Taking on Child Poverty: A Policy Brief

Tom Warwick

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” – FDR

Almost a quarter of all American children live in a family with an income below the federal poverty threshold of $20,160 or a family of 3. There are clear associations between the time a child spends in poverty and their ability to succeed in their adult life.  Studies have shown that children raised in poverty will see significantly lower future achievements in fields such as education, income, and personal health as compared to  other children. The outcome of this can result in hundreds of billions of dollars worth of lost productivity and government spending.  Though children in poverty will suffer from these effect throughout their lives, the poverty they experience as child is beyond their control. Nearly a quarter of all children live in poverty, a rate that has remained virtually unchanged for almost half a century. The causes of poverty are many but almost always include family structure, basic job opportunities, and education. The most effective cure for these societal ills would have to address these three basic needs.

While there are certainly a large pool of possible options to address the causes of child poverty, any solution put forward must meet, at least, two main criteria: it must be socially acceptable and politically feasible. To be socially acceptable, any solutions offered would have to acceptable to the public at-large, or at least not so unacceptable that they would be motivated to mobilize against it (Kraft and Furlong, 185). To be politically feasible a measure would have to be structured in a way so that “elected officials accept and support” the proposal (Kraft and Furlong, 211).  Two policy options that fit within these definitions are a modest raise to the minimum wage and increasing the Earned Income Tax Credit.

Raising the minimum wage, if only by a few dollars, would have a significant effect on the children living in poverty by helping to put more money in the pockets of those directly responsible for their welfare. Studies have shown that nearly 70% of the children considered to be living in poverty live in a household with at least one working adult (CDF,2015).  However, an adult working full time at the current federal minimum wage would still earn $4,700 less than what is needed to reach the Federal Poverty Threshold (CDF, 2015). The situation becomes even more complicated for a single parent working a tipped minimum wage job which currently only pays $5.12 an hour, without tips (US Department of Labor, 2016).  By raising the minimum wage to just $10.10 an hour the Congressional Budget Office estimates that almost 900,000 people could be lifted above the poverty threshold (CDF, 2014). Additionally the increase in new tax revenue combined with the savings from decreased benefits could save the taxpayer up to 15.2 billion dollars (CDF, 2015).

While a policy advocating for a raise in the minimum wage would be an uphill battle, it is certainly within the range of political feasibility.  Nationwide twenty-nine states already have a minimum wage above the federal minimum, however, this means that there are twenty-nine states (and the fifty-eight Senators who represent them) who are at a disadvantage when it comes to business competitiveness (Desliver, 2015). Therefore, in addition to the benefits that come with reducing poverty, these states would become more competitive in attracting business if the rest of the country had a higher minimum wage. In terms of social acceptability, recent polls have shown that 60% of Americans support raising the minimum wage (Byrnes, 2015).

The Earned Income Tax Credit (EITC) is “a federal tax credit for low and moderate-income working people, which encourages and rewards work as well as offsets federal payroll and income taxes” (CBPP, 2016). The EITC is only available to those who are bringing in income and provides an incentive to work more hours. According to the Children’s Defence Fund, the EITC has been one of the “nation’s most effective tools for reducing child poverty among working families” (CDF, 2015). In 2013 the EITC helped to keep “3.2 million children out of poverty” and, according to an Urban Institute analysis, increasing this credit has the potential to lift one million more children out of poverty (CDF, 2015).

The political feasibility of an increase in the Earned Income Tax Credit would also be significantly easier than an increase in the minimum wage.  It tends to be an issue that both major political parties can support, which is especially important considering we currently have a divided government. In terms of social acceptability, twenty-six states have established a supplement EITC to  the Federal tax credit. This demonstrated that there is at least a wide geographical support for the program.

For a nation that considers itself the most powerful country in the world, to have almost a quarter of its children living in poverty should be an embarrassment. As cliche as it feels to say, these children really are the future. We have a responsibility, not just to the individuals experiencing this hardship, but to the nation as a whole to ensure that its next generation is afforded the basic necessities.  While an increase in the minimum wage or another tax credit is unlikely to be the magic bullet that will eliminate poverty, it is at least a starting point.

Photo Credit: Stephen Shames 

Sources:

Byrnes, Jesse. “Poll Finds Support for Minimum Wage Increase.” The Hill. The Hill, 19 Feb. 2015. Web. 23 Feb. 2016.

CDF. “Ending Child Poverty Now.” Ending Child Poverty Now. Children’s Defense Fund, 2015. Web. 24 Feb. 2016.

CPBB. “Policy Basics: The Earned Income Tax Credit.” Policy Basics: The Earned Income Tax Credit. Center for Budget and Policy Priorities, 15 Jan. 2015. Web. 23 Feb. 2016.

Desliver, Drew. “5 Facts about the Minimum Wage.” Pew Research Center RSS. Pew Research Center, 23 July 2015. Web. 23 Feb. 2016.

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