Key Policy Takeaways from 30 years of Child Poverty Decline
- Childhood poverty leads to worse educational attainment, worse future labor market outcomes, worse mental and physical health and development, and increased risk of engaging in delinquent behavior.
- A reduction in child poverty is tied to government programs which incentivize work.
- The key takeaway from the Census data which shows child poverty rates are falling and the Child Trends report which studied the causes of the decline is that, despite massive social safety net expansions, work and self-sustainability still played a larger role in lifting children out of poverty than government spending did.
by Alexander Adams
In a world marred by clickbait media headlines portending disaster, it’s always a relief when some rosy news can sneak its way into a major publication: “Poverty, Plunging” was the title of a recent New York Times newsletter. Fortunately, there happens to be strong backing for such a direct headline: According to a recent report by the firm Child Trends, a nonpartisan research center, in 1991 27.9% of children lived at or below the Census’ Supplemental Poverty Measure. Today, that number has fallen to 11.4%.
This is undoubtedly fantastic news. The research is unequivocally clear: children living in poverty face worse lifetime outcomes on a whole host of measures. Childhood poverty leads to worse educational attainment, worse future labor market outcomes, worse mental and physical health and development, and increased risk of engaging in delinquent behavior. The reduction in child poverty makes the lives of millions of children better off and has positive externalities for everyone in the country.
The Child Trends report asked a few fundamental questions regarding this amazing decline in child poverty, the key one being: what exactly caused this massive decline in child poverty?
According to the media’s portrayal of the report, the reduction was due to expanded social safety net and increased social safety net spending. Another New York Times article on the Child Trends report was headlined: “Expanded Safety Net Drives Sharp Drop in Child Poverty.” Opinion writers at the Washington Post took it a step further, arguing that the decline in child poverty since the 1990s debunks “arguments that…government help must be accompanied with work requirements.”
But does it really?
According to the Child Trends report itself, many of the programs proven to be successful in reducing poverty—the Earned Income Tax Credit (EITC), the Child Tax Credit, the Supplemental Nutrition Assistance Program (food stamps)—have work requirements. The EITC is actually an earnings supplement which has been shown to incentivize work. The expansion of work requirements for welfare programs in the 1990s increased labor force participation, according to research, which translated into more income and less poverty.
The increased post-tax income due to work incentives and requirements has not only reduced poverty and increased income, but has had nonfinancial impacts as well such as improved educational outcomes for children. The Georgia Center for Opportunity has previously published work on the deleterious nonfinancial impacts of nonwork. Figure 1.1 of the Child Trends report also shows that child poverty was stagnant from the beginning of the War on Poverty to the mid-1990s. The decline in child poverty occurred after we replaced our no strings attached welfare system with a system replete with pro-work incentives and requirements (though, work remains to be done).
Given all of this, it should be argued, based on the results of the report, that it was pro-work reforms and expansions to earnings supplement programs which directly promote work and self-sustainability that reduce child poverty — not unrestricted government spending.
Not only that, but according to the Child Trends report itself, the vast majority of the decline in child poverty is attributable to increases in earned income and not expanded social safety net programs. According to the report, child poverty fell 16.5 percentage points — from 27.9% to 11.4% — between 1993 and 2019. In 2019, they argue the child poverty rate would be 44% higher in the absence of social safety net expansions. This means, of that 16.5% drop, approximately 6% can be attributed to social safety net spending and over 10% is due to non-governmental factors.
These other factors represent the effect of earned post-tax income not provided by aid. While the social safety net played a role in material child poverty reduction, we can see that private income played an even larger role in that decline.
At GCO, we promote self-sustainability and work precisely because we understand that work plays a larger role in lifting oneself up from poverty than government aid — and the Child Trends report supports that argument.
The key takeaway from the Census data which shows child poverty rates are falling and the Child Trends report which studied the causes of the decline is that, despite massive social safety net expansions, work and self-sustainability still played a larger role in lifting children out of poverty than government spending did. Further, among the programs which did measurably help the poor, it was policies oriented towards promoting work, not programs without work requirements, which usually had the largest impact.
 As the child poverty rate in 2019 was 11.4% in 2019, and it would be 44% higher without social safety net expansions, this means, without social safety net expansions, child poverty would be approximately 16.4% (11.4*1.44 = 16.4). 16.4 (no welfare) minus 11.4 (reality) = 6%. This means approximately 10.5 percentage points of the 16.5% decline in child poverty was due to increases in earned income, and only 6 percentage points due to social safety nets (16.5 – 10.5 = 6).