The Children Are Starving

On behalf of the millions of children currently living in poverty in the US, allow me to remind you that… well, that there are millions of children living in poverty in the US.

These are uncomfortable statistics. Especially for those who can’t fathom any scenario where their own children (or grandchildren) would ever experience anything like poverty.

For most readers, this discussion is akin to certain kinds of conversations you’re infrequently compelled to, but would rather not, have with your doctor. Or like your semi-annual trip to the dentist for a teeth cleaning. You realize it’s necessary. But because it’s usually safe to ignore it in the short- or even in the medium-term, the tendency is to push it to the back of your mind. But, like plaque, it’s insidious over time. It must be addressed.

The reason I bring up childhood poverty now is simply because the US is trying to extricate itself from a public health crisis, and part of the palliative measures taken along the way involved direct payments to households and other types of enhanced federal assistance which (surprise, surprise) served to reduce poverty, specifically in April, May, and June. I talked about this late last month.

Read more: Less Money, More Poverty

“The entire decline in poverty through June can be accounted for by the one-time stimulus checks the federal government issued, predominantly in April and May, and the expansion of unemployment insurance eligibility and benefits,” economists Bruce Meyer, from the University of Chicago, and James Sullivan, of Notre Dame, wrote, in a study documenting the data from their near real-time poverty dashboard. “In fact, in the absence of these programs, poverty would have risen sharply.”

Using the same dashboard, one can see the effect of last year’s pandemic relief package on childhood poverty very clearly. Just in case, I’ve made the bars green (below).

The chart subheader is important. There’s no excuse for any measurable childhood poverty in the US. By “measurable” I simply mean that it’s impossible to wipe out every, single instance of an individual child experiencing poverty. That kind of economic micromanagement simply isn’t achievable. But, it’s probably possible to reduce childhood poverty to an extent that it would be so negligible as to be essentially immaterial from a statistical perspective.

You might scoff. This is, after all, a huge problem with multiple, overlapping causality and no easy fixes. And yet, I wanted to make the same point here that I made in the linked article above. Namely that the decrease in poverty during the months when the first major COVID stimulus package was being deployed indicates that lawmakers and Treasury can, in fact, drive down poverty rates literally overnight. It is that simple. Almost, anyway.

The figure (below) is from Census Bureau data and it’s meant to provide some perspective. More to the point, it’s meant to show that the trend is generally good. Childhood poverty in America has been on the wane for decades.

However, there are multiple disconcerting aspects of that simple chart. While it’s true that adjusting the y-axis would make the decline for white and Asian Americans appear more dramatic, the tragic irony is that in order to do so, I would have to literally pretend as though African American and Hispanic children don’t count.

But they do — count, that is. And while childhood poverty rates were falling quickly for minorities pre-pandemic, they were still triple levels for white and Asian American children. About 26% of African American children were impoverished in 2019. And that counts as the “best” outcome in the entire data series.

Additionally, you might note from the visual that the “progress” for white American children doesn’t look much like “progress.” Instead, it almost seems like the trend is more sideways than it is down.

The pandemic offers a rare opportunity to help address this issue. While it’s a simple observation, seeing it on a bar chart somehow makes it more “real.” The first visual above suggests that making a material dent in childhood poverty is as simple as legislating it away. Let that sink in.

If you’re looking for a nuanced suggestion, consider the following from the University of Maryland’s Melissa Kearney:

A social insurance program for children could dramatically reduce child poverty in the U.S., as Social Security has done for elderly poverty. The fact that children have the highest official rates of poverty in the U.S. is a dramatic reversal from the mid-twentieth century, when elderly poverty rates were the highest in the country. In 1959, 35% of those aged 65 and up lived in poverty, versus 27% of kids and 17% of adults. Social security has been a great anti-poverty success story for the elderly in this country. We could make a similar commitment to children. If each child living in poverty received a social insurance benefit equal to the average annual social security retiree benefit ($17,112), child poverty would fall to less than 1%. If each child living in poverty received half the average social security retiree benefit ($8,556), the rate of childhood poverty in the U.S. would fall below 4 percent. This would cost on the order of $179 billion and $90 billion a year, respectively. If the benefits were phased out at a rate of 70 cents on the dollar (which would clearly be a better policy design than a cutoff at the poverty line and would additionally reduce the number of children living in near poverty conditions), the annual cost estimates would be $293 billion and $118 billion, respectively. In 2019, our national Gross Domestic Product was $21.4 trillion. That means that with spending in the range of 0.4% to 1.4% of GDP, we could bring childhood poverty rates to less than 4 or 1 percent.

Think about all of the wasteful government spending that goes on every year. It would cost less than $300 billion, annually, to eliminate childhood poverty in America. 300 billion dollars, that is. And dollars, you’re gently reminded, can be conjured at will, with a legislative stroke of the pen and a keystroke at the Fed. They don’t need to be “sourced” from taxpayers, nor do they need to be “borrowed” from China, or anyone else. For context, the Fed is currently buying $120 billion in Treasurys and MBS each and every month. They aren’t taxing or borrowing to obtain the dollars for those purchases, folks.

Oh, and if you’re wondering how the US compares globally versus other rich countries on childhood poverty, the word is “embarrassing.” The US is nowhere near the OECD average. America can’t even see Finland, Denmark, Iceland, and Norway, from where it’s at.

As the OECD noted, “in Denmark and Finland, the child relative income poverty rate is only around 3-4%.”

Eventually, this is going to undermine the US economy. It already is, but over time, it will be a figurative (and literal) death knell. How could it not be? As the above-mentioned Kearney wrote, “growing up in poverty has long-term consequences for children and is very much entwined with issues of inequality and social mobility.” She added that “children who grow up in poverty have poorer physical and mental health; worse performance in school, and, given neighborhood segregation by income, they are more likely to attend lower quality schools and live in neighborhoods with fewer employed adults.” (I’ve preserved her citations for reference.)

When you think about the arguments against proposals like that set out in the longer excerpted passage from Kearney, note that they’re very often couched in terms of the deficit and the national debt. “Think about our children and our grandchildren,” budget hawks often say, referencing the myth that future generations will need to “pay for” our expenditures now.

Yes, indeed. “Think about our children and our grandchildren.” Because the former are starving right now. And the latter will be starving later.