The Consequences of Poverty for Children and the Nation

Posted March 11, 2014
By the Annie E. Casey Foundation
Blog consequencesofpovertforkidsandfamilies 2013

Most peo­ple don’t real­ize the enor­mous eco­nom­ic price we pay as a coun­try for hav­ing the high­est lev­el of child pover­ty in the devel­oped world. Extend­ed expo­sure to eco­nom­ic hard­ship can harm children’s devel­op­ment and have long-term neg­a­tive con­se­quences for indi­vid­u­als and fam­i­lies, but it also puts tremen­dous finan­cial strain on all lev­els of gov­ern­ment and weak­ens our nation’s com­pet­i­tive­ness in the glob­al econ­o­my. Pro­vid­ing all chil­dren with the oppor­tu­ni­ty to reach their full poten­tial would strength­en the next gen­er­a­tion and our country’s eco­nom­ic future.

How Pover­ty Threat­ens the Next Generation

Low fam­i­ly income can impede chil­dren’s cog­ni­tive devel­op­ment and their abil­i­ty to learn. It can con­tribute to behav­ioral, social and emo­tion­al prob­lems, and it can cause and exac­er­bate poor health as well. Research has con­sis­tent­ly shown that ongo­ing expo­sure to eco­nom­ic stress and hard­ship harms child devel­op­ment: par­ents invest less in their kids and expe­ri­ence high­er lev­els of stress.

When par­ents are unem­ployed or their incomes are low, they may strug­gle to meet their children’s most basic needs for food, safe hous­ing, med­ical care and qual­i­ty child care. Being hun­gry, home­less or hav­ing untreat­ed health prob­lems pose tremen­dous obsta­cles for chil­dren to suc­ceed in school. Low-income par­ents also strug­gle to pro­vide the devel­op­men­tal­ly enrich­ing books, toys, activ­i­ties and ear­ly care and learn­ing envi­ron­ments that are abun­dant in the lives of more afflu­ent children.

Inad­e­quate fam­i­ly income and eco­nom­ic uncer­tain­ty increase par­ent stress, which in turn can cause depres­sion and anx­i­ety and increase the risk of sub­stance abuse and domes­tic vio­lence, all of which com­pro­mise par­ent­ing. Although these prob­lems are found in fam­i­lies at all income lev­els, they are more preva­lent among low-income fam­i­lies, who have far less access to social sup­ports and treat­ment options.

Deep, Long-Term and Young Child Pover­ty Pose the Great­est Risks

The effects of pover­ty on children’s health and devel­op­ment depend in part on the tim­ing, dura­tion and inten­si­ty of pover­ty in child­hood. The risks posed by pover­ty are great­est for chil­dren who expe­ri­ence eco­nom­ic hard­ship when they are young and among those who expe­ri­ence per­sis­tent and deep poverty.

Eco­nom­ic hard­ship pos­es the great­est risk to young kids because a child’s ear­li­est years, espe­cial­ly from birth to age 3, lay an impor­tant foun­da­tion for lat­er devel­op­ment. Children’s brains are devel­op­ing rapid­ly and the qual­i­ty of their ear­ly rela­tion­ships and envi­ron­ments can have last­ing effects on their lat­er devel­op­ment. As a result, cog­ni­tive, social and behav­ioral gaps among chil­dren of dif­fer­ent socioe­co­nom­ic back­grounds are evi­dent ear­ly on and will per­sist with­out intervention. 

For exam­ple, at age 4, chil­dren who live in very low-income fam­i­lies are 18 months behind the devel­op­men­tal norm for their age, and by age 10, the gap is still present.

The neg­a­tive effects of eco­nom­ic hard­ship on young chil­dren are trou­bling in their own right but also cause for con­cern because they are asso­ci­at­ed with dif­fi­cul­ties lat­er in life — drop­ping out of school, poor ado­les­cent and adult health and poor employ­ment outcomes.

Child Pover­ty: Every­body Hurts

High rates of child pover­ty also exact a seri­ous toll on the U.S. econ­o­my. Before the reces­sion, econ­o­mists esti­mat­ed that child pover­ty cost the Unit­ed States $500 bil­lion per year in lost labor force pro­duc­tiv­i­ty, spend­ing on health care and crim­i­nal jus­tice. Each year, child pover­ty reduces pro­duc­tiv­i­ty and eco­nom­ic out­put by about 1.3 per­cent of our gross domes­tic prod­uct. These costs are undoubt­ed­ly high­er today giv­en the increase in eco­nom­ic hardship.

The true costs of child pover­ty, how­ev­er, go far beyond wast­ed dol­lars. With­out mak­ing smart invest­ments to expand oppor­tu­ni­ty for all chil­dren to reach their full poten­tial, we can expect to see con­tin­ued ero­sion in eco­nom­ic mobil­i­ty and weak­en­ing of our nation’s com­pet­i­tive­ness in the glob­al marketplace.

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