. UC = Unemployment Compensation; WC = Workersâ Compensation tax credits would raise SPM child poverty to 18.9 percent, an increase of 5.9 percentage points or 4.4 million children. The poverty-reducing benefits from the Supplemental Nutrition Assis- tance Program (SNAP) are the next largest: In the absence of SNAP benefits, the child poverty rate would have increased to 18.2 percent. In the absence of Social Security benefits, which go to many multigeneration households containing children, the child poverty rate would have been 15.3 percent. Without the Supplemental Security Income (SSI) Program, the child poverty rate would have increased to 14.8 percent. In contrast to rates of child poverty defined by SPM thresholds, rates of deep poverty (50% of SPM thresholds) are affected very little by refund- able tax credits. This is because most families in deep poverty have very low levels of earned income, and all three of the tax benefits are based on earnings. SNAP is by far the single most important federal program for reducing deep poverty; it is estimated that eliminating SNAP would nearly
SUMMARY 9 double (from 2.9 to 5.7%) the fraction of children in families with incomes below the deep poverty threshold. The demographic groups with the highest child poverty ratesâBlacks and Hispanics, single-parent families, and families with poorly educated parentsâbenefit disproportionately from both SNAP and the tax benefit programs. The two exceptions are children in noncitizen families, who benefit less from both programs, and children in families with no workers, who do not benefit from tax-related benefit programs. IS A GOAL OF 50 PERCENT REDUCTION IN CHILD POVERTY REALISTIC? Both the U.S. historical record and the experience of peer countries show that reducing child poverty in the United States is an achievable pol- icy goal. Child poverty fell by nearly one-half between 1967 and 2016 (see Figure S-2).10 Rates of deep child poverty declined as well over that period, both overall and across subgroups of children defined by race and ethnicity. Historically, macroeconomic growth has fueled growth in wages and employment, which in turn has led to corresponding reductions in pov- erty. However, during the past several decades economic growth has not been shared equally across the income distribution. Wages have stagnated or declined for lower-skilled male workers since the early 1970s, while the wages of lower-skilled women have stagnated since 2000. During the 1967â2016 period, child poverty rates varied with both business cycles and changes in social benefit programs. Government tax and transfer programs reduced child poverty modestly between 1967 and 1993, but they became increasingly important after 1993 because of increases in government ben- efits (mainly the Earned Income Tax Credit) targeted at the poor and near poor. Between 1993 and 2016, SPM poverty fell by 12.3 percentage points, dropping from 27.9 to 15.6 percent.11 The United States spends less to support low-income families with children than peer English-speaking countries do, and by most measures it has much higher rates of child poverty. Two decades ago, child poverty rates were similar in the United States and the United Kingdom. That began to change in March 1999, when Prime Minister Tony Blair pledged to end child poverty in a generation and to halve child poverty within 10 years. Emphasizing increased financial support for families, direct investments in children, and measures to promote work and increase take-home pay, 10 As defined by the U.S. Census Bureau, an SPM-based poverty measure that counts cash income, tax credits, and near-cash benefits (e.g., SNAP benefits) in its measure of household resources. 11 Conclusion 4-4, Chapter 4.
