Choosing Child Poverty

Susan Phillips
May 30, 2004
Economist Timothy Smeeding
Economist Timothy Smeeding

Poor Kids in a Rich Country (Russell Sage Foundation, 2003) compares data from 25 nations, collected over several decades. Most of the book, however, focuses on a core group of 15 rich nations: the U.S., Canada, Australia, the United Kingdom and 11 Western European countries.

The information comes from the Luxembourg Income Survey, a rich data set that is a treasure trove for comparative economic analysis. Using various statistical methods to compare how children are faring in each of the countries, Smeeding and Rainwater build a compelling case for the argument that U.S. domestic policy choices, rather than economic or social forces beyond government control, account for the lion's share of child poverty.

It's not an easy read; but it's an important one.

Susan Phillips spoke recently with Timothy Smeeding about the implications of this work for those interested in U.S. policies affecting low-income families and children.

You and your colleagues confront a lot of statistical challenges in making international comparisons. Have you heard many objections to, for example, your method of calculating the child poverty rate in the U.S. and elsewhere?

Not really. Certainly there are other ways to define child poverty. But it's clear that regardless of the measure we use, our children really don't do well compared to children in other comparable countries, no matter how you slice it. That's not to say poor children in Mexico or Romania are better off than poor children here. It's a question of who we should be comparing ourselves with.

Comparing Poverty

You make the case that here in the U.S. we choose to have high child poverty rates. Has your work lead you to any conclusions about why?

Certainly there are a lot of other priorities out there that we know about. We decided some time back that poverty among the elderly is something we would address, and we've done that pretty effectively.

But it seems to me that for a country as committed to equality of opportunity as we say we are, it is odd that we don't do more, especially for families where the mother is working hard to support her children.

We've cut the welfare rolls from 5 million to 2 million or less, but along the way we have turned the welfare poor into the working poor. We now have the hardest working low- income mothers in the developed world, but their poverty rates remain high. This is indeed disturbing. If you make other choices, policy can make a difference.

Poverty among children in low-income single-mother families

What kind of a policy or program directions, at the federal level, would signal that we were making a different choice, and getting serious about reducing child poverty?

Added support for child care, family leave, health insurance so that low-income mothers and fathers would be able to attend to their children's needs as well as support them through work. Making the current child care credit refundable as well. Making the EITC (Earned Income Tax Credit) and the child care credit available throughout the year instead of only the following year as part of a tax refund. More educational opportunities for low-income single mothers.

That's quite a big package, but if we understand the working poor, we know they tend to be just one accident away from losing their job.

Here in the U.S., we seem to address poverty and income distribution through the tax code. The EITC, for example, is one of the most important supports for the working poor. How do other nations approach these issues?

A lot of countries also use the tax code. The difference is that for us, it tends to be pretty much the only instrument we use. We don't have a good system for delivering benefits to children on a regular basis, through a family allowance for instance, the way that others are able to do it. This creates some issues. It says we are much more limited in what we can do for low-income children and families. There's only so much you can do with the tax code.

What about means testing to restrict eligibility for benefits? Is that more or less common in these other wealthy nations?

Hardly anyone means tests the way we do. Often they will look at income, but few penalize low-income families for having assets or savings as we do. There is a mix of benefits that are directed at low-income families, and benefits for everyone. But in general there is a greater universal set of benefits, especially in terms of health insurance and child care, and the child allowance system is universal.

What's unique in the U.S. and in the other Anglo-Saxon countries (U.K., Australia) is that we have very low wages too. Working 1,100 hours a year (about 20 hours a week) is not enough to get you out of poverty here. The minimum wage is part of it. Job advancement and the rate at which benefits rise isn't very good either, so the combination is very difficult.

Here in the U.S., family leave policy tends to benefit the highest-paid and best-educated mothers, and to be pretty unforgiving for other mothers. It's very difficult to be a full-time mother and a full-time worker at the same time. It seems to me we could find some ways to help. Why not guarantee child support, if the father is in prison, or if the father is not paying?

Do you think that using economic arguments, cost/benefit analyses, etc., is a useful way to raise these issues, given that moral appeals don't seem to have had much impact?

Cost-benefit analysis can be very useful. The problem with it is that when it comes to looking at investments in children, the benefits accrue far off in the future, so the people in power today won't see the benefit.

I think that to a great degree, children are still regarded as private goods in America. We need to understand that children are also a public good, they are going to support Social Security, they are going to be the ones competing with China!

The real trick is convincing politicians to support children. In 1997, Tony Blair made poor children a priority in Britain. He increased spending by roughly $90 billion. And it worked; the child poverty rate has fallen from 25 percent to about 12 percent.

It's an example of what you can do if you put your mind and your money to it, if you really believe in the idea of no child left behind.

You note in the book that the Anglo-Saxon countries—the U.S., U.K., Canada and Australia—generally seem to have a higher tolerance for child poverty than the European nations. Why is that?

Well, they tend to be younger countries. But it's important to note that our paths have diverged considerably in the last 10 years, there's been a split within the Anglo-Saxon countries, and our kids are now at the very bottom of the barrel. It's very discouraging. In the U.K., in Canada, in Australia, they've started to do much better.

U.S. Child Poverty Trends Over Time.

I'm not sure why. Political leadership is critical—somewhere somebody has to understand we're not talking about helping welfare mothers, there are very few of them left in any case.

Timothy Smeeding is a professor of public policy at Syracuse University, and overall director of the Luxembourg Income Study.

More data and analysis of the child poverty information from the Luxembourg Income Study can be found in this slide show presentation:

Susan Phillips is the former executive editor for Connect for Kids.