Invisible Americans: The Tragic Cost of Child Poverty
Jeff Madrick
Knopf, $25.00 (cloth)
There are several ways to appraise the justness of any given society, but most people would likely agree that one relevant criterion ought to be the status of its most defenseless members. While there will be multiple candidates for this unenviable designation, children would make any short list that gains wide currency, with the poorest of them deemed particularly vulnerable. But a demonstration of just how precarious the lives of poor children can be should not be confused with a strategy for making their circumstances better. To be sure, raising awareness about injustice and eliciting compassion can help develop solutions aimed at reducing inequity. There is, however, no substitute for the hard, messy work of mobilizing political support and translating it into the political efficacy needed to reshape existing laws and develop effective policies. Republicans have done little to better the lives of poor children. Yet Democrats, too, have failed to chalk up large victories on this front, despite the magnitude of this particular form of inequity and the various ways in which it degrades the lives of American children. Child poverty, and our failure to address it, is the subject of Jeff Madrick’s new book Invisible Americans: The Tragic Cost of Child Poverty (2020).
Republicans have done little to better the lives of poor children. Yet Democrats, too, have failed to chalk up large victories on this front.
According to the U.S. Census Bureau, the official poverty rate in 2018 was 11.8 percent, though it was considerably higher for Hispanics and African Americans (17.6 percent for the former, 20.8 percent for the latter). The stark racial disparities are once again evident in the proportion of children living in poverty—only 10 percent of whom are white, while 30 percent are Native American, 31 percent are black, and 23 percent are non-white Hispanic or Latino. The worst off, 8 percent of all children in 2016 (children comprise 22 percent of the United States population), endure “deep poverty,” meaning that their families’ incomes are below 50 percent of the poverty line—and that was before the COVID-19 pandemic. Alas, the economic crisis wrought by COVID-19 will make life even harder for the poor.
Madrick, a senior fellow at the Century Foundation and director of its Rediscovering Government Initiative, has written prolifically about the intersection between economics and justice. True to form, his analysis in Invisible Americans is perceptive, lucidly written, and based on wide-ranging evidence. The book is also concise, spanning about 240 pages, though, unfortunately, it doesn’t include any real-life portrayals of his subjects.
Madrick delivers an impassioned and unsparing verdict on the “scourge” of child poverty early on: the American government has not done what it should, and could, to better poor children’s lives, and indeed has accorded them little importance. The evidence bears him out. In a study by the Organization of Economic Cooperation and Development (OECD) that included thirty-one countries—the United States and Canada plus European states—the United States had the highest child poverty rate, after counting taxes and state-provided benefits. Madrick, a fierce critic of the U.S. government’s methodology for calculating poverty, maintains that if it were “properly measured,” between 20 to 25 percent of American children would count as poor. Compare this to one child out of ten in France, and one out of thirty in Scandinavia.
This failure can’t be attributed to a lack of money or the inherent insolvability of child poverty, Madrick contends. Instead, he attributes it to the absence of long-term and sufficiently-funded political decisions and policies during the last four decades. He doesn’t, however, throw up hands in despair. It needn’t be this way, he assures us, pointing to the success of the anti-poverty programs launched during Franklin Roosevelt’s New Deal and Lyndon Johnson’s War on Poverty, and the superior record of European countries. When leaders are determined to reduce poverty and muster the necessary political support and resources, the results have been remarkably good, for both children and their parents. Between the 1930s and the 1980s, the United States made great strides in the fight against child poverty. Madrick believes that that progress, which largely stalled during the past few decades, can not only resume, but be accelerated.
Poverty pervades every corner of a child’s life. Poor children often go hungry or experience “food insecurity,” meaning that they do not know when they will eat their next meal or where it will come from. Filler foods, which are easier on the budget but poorer in nutrition, are staples in their diets because their parents have to scrimp. Poor children live in neighborhoods with underfunded schools and hospitals, high rates of crime, and poorer air quality. Their chances of moving to communities with better basic services are slight; their parents have low incomes or are poor. (Child poverty cannot, of course, be separated from poverty more generally.) Worse, as Matthew Desmond’s devastating Pulitzer Prize-winning book Evicted describes, poor families risk being repeatedly expelled from their homes and ending up in shelters. Hobbled by stagnant wages and soaring rents, they struggle to pay landlords, who don’t lack for tenants and are happy to see defaulters depart.