PageÂ 2Â ofÂ 18Â 10 A ROADMAP TO REDUCING CHILD POVERTY FIGURE S-2â Child poverty rates as measured by the Supplemental Poverty Mea- sure (SPM), 1967â2016, using the Current Population Survey Annual Social and FIGURE S-2 Child poverty (CPS as measured by the Supplemental Poverty Measure (SPM), Economic Supplement rates ASEC). 1967â2016, using theareas indicate recession years. Poverty estimates use the Supplement (CPS NOTE: Shaded Current Population Survey Annual Social and Economic SPM with income that is not corrected for underreporting, as it is not feasible to correct in- ASEC). SOURCE: reporting commissioned by the committee and conducted by Christopher Wimer come Analyses in the CPS ASEC over the entire period shown. Corrections for un- derreporting account for the bulk of the 13.0% vs. 15.6% poverty rate differences (2017). NOTE: ShadedFigures S-1 and S-2. shown in areas indicate recession years. Poverty estimates use the SPM with income that is not corrected for underreporting, as it is not the committee andincome reporting in the CPS SOURCE: Analyses commissioned by feasible to correct conducted by Christopher Wimer (2017). ASEC over the entire period shown. Corrections for underreporting account for the bulk of the 13.0% vs. 15.6% poverty rate differences shown in Figures S-1 and S-2. the United Kingdom enacted a range of measures that made it possible to meet the 50 percent poverty-reduction goal by 2008âa year earlier than anticipated. More recently, the Canadian government introduced the Canada Child Benefit in its 2016 budget. According to that governmentâs projections, the benefit will reduce the number of Canadian children living in poverty by nearly one-half. REDUCING CHILD POVERTY IN THE UNITED STATES BY HALF IN 10 YEARS The heart of the committeeâs charge is to identify policies and programs that have the potential to reduce child poverty and deep poverty in the United States by half within 10 years. With hundreds of local, state, federal, Â
SUMMARY 11 and international anti-poverty program and policy models to choose from, the committee developed a set of criteria to guide its selection process. These included (1) the strength of the research and evaluation evidence; (2) likely reductions in the number of poor children; (3) the extent of child poverty reduction achievable within the subgroups with the highest child poverty rates; (4) cost; and (5) positive impacts on work, marriage, oppor- tunity, and social inclusion. The committee examined 10 program and policy options. Four of them are tied to work, three of them modify existing safety net programs, two come from other countries, and the final one modifies existing provisions relating to immigrants. It then formulated two variations for each of the 10 options, yielding 20 scenarios in all. The 10 options are as follows: Program and policy options tied to work: 1. expanding the EITC; 2. expanding child care subsidies; 3. raising the federal minimum wage; and 4. implementing a promising training and employment program called WorkAdvance nationwide. Modifications to existing safety net programs: 5. expanding SNAP; 6. expanding the Housing Choice Voucher Program; and 7. expanding the SSI program. Options used in other countries: 8. introducing a universal child allowance (which, in the U.S. context, can also be thought of as an extension of the federal child tax credit delivered monthly instead of once a year); and 9. introducing a child support assurance program that sets guaranteed minimum child support amounts per child per month. Modifications to existing provisions relating to immigrants: 10. increasing immigrantsâ access to safety net programs. The committeeâs simulations showed that no single program or policy option that we considered could meet the goal of reducing child poverty by one-half. A $3,000 per child per year child allowance policy would produce the largest poverty reduction, and it would meet the goal of reducing deep poverty (50% of SPM poverty) by one-half.12 A number of other program and policy options were also estimated to reduce child poverty substantially 12 Conclusion 5-1, Chapter 5.
