See also: A Strong Middle Class Is Key to Getting Our Economy Moving by Michael Ettlinger and Economic Inequality Is Not Sustainable by Heather Boushey
A new report from the Half in Ten campaign, “Restoring Shared Prosperity: Strategies to Cut Poverty and Expand Economic Growth,” examines recent data on poverty in our nation and provides a set of benchmarks to help policymakers stay on target to cut poverty in half in 10 years. The report shows that more than 15 percent of Americans—one in six—fell below the official poverty line in 2010—defined as a family of four with income below $22,314. Child poverty increased noticeably between 2009 and 2010, too, with more than one in five children—22 percent—living in poverty.
Recent U.S. census data and the new Half in Ten report clearly show the debilitating consequences of stagnant wages, high unemployment, and a slow economic recovery. Yet too often we separate the discussion of poverty reduction from debates about the overall U.S. economy. We do so at our own peril. Even before the Great Recession, the economy was not working for average Americans. Between 2003 and 2007 economic productivity and profits were on the rise, even as median wages for the average worker declined and poverty rates rose. The Half in Ten report outlines a new vision for shared economic growth that will restore the relationship between economic productivity and increased wages for workers.
While the millions of children and adults who live in poverty face real and immediate economic hardships, reducing the overall rate of poverty is a public good that will benefit Americans at every income level. Below are 10 reasons why cutting poverty is good for both individuals and the overall economic strength of the United States.
Individuals
Poverty affects more Americans than we think
While 15.1 percent of Americans lived below the official poverty line in 2010, this number is only a snapshot. At the same time more than 100 million Americans were struggling to get by on low incomes, earning below twice the poverty line ($44,700 a year for a family of four), and experiencing many of the same hardships as those officially defined as poor.
In addition, nearly one-third of Americans were cycling in and out of poverty even during the boom years. Between 2004 and 2007 32 percent of Americans had at least one spell of poverty lasting two or more months. During the same period chronic poverty was relatively low, with only 2.2 percent of Americans living in poverty for the entire period. These figures tell us that the poor are not a static group and that widespread economic insecurity has pushed millions of Americans into poverty or at risk of falling into poverty at some point during their lives.
Rising poverty among children is particularly harmful to society
In 2010 more than one in five children—22 percent—lived below the official poverty line. Children who live in families below the poverty line, even for short periods, are at greater risk of lower cognitive development, educational attainment, increased reliance on public benefits, and increased rates of incarceration. Consequently, children who grow up in poverty are more likely to have lower lifetime earnings due to the poverty-related risks. This means they are far less likely to grow up to become positive contributors to our economy and our society.
Poverty increases health risks
Poor children are much more likely to have lower birth weight, and infants living in poor households face higher rates of food insecurity, which impairs healthy development. As adults, lower-income individuals experience higher rates of illness, disease, and disabilities than those who have higher incomes. They have higher rates of chronic disease such as hypertension, high blood pressure, and elevated cholesterol. These conditions are exacerbated by the frequent lack of health insurance and access to medical care among lower-income individuals. Consequently, the life expectancies for poor individuals are much lower than those with high incomes. One estimate showed that individuals with low incomes had life expectancies 25 percent lower than those with higher incomes.
Poverty weakens families
Low-income and poor families face significant economic pressure as they struggle to pay bills and make ends meet. This economic pressure, coupled with other stressful events that are more prevalent in the lives of poor families, create high levels of psychological distress, including depression among poor parents. As couples struggle to make ends meet, their interactions become more hostile, and they tend to withdraw from each other—leading to fractures in relationships and poor parenting. Job losses, a major cause of poverty, increase a couple’s risk of divorce, especially for African Americans who experience two to three times greater risk of divorce in such circumstances than white couples.
Poverty traps individuals and decreases mobility
Children who grow up in poor families are more likely to be poor as adults compared to children from upper-income families, undermining the American Dream. These poor adults are also more likely to have poor children of their own. Only 6 percent of children born to poor parents (those in the bottom fifth of income earners) grow up to become rich (entering the top fifth of income earners) while nearly half of them (46 percent) remain just as poor.
United States
Poverty costs our economy billions of dollars annually
High rates of poverty hurt everyone in the United States because it strips limited resources from the government that could be invested in other areas to promote economic growth. Child poverty alone is estimated to cost the U.S. economy more than $500 billion annually in lost productivity, increased health care costs, and higher criminal-justice expenditures.
Poverty weakens the middle class, the engine of America’s economic growth
America’s economic strength is based on a strong middle class with purchasing power to fuel our economy and workforce contributions to increase our economic growth and productivity. The increasing number of Americans who slip from the middle class into poverty places downward pressure on our nation’s revenues due to the impact of lower earnings. Additionally, long periods of poverty produce downward effects on human-capital development by limiting access to education and training and proper health care. As a result, when individuals who have experienced long periods of poverty enter the workforce, their contributions may be restricted or minimal, while others may not enter the workforce at all. The result is low productivity from millions of underskilled Americans alongside a significant reduction in the purchasing power and savings among poor individuals. This results in lower demand from a large segment of our population and less investments to expand and grow the economy.
Poverty weakens communities and access to the American Dream
The long-term impact of concentrated poverty contributes greatly to the increasing income and wealth gap in the United States. Children living in neighborhoods that experienced a 10 percentage-point decline in poverty saw a $7,000 increase in family income as adults compared to those children living in neighborhoods without a reduction in the poverty rate. This cycle of poverty creates generations of individuals who are trapped in economically isolated communities with low incomes. This is at odds with our American values of opportunity for all.
Poverty lowers U.S. long-term competiveness
Poverty also dramatically harms long-term human-capital development, a critical component in our nation’s global economic competitiveness. A substantial body of research shows that children who grow up in poverty underperform in school, have limited access to higher education, and are less likely to be prepared for the high-skilled jobs of the future. With 22 percent of the nation’s children living in poverty, we are imperiling future generations of workers who will be needed to lead U.S. productivity and competitiveness.
Poverty weakens our democracy
Disparities of income, wealth, and access to opportunity are growing more sharply in the United States. The result is a system with unequal voices in which millions of low-income Americans do not fully exercise their rights as citizens. Those who enjoy higher incomes are more likely to make their values known to government officials. Consequently, when Americans with different income levels differ on policy preferences, the policy outcomes strongly reflect the values of the wealthy at the expense of the middle class and the poor. This reality conflicts with the cherished American ideals of equal representation and political equality.
Conclusion
These 10 reasons showing why cutting poverty in half in 10 years is good for our nation underscore the need for a comprehensive set of reforms to create greater opportunity for all and reduce the number of families who live in poverty. Specific strategies must be implemented to reduce the number of children who are born or fall into poverty. The economic consequences will be severe for future generations if we do not take swift action. We know the path to cut poverty, have done it before, and have the policy prescriptions to address the challenges that families and the nation now face.
The new report from Half in Ten outlines a broad policy framework that would help develop more good jobs, strengthen and protect families, and place more Americans on a path to economic stability. We have the blueprint for action. Now we need to act.
Desmond Brown is a consultant for the Center for American Progress Action Fund-led Half in Ten campaign to reduce poverty by half in 10 years.
See also: A Strong Middle Class Is Key to Getting Our Economy Moving by Michael Ettlinger and Economic Inequality Is Not Sustainable by Heather Boushey