If a low-income family has to fork over more than one-third or even half of its earnings to cover rent, there will be little left to meet the other basic needs of the children.
Poor nutrition, the stress created by inhabiting overcrowded homes, intermittent and unforeseen moves, periods of homelessness, inadequate healthcare, and the harshness of quotidian life take their toll on children in various ways. Compared to their better-off peers, they tend to have worse physical health and greater susceptibility to illnesses. Poverty can also impair their brain development and cognitive skills, contributing to various behavioral problems. These ill-effects cast a long shadow. Poor children are less likely to finish high school (nearly one-third do not) or complete college in four years than children raised in better conditions—even when they score better on tests. As adults, they earn substantially less (by about half) and, as the work of the economist Raj Chetty and his colleagues has shown, their social mobility lags. Poverty in childhood also puts them at much greater risk of plunging into periods of poverty in adulthood.
Poor children lack in sufficient measure what Amartya Sen and Martha Nussbaum called “capabilities,” the economic and social resources that enable agency and self-actualization. Yes, some do defy the odds, and are held up by critics of government-provided assistance as proof that diligence and the magic of the marketplace are the true solutions to poverty; but the larger point stands: the deck is stacked against poor children, and owing to circumstances outside of their control.
Between 1979 and 2018, the wages of low-income workers (allowing for inflation) “barely budged” according to a study by the Pew Research Center. And such gains as did occur overwhelmingly benefitted households on the upper rungs of the income ladder: while the wages of workers in the 90th percentile increased by 34 percent, the wages of those in the 10th percentile increased by 4 percent. Those in the 5th percentile actually lost ground, especially African Americans and Hispanics. Though these statistics began improving after 2010—wages increased by 3.5 percent for workers in the 5th percentile and by 5 percent for those in the 10th percentile—the pandemic will surely erase these gains.
The trends in rent were rather different. The median cost of rent jumped 17.2 percent between 2000 and 2016. By 2017 47.4 percent of American households were considered “rent-burdened,” meaning that rent consumed at least one-third of family income. The percentage of American households now in this predicament is nearly double what it was in the 1960s. And in 2018 alone, the median monthly cost for a one-bedroom apartment increased by 4.1 percent to $1,078.
But even this doesn’t tell the full story of the rent squeeze. Madrick reckons that 83 percent of families with annual incomes under $15,000, and 77 percent of those making $15,000 to $29,999, are rent-burdened. And some renters had it worse. In 2017 24.9 percent used at least half of their incomes to pay the landlord. If a low-income family, let alone one living below the poverty line, has to fork over more than one-third or even half of its earnings to cover rent, there will be little left to meet the other basic needs of the children, especially since poor families don’t have deep reserves to draw on in hard times. Leave aside families living below the official poverty line—as of this year, $12,760 for individuals and $21,720 for a three-person family—over one-fifth of American adults lack savings of any kind to use for paying past due rent or managing emergencies. No one should be surprised, therefore, at the Department of Housing and Urban Development’s (HUD) 2018 finding that “children under the age of 18 made up 60 percent of people experiencing homelessness in families.”
There are different ways to measure poverty. The U.S. government uses two, both of which Madrick disdains. The Official Poverty Measure (OPM) adjusts the 1963 cost of a subsistence-level food budget for inflation and family size, then, based on the assumption that the average household spends one-third of its income on food, multiplies that amount by three. (The calculations omit taxes people pay and benefits they receive from the government.) Madrick describes the OPM as “among the least sensible” of official statistics, and with good reason. Prosperity has increased since the OPM’s formulation in 1969, meaning that families now spend much less than one-third of their income on food—about 10.5 percent in 2020. Madrick contends that the OPM therefore ought to be four to five times the family basic food budget and that having failed to change with the times, it lowballs the proportion of poor Americans. Anyone who glances at the yearly OPM thresholds—for example, $25,926 for a family of four last year—will wonder how parents can possibly afford basic necessities, such as rent, gas, clothing, healthcare, and childcare, not least because the prices of these items have generally outpaced food costs.