PageÂ 3Â ofÂ 18Â 12 A ROADMAP TO REDUCING CHILD POVERTY FIGURE S-3â Reductions in child poverty and cost of several policy and program FIGURE S-3 Reductionsthe child poverty and cost of several policy and program options options developed by in committee. developed by the committee on provisions of the 2015 tax law applied to income for NOTES: Costs are based 2015. Incomes are corrected for underreporting. EITC = Earned Income Tax Credit, SOURCE: Estimates from TRIM3 commissioned by the committee. NOTE: Costs are based onNutrition Assistance Program. applied to income for 2015. Incomes SNAP = Supplemental provisions of the 2015 tax law are SOURCE: for underreporting. corrected Estimates from TRIM3 commissioned by the committee. (see Figure S-3). Three of them involve modifications to existing programs: the EITC, SNAP, and subsidized housing.13 Policy makers may wish to balance poverty reduction against other policy goals, including boosting employment among low-income families as well as containing costs, keeping in mind the consequences of raising revenues to pay for the policies and programs that reduce the number of children raised in a poor family. As might be expected, there is a strong positive relationship between cost and the number of children moved out of poverty. Almost all of the committee-developed program options that would lead to substantial poverty reductions were estimated to cost at least $20 billion annually.14 The committee devoted significant effort to estimating how families might change their work effort in response to each of the policy and pro- gram options under consideration. It found considerable variation in the changes in employment and earnings resulting from the simulated imple- mentation of the 20 program and policy options. Work-based program 13 Conclusion 5-2, Chapter 5. 14 Conclusion 5-3, Chapter 5. Â
SUMMARY 13 expansions involving the Earned Income Tax Credit and the Child and Dependent Care Tax Credit were estimated to increase earnings by as much as $9 billion and employment by as many as half a million jobs. Programs such as child allowances and expansions of the housing voucher program were estimated to reduce earnings by up to $6 billion and jobs by nearly 100,000.15 The 20 program and policy options the committee examined generated different impacts in different subgroups of the population. Although virtually all of these options reduced poverty across all of the subgroups considered, there were disproportionately large decreases in child poverty for Black chil- dren and children of mothers with low levels of education. Hispanic children and children in immigrant families benefited relatively less.16 PACKAGES OF POLICIES AND PROGRAMS TO REDUCE CHILD POVERTY AND DEEP POVERTY Since none of the committeeâs individual policy and program options met both of the 50 percent reduction goalsâfor both poverty and deep povertyâthe committee developed the four program and policy âpackagesâ shown in Table S-1 and assessed their expected impacts. The work-oriented package attempted to capitalize on the fact that gains in steady employment and earnings are among the strongest correlates of escaping poverty. Accordingly, this package was focused exclusively on policies tied to paid employment by combining expansions of two tax c Â redits (the EITC and Child and Dependent Care Tax Credit [CDCTC]) with an increase in the minimum wage and implementing the Â orkAdvance W Program nationwide. Although combining these four programs was esti- mated to add a million workers to the labor force, generate $18 billion in additional earnings, and cost only $8.7 billion, the reduction in child poverty it was estimated to bring about was less than one-half of what is needed to meet the 50 percent poverty-reduction goal.17 It was disappointing to conclude that this work-oriented package would be unable to achieve adequate reductions in child poverty, in light of the often-stated policy goal of moving low-income families from reliance on government assistance and toward greater participation in the labor force. Although states have been testing a number of new work-oriented programs, especially those including work requirements, most states have evaluated the new programs using weak methods that fall far short of the evidentiary standard set by the National Academies for its reports. Some of 15 Conclusion 5-4, Chapter 5. 16 Conclusion 5-5, Chapter 5. 17 Conclusion 6-2, Chapter 6.
14 A ROADMAP TO REDUCING CHILD POVERTY TABLE S-1â Components of the Four Packages and Their Estimated Costs and Impact on Poverty Reduction and Employment Change 2. Work- based and 3. Means- 4. Universal 1. Work- Universal tested Supports oriented Supports Supports and and Work Package PackageÂ Work Package Package Expand EITC X X X X Work-oriented Programs and Expand CDCTC X X X X Policies Increase the Minimum Wage X X Roll Out WorkAdvance X Expand Housing Voucher Program X Income Support-oriented Programs and Policies Expand SNAP Benefits X Begin a Child Allowance X X Begin Child Support Assurance X Eliminate 1996 Immigration Eligibility Restrictions X Percentage Reduction in the Number of Poor Children â18.8% â35.6% â50.7% â52.3% Percentage Reduction in the Number of Children in Deep Poverty â19.3% â41.3% â51.7% â55.1% Change in Number of Low-income Workers +1,003,000 +568,000 +404,000 +611,000 Annual Cost, in Billions $8.7 $44.5 $90.7 $108.8 NOTE: CDCTC = Child and Dependent Care Tax Credit, EITC = Earned Income Tax Credit, SNAP = Supplemental Nutrition Assistance Program. the committeeâs research recommendations address the need for building a more solid and reliable body of evidence on current programs. Our second package, the work-based and universal supports package, builds on the work-based package by combining expansions of two tax credits (the EITC and CDCTC) with a $2,000 child allowance designed to replace the Child Tax Credit. This package generates an estimated 36 per- cent reduction in poverty and 41 percent reduction in deep poverty, which
