Updated July 16, 2009.

CFK field report from a July 7, 2009 Hill Briefing, hosted by the Coalition on Human Needs and co-sponsored by Sen. Dodd (D-CT) and Rep. McDermott (D-WA).

Washington, DC, July 7—It's a time of tight budgets and high price tags, but Dr. Harry Holzer, economist at Georgetown University and co-author of the report, "The Economic Costs of Poverty in the United States: Subsequent Effects of Growing Up Poor", believes that overlooking opportunities to invest in youth is the biggest mistake Americans can make.

"When we don't invest in education programs, health programs for children, especially for children in poverty, we are making ourselves a poorer country," Holzer said. "This is not the place or the time to skimp. The small amount of money that is needed to invest in our kids, especially during a recession, will have a significant impact on our economic future."

Holzer joined Michael Linden, senior director of Tax and Budget Policy at First Focus, and Kinsey Dinan, senior policy associate at the National Center for Children in Poverty, for a July 7 Congressional briefing addressing the economic costs of 13.3 million American children living in poverty.

• According to Child Trends, the number of U.S. children living in poverty increased from 11.6 million in 2000 to 13. 3 million in 2007. In that same time, the percentage of children living in families with incomes below the poverty line increased from 16.2 percent to 18.0 percent. Child Trends estimates that nearly one in five children are poor.

• The latest HungerReport.org report estimates that children in the U.S. have the highest poverty rates of all age groups (18 percent for children). In 2007, the poverty rate for adults was 10.9 percent and 9.7 for the elderly.

• According to the Luxembourg Income Study, the U.S. child poverty rate is the second highest among 15 high-income nations, including Australia, Canada, Israel and other Western European nations.

A Lasting Cost for All
The immediate impact of a child living in poverty often goes unnoticed, but Holzer acknowledged that childhood poverty "imposes costs on American society equal to nearly four percent of GDP, or about $500 billion a year."

This generation of impoverished youth represent a future workforce that will not be able to fully contribute to economic growth. According to Kinsey Dinan, poverty impedes brain development, ability to learn and increases social and emotional behavioral problems, conditions that can make it even more challenging for a child to escape poverty in the future.

"Unless we're addressing the root source of poverty and providing children with the ability to escape it, then we're just throwing water at the wind," Linden said. "We need to invest in the long-term programs for our children, like education and job training. Right now, our focus is on short-term solutions, and that may help for a bit, but ultimately, we need to invest more in these programs for our own future economic security."

Outdated Poverty Formula a Disadvantage
Flaws with the current poverty formula make it difficult to measure the impact of current programs such as Medicaid, the State Children Health Insurance Program (SCHIP), food stamps and child tax credits, which aim to address childhood poverty. Dinan concluded: "In America, it is clear that we have miscalculated what it means to live in poverty today. Because of this current benchmark, we have families that are living against outdated standards of what it means to have a decent life."

The National Center for Children in Poverty calls for a new formula to measure family poverty in America. The Measuring American Poverty Act of 2009 would be based on the current cost of food, clothing, shelter and other basic necessities, such necessary medical and work expenses.

Using this formula will set the federal poverty level to 120 percent of where it currently stands.

Under the current poverty formula, a family of four with an income of approximately $22,000 per year is considered to be living in poverty. The NCCP estimates that basic living expenses can conservatively reach about $47,000 for a family of four, far exceeding the national poverty threshold. (An earlier version of this article incorrectly stated that the new formula would result in a 20 percent increase in the number of families considered to be living in poverty. We apologize for the error.)

Accurately "measuring child poverty is as important as addressing it," Dinan said during the event.

Learn More

• CFK’s Family Income topic page

---

Clare Krusing and Maria Allen are interns with Connect for Kids. Clare is a senior at Indiana University, majoring in journalism and public & environmental affairs. Maria will complete her degree in Elementary and Special Education from SUNY Geneseo in fall 2009.