Madrick proposes a new poverty measure that, if applied, would raise the U.S. poverty rate to 25 percent, double what it is now.
Then there’s the Supplemental Poverty Measure (SPM), which builds on the OPM but also counts government-provided benefits. These include the Temporary Assistance to Needy Families (TANF), a cash grant that was introduced in 1996 as part of President Clinton’s welfare reform and replaced the more generous Aid to Families with Dependent Children (AFDC) program initiated by FDR; the Supplementary Nutritional Assistance Program (SNAP), the substitute for the 1939 First Food Stamp Act and the Food Stamp program of the 1960s; Medicaid (about one-fourth of its budget is channeled to children); the Children’s Health Insurance Program (CHIP), for families who earn too much to qualify for Medicaid; and housing subsidies. The SPM also counts earnings, Social Security income, and non-cash tax benefits, such as the 1975 Earned Income Tax Credit (EITC) and the 1997 Child Tax Credit (CTC), both designed to supplement the incomes of middle- and low-income families. Tax payments and the inflation-adjusted (based on a five-year moving average) cost of expenses such as food, housing, medical bills, transportation, and childcare are deducted, allowing for regional variations. These complexities culminate in the creation of various poverty thresholds. In 2018 the overall SPM-based poverty rate was 12.8 percent for all Americans and 13.7 percent for children under eighteen.
Madrick notes that though the more nuanced SPM improves upon the OPM, it still falls short. Poor families, who earn little and therefore don’t pay much in taxes, gain proportionately less from the tax credits included in the SPM formula. For EITC, the maximum income for eligibility was $55,952 in 2019, and the credit ranged from $529 for a household without children to a maximum of $6,557 for one with three. The basis for Madrick’s dissatisfaction with EITC isn’t entirely clear. It pulled 5.6 million people, including three million children, out of poverty in 2018 and has been widely commended for reducing child poverty.
Madrick’s critique of the CTC rests on firmer ground. The CTC provides a refundable credit of up to $2,000 for each child under seventeen—however, if the credit exceeds what’s owed in taxes, the maximum amount gained is $1,400. About 27 million kids do not qualify for the full credit because their families’ earnings fall below the minimum earnings threshold and the credit exceeds their tax liability. Meanwhile, 70 percent of the children in families headed by single women receive less than the full credit on account of low household incomes, and 28 percent receive none at all. For children in families headed by single men, 42 percent receive partial credit and 18 percent receive none. By contrast, only 25 percent of the children in two-parent families fail to qualify for the full credit, and a mere 5 percent are ineligible for any credit. There are racial disparities as well. Of the families with children, 53 percent of those who are black and 50 percent of those are Hispanic do not qualify for the full credit in comparison to 23 percent of those who are white. And though President Trump doubled the credit per child, he also raised the household income ceiling for CTC from $110,000 to $400,000.
Madrick wants to discard both of the government’s poverty measures. In their place, he proposes setting the annual poverty rate in relation to median income, the method used in Europe, counting families earning less than 50 percent of the U.S. median income ($61,937 in 2018) as poor. This would raise the U.S. poverty rate to 25 percent, double what it is now. As for solutions, he appears to favor replacing the current panoply of anti-poverty programs—whose effectiveness he does acknowledge—with monthly cash grants of $300-$400 per child, and “to all families with children,” in effect a version of the Universal Basic Income (UBI), but for children. (This idea places him in odd company as it has also been embraced by some on the political right.) Madrick reasons that cash allowances would help poor families more than tax credits and programs. Parents could use the money to meet their children’s particular needs and also count on a dependable monthly income supplement, which tax credits don’t provide. Madrick’s proposal seeks to boost children’s “capabilities” (to again invoke Nussbaum and Sen).
So what about the cost? There are 74.2 million children in the United States; depending on whether each receives $300 or $400 per month, Madrick’s cash supplement would require between $267.1 billion and $320.7 billion this year. Though this amount is less than what he estimates as the cost of existing antipoverty programs for children ($481 billion), he also calls for substantial investments in infrastructure, apprenticeships, and “work and wage subsidies,” accompanied by additional funds for public schools in poor and low-income neighborhoods. Yet he never specifies the minimum investment necessary to meet all of his goals.