SUMMARY 15 also falls short of meeting the full 50 percent reduction goals. However, at a cost of $44.5 billion per year, and with increases of employment and earnings amounting to 568,000 jobs and $10 billion, respectively, it offers a potentially appealing approach to meeting policy goals that are often in competition with one another. The means-tested supports and work package combined expansions of the two tax credits in the work-oriented package with expansions of two existing income support programs: SNAP (formerly known as food stamps) and housing voucher programs. The committee estimates that this package of programs would in fact meet the goal of reducing both pov- erty and deep poverty by one-half, at a cost of $90.7 billion per year. On balance, the work incentives associated with the two tax credits outweigh the disincentives arising from the income support programs: The package is estimated to add about 400,000 workers and generate $2.2 billion in additional earnings. The universal supports and work package was designed to meet the 50 percent poverty-reduction goals by enhancing income security and stabil- ity while at the same time rewarding work and promoting social inclusion. The cornerstone of this package is a child allowance, but the package also includes a new child support assurance program, an expansion of the EITC and CDCTC, an increase in the minimum wage, and elimination of the immigrant eligibility restrictions imposed by the 1996 welfare reform. This package of programs, which also meets the 50 percent poverty-Âeductionr goals, is estimated to cost $108.8 billion. The net effect of this full package of universal supports and work promotion policies is to increase employ- ment by more than 600,000 jobs and earnings by $13.4 billion. What Other Policy and Program Approaches Should Be Considered? The committee considered a number of other program and policy ideas. One involved family planning. Research evidence suggests that increasing both awareness of and access to effective, safe, and affordable long-acting reversible contraception devices reduces the incidence of unplanned births, which could in turn reduce child poverty.18 At the same time, the evidence was not strong enough to support a calculation of the likely magnitude of this poverty-reduction effect for the nation as a whole. We also examined marriage promotion policies. Although increasing the proportion of children living with married or cohabiting parents, rather than single parents, would almost certainly reduce child poverty, whether and how policy can achieve this goal remains uncertain. Evidence from existing social programs is inconclusive and points to neither strong positive 18 Conclusion 7-1, Chapter 7.
16 A ROADMAP TO REDUCING CHILD POVERTY nor negative effects. In the early 2000s, an ambitious attempt to develop programs that would improve couple relationship skills, promote marriage, and improve child well-being failed to boost marriage rates and achieve most of their other longer-run goals.19 Similarly, evidence was insufficient to identify mandatory work policies that would reliably reduce child poverty. It appears that work requirements are at least as likely to increase as to decrease poverty. The dearth of evi- dence on mandatory work policies also reflects an underinvestment over the past two decades in methodologically strong evaluations of the impacts of alternative work programs.20 WHICH CONTEXTUAL FACTORS PROMOTE OR IMPEDE ANTI- POVERTY POLICIES AND PROGRAMS? Any policies aimed at reducing child poverty will necessarily be imple- mented in complex societal and individual contexts, and these contexts can influence the policiesâ success. The committee identified six major contex- tual factors that policy makers and program administrators should consider when designing and implementing anti-poverty programs: 1. Stability and predictability of income: Because unstable and unpredictable income makes it difficult for families to juggle their everyday challenges, programs that provide regular income sup- portâwhether through tax credits, cash, or vouchersâmay be more helpful to families if they provide adequate benefits at well- timed intervals. 2. Equitable and ready access to programs: Unnecessarily burden- some administrative procedures can discourage familiesâespecially the most needy familiesâfrom applying for the income assistance benefits they are eligible to receive, and thus prevent them from receiving them at all. 3. Equitable treatment across racial/ethnic groups: Discrimination in hiring and employment may undermine policies that aim to increase or subsidize wages as well as policies that require beneficiaries to work. Similarly, housing discrimination reduces racial/ethnic minority familiesâ access to and benefits from housing programs. 4. Equitable treatment by the criminal justice system: Involvement of a parent or other relative in the criminal justice system harms 19 Conclusion 7-2, Chapter 7. 20 Conclusion 7-4, Chapter 7.
