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Recession-Induced Child Poverty to Cost U.S. $1.7 Trillion in Economic Loss
added: 2008-12-16

A new report has found that the United States will suffer a future economic loss of over $1.7 trillion if the current recession drives an additional 3 million children into poverty, as has been predicted. That amounts to a yearly loss of about $35 billion dollars per year over the lifetime these children.

The report, entitled "The Cost of Doing Nothing," was released by First Focus, a bipartisan children's advocacy organization. The report analyzes the costs of childhood poverty, including its effects on lifetime earnings and health outcomes. Research indicates that children who spend more than half of their childhood in poverty earn, on average, 39% less than the median income. Furthermore, a poor child loses approximately a quarter of a million dollars worth of "health quality" over the course of their lifetimes. By aggregating these long-term effects across the millions of poor children who are projected to fall into poverty as a result of this recession, the report produces a baseline estimate of the economic costs of allowing additional children to become poor during a recession.

"If we do not act now, the current economic climate will lead to millions more children living in poverty, which will cause a severe economic loss for our nation's future," said Bruce Lesley, President of First Focus. "When children enter poverty at a young age, their ability to achieve the American dream is diminished. They are 13 times more likely to remain in poverty for several years after the recession ends, leading to adverse effects on lifetime earnings as well health outcomes."

The report looks at the particularly severe ramifications that stem from numerous childhood years spent in poverty. The report finds that more than half of children who fall into poverty during recessions are likely to remain in poverty for at least some time after the recession ends. In fact, about a quarter of children who suffer from recession-induced poverty will spend at least half of their remaining childhood in poverty.

"Our findings show that recession-induced poverty has a lifelong effect on our children. Moreover, we know that poverty during childhood leads to severe, long-term economic costs. Therefore, there is a significant economic benefit to acting now to prevent the child poverty rate from skyrocketing. Indeed, if we can just maintain the current child poverty rate, the US economy will benefit by at least $1.7 trillion over the next several decades," Lesley added.

In August, the U.S. Census Bureau released data showing that the number of children living in poverty in 2007 has already begun to climb, reaching its highest rate in a decade. The Census shows that in 2007, 13.3 million children were living in poverty.


Source: PR Newswire

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