More than one in five children in the US lives in poverty: that’s 790,000 children in New York, 429,000 in Chicago, and 125,000 in Washington, D.C. In all, there are 16 million poor children. Child poverty is also rising, up six percentage points since the turn of the century.
Those numbers make it seem like a pretty intractable problem. After all, it’s literally millions of our children—living without adequate shelter, without healthy food, without adequate opportunities to play and learn and grow. If we’ve let things get this bad then surely child poverty must be nearly impossible to solve.
But the fact is it isn’t difficult to end child poverty, or at least to dramatically reduce it. As Austin Nichols, an economist at the Urban Institute, wrote last year:
If the United States offered cash benefits to children in poor families, we could cut child poverty by more than half. According to calculations using the 2012 Current Population Survey, poor children need $4,800 per year each, on average, to escape poverty. That’s $400 a month for each child.
If we issued a $400 monthly payment to each child, and cut tax subsidies for children in higher-income families, we would cut child poverty from 22 percent to below 10 percent. If we further guaranteed one worker per family a job paying $15,000 a year, and each family participated, child poverty would drop to under 1 percent.
A child benefit is now common across developed countries, with amounts of about $140 a month in the UK, $190 in Ireland, $130 in Japan, $160 in Sweden, and $250 in Germany. A smaller child benefit of $150 per month would chop child poverty from 22 percent to below 17 percent. Adding the job guarantee would lower child poverty to 8 percent.
So the fact is we could end child poverty, but we’d have to give poor families money to spend on their children—and there’s a lot of evidence that simply giving poor people money works. But it would be expensive, and in these economic times surely we can’t afford it, right?
That’s actually not so clear. It would be expensive in the short run—about $76 billion annually—to spend $4,800 a year on every poor kid. But what if it’s really expensive in the long run not to?
Empirical evidence suggests that the economic costs of child poverty each year in the U.S. are about $550 billion, or 3.8 percent of GDP.
Rigorous evidence is also mounting that being born into poverty makes it much likelier that a newborn will have a range of physical ailments, and that she’ll spend significant time in poverty during her childhood. That same body of evidence shows how much likelier it is that children who spend significant time in poverty will be poor as adults. And that effect compounds: the more time in child poverty, the worse the outcomes when the child reaches adulthood—including outcomes for health, education, economics, and criminal justice.
In other words we know—when a baby is born—if she’s likely to be poor as a child and therefore poor as an adult. And we know that if she’s poorer as an adult, she will have worse educational outcomes and less productivity in the job market. Her kids will likelier be poor and unhealthy, and the family as a whole will rely more on the social safety net.
Put that all together and it gets awfully expensive fast—up to $550 billion a year, compared to $76 billion or less a year to dramatically reduce poverty.
So what if instead we spent some of that money now—up front—to help children break out of the cycle? While it’s expensive, future savings stemming from higher productivity and lower safety net spending are great. That makes it sound a lot like—wait for it—an investment! You invest money now because you expect strong returns in the future.
Dramatically reducing poverty is in fact the financially prudent thing to do, and helping 16 million American children out of poverty is the moral thing to do as well.
Zach McDade is a researcher and communications specialist at the Urban Institute. You can follow him on Twitter @zmcdade. The views expressed here are his alone, and are not intended to reflect those of the Urban Institute.