SUMMARY 17 significant numbers of low-income children, particularly minority children, both economically and in other ways. 5. Positive neighborhood conditions: Living in areas of concentrated poverty makes it difficult for parents to lift themselves and their children out of poverty. Supportive, thriving social networks and neighborhood conditions enrich family life, personal connections, and access to opportunities, yet too frequently the poor live in urban areas of concentrated poverty or are widely dispersed in rural areas with limited transportation and little access to employ- ment, poverty-reduction programs, or community resources. 6. Health and well-being: Because physical and mental ailments, sub- stance abuse, and domestic violence can undermine parentsâ ability to make sound decisions, care for their children, gain education, obtain and keep work, and support their households, anti-poverty programs that require participants to be employed in order to maintain eligibility or that have cumbersome eligibility require- ments may be less effective for families with these issues. SUMMARY AND NEXT STEPS The committeeâs work has identified two program and policy packages that would enable the nation to meet the ambitious goal of reducing by half the number of poor children and children living in deep poverty. Other packages are also conceivable. Both of the committeeâs packages involve combinations of program enhancements, some of which encourage and reward paid employment, while others provide basic income support to help cover the expenses incurred when raising children. Both are also quite costly in an absolute sense. They would require an investment of between $90 and $110 billion per year, although this cost is much lower than the estimated annual macroeconomic cost of child poverty, which is estimated to range from $800 billion to $1.1 trillion.21 A third package fell short of the full 50 percent poverty-reduction goal but, at $44.5 billion, cost con- siderably less and increased work and earnings. The virtues of bundling work- and supports-oriented policy and pro- gram enhancements into packages are clear from the committeeâs analyses. No single modification we considered met the 50 percent poverty-reduction goals, and those that came close led more people to leave than enter the labor force. And while work-oriented enhancements, such as expanding the EITC or making the CDCTC fully refundable, would reduce child poverty at a relatively low cost, they would be much less effective at reducing the number of children living in deep poverty. The committee found that it is 21 Conclusion 6-1, Chapter 6.
18 A ROADMAP TO REDUCING CHILD POVERTY possible to combine the two approaches in a way that would meet both the poverty and deep poverty-reduction goals and, on balance, increase work and earnings among low-income families with children. Assuming that stakeholdersâCongress, federal and state agencies, and the publicâagree that further reduction of child poverty is a priority goal for U.S. policy, the committee recommends that a coordinating mech- anism be put in place to ensure that its report is followed up and that well-Âonsidered decisions are made on priorities for new and improved c anti-poverty programs and policies. This mechanism should also ensure that the associated research and data needed for monitoring, evaluating, and further improvement are supported as well.22 In the view of the committee, the U.S. Office of Management and Budget (OMB) is the appropriate agency to coordinate the assessment of these conclusions and recommendations and to put together an action plan. It could do this by convening working groups of appropriate federal program, research, and statistical agencies to assess this reportâs conclusions regarding the program packages capable of reducing child poverty by half within 10 years of adoption. Further, the committee recommends that OMB convene working groups charged with assessing the reportâs recommenda- tions for research and data collection to fill important gaps in knowledge about programs that are effective at reducing child poverty. A number of additional research recommendations embraced by the committee can be found in Chapter 9 of the report. Acting on this reportâs conclusions and recommendations has the potential not only to reduce child poverty, but also to build a healthier and more prosperous nation. 22 Recommendation 9-10, Chapter 9.