Expand Economic Opportunity and Reduce Child Poverty

Root Causes: Child Poverty

Why is this Trend Important?

The "toxic stress" associated with living in poverty significantly limits children’s brain development, and early brain development is critical to children’s health and future well-being.[i] Children in poverty are more likely to experience negative outcomes in educational, employment, health, and emotional development. Thus, reducing child poverty can have a beneficial effect on many outcomes for children. From a fiscal perspective, negative outcomes associated with poverty create significant costs for taxpayer-funded programs including remedial education and income supports.

What Factors Impact Child Poverty?

Historical rises in child poverty rates have been caused by multiple factors, including slow economic growth, declining earnings for less-educated workers, and rising numbers of children in single-parent households.[ii] Other wealthy, industrialized nations have much lower child poverty rates than does the United States, associated with significantly higher rates of expenditures on work supports such as child care.[iii]

Factors that affect child and family poverty rates, most of which can be influenced by state policy, include:

§ Job Availability. The availability of employment has multiple components, including availability for workers with multiple skill levels and in a location that is accessible to workers with limited transportation options.

§ Wages. One-third of children in poverty have a parent working year-round, full-time, and the percentage of children in these working-poor families has grown by 60 percent since 1992.[iv]

§ Taxes. Income taxes, sales taxes, property taxes, and other taxes can significantly reduce the resources available to families.

§ Cost of living. Paying for necessities such as housing, transportation, health care, and child care can pose major barriers for parents seeking to gain and maintain employment, and is a significant factor contributing to the number of children in poverty. These necessities have grown at a significant rate over recent history.

§ Wealth-stripping practices. Each year, families lose millions of dollars to financial service providers using unscrupulous practices in the areas of predatory mortgage lending, payday lending, auto title lending, refund anticipation lending, and high-fee check-cashing and tax preparation services.

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