How Much Does Child Poverty Cost the Economy?

A blog post by Chris Lilienthal, originally published at Third and State.

At a conference this week, a presenter posed an important question that doesn't get asked very often: How much does child poverty cost our economy?

Based on an analysis of the U.S. Census Bureau's 2006 American Community Survey data, researchers estimated that child poverty costs the nation $500 billion annually in foregone earnings, involvement in crime, and the costs associated with poor health outcomes. In Pennsylvania, the cost is $17.5 billion annually, based on the 2006 data showing 465,000 (or 17%) of children living in poverty.

In effect, this is money that would accrue to the U.S. and Pennsylvania economies if we took steps now to end child poverty once and for all, such as investing in education, health care and other vital family needs. And with poverty rates higher today in the wake of the recession, the benefits of doing so would be that much greater.

We have long grappled with the social costs of poverty and what it means for families across Pennsylvania and the nation. It's also critical to look at poverty as a huge economic and jobs issue.

Lori Pfingst of the Washington State Budget and Policy Center, who took the national data and broke it down by state, explains:

The social and economic costs associated with childhood poverty are a powerful argument for policymakers to develop poverty reduction campaigns at both the federal and state level. Several states have developed poverty reduction campaigns and some have implemented new anti-poverty policies. ... In light of these numbers, poverty reduction should be viewed as a social investment that generates billions of dollars in returns to society in the form of increased economic productivity, reduced expenditures on health care and the criminal justice system, and improvements to multiple dimensions of children’s well-being.

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