Should all families, regardless of need, receive cash allowances for their children? Madrick believes that they should.
Madrick leaves other questions unanswered, which are addressed in other careful studies of UBI proposals that agree that income supplements would substantially benefit children. One particular aspect of his proposal that requires more discussion is whether all families, regardless of need, should receive cash allowances for their children. Madrick believes that they should, presumably because universality would increase public support for a child-centered UBI. But why not first focus solely on children in poor families or widen the circle of eligibility to those who earn less than the median income? After all, today’s welfare programs are “means tested.” Then there’s the question of whether, as Madrick appears to believe, cash allowances would actually reduce poverty more effectively than extant programs, such as Medicaid, TANF, SNAP, CHIP, the EITC, and the CTC. Given their success in meeting particular needs, there could be benefit to retaining these current programs alongside an additional child cash supplement. And what about the hardship that eliminating SNAP would impose on childless adults who qualify for that program? They are “extremely poor,” with one-quarter lacking a high school diploma and one-half lacking any education beyond that. Surely poor adults without children matter too.
A child-centered UBI may well be the best antipoverty initiative, all on its own. But Madrick’s framework doesn’t provide the details necessary to make his case stick. In this respect, the compactness of his book is a drawback.
Jeff Madrick’s plans are nothing if not bold, and may even verge on being unrealistic. By Madrick’s own admission, child poverty doesn’t make for big headlines or loom large in the platforms of those seeking elected office. Ignoring well-funded and politically-connected groups often costs candidates dearly, but organizations and groups dedicated to bettering the lives of poor children lack either attribute and consequently wield little clout. Yet Madrick doesn’t consider the headwinds his proposals will face. The compassion underlying his ideas is surely admirable, but he could have usefully devoted a chapter to sketching a strategy for countering the opposition his ideas will inevitably encounter. Because poverty reduces labor productivity and drives up healthcare costs, Madrick contends that his proposals would save the economy $1 trillion (a figure mirrored in other studies, though most estimate savings closer to $500 billion). Regardless of the actual amount, this economic logic hasn’t yet made much difference in the public sphere and is unlikely to serve as a compelling selling point.
If anything, anti-poverty programs have been scaled back—beginning with the Reagan administration and extending into Clinton’s 1996 welfare reforms. Meanwhile, the criteria for qualifying (work requirements and lifetime limits) have been ramped up, with new regulations created and existing ones made more stringent. Rather than devising a compelling narrative to counter the GOP’s efforts to paint them as profligate bleeding hearts, the Democrats have caved—here, Clinton is Exhibit A—and this has helped make the attacks from the right effective.
Many white people perceive poverty as an African-American problem, partly because Black people feature prominently in media coverage of the topic, even though poor white people greatly outnumber poor people of color.
While running against Gerald Ford for the Republican Party’s presidential nomination in 1976, Ronald Reagan made an outlandish, false claim regarding a woman labelled “the welfare queen” by the Chicago Tribune. Reagan presented her as an example of rampant and routine welfare fraud. While she did have run-ins with the law (and not just over welfare scams) and was charged with illegally collecting benefits, his claim that she raked in $150,000 a year, tax free, was wildly off the mark. In reality, the amount she misappropriated was about $40,000, and over many years; the formal charge against her cited less than one-fourth of that amount.
Reagan’s trademark mantra—that government is the source of poverty, not its solution—also left a lasting political imprint and has been central to the GOP’s storyline ever since. Clinton understood the power of this narrative, which is why he moved the Democratic Party rightward on welfare (and crime). During his 1992 presidential campaign he pledged to “end welfare as we have come to know it” and denounced “welfare dependency.” Four years later, he signed legislation artfully titled “The Personal Responsibility and Work Opportunity Act.” Donald Trump has gone much further. During the 2016 presidential race, he attacked social programs that benefit the poor, often using racist dog whistles in a calculated move to rev up his base. Once in office, Trump moved to cut billions of dollars from programs—covering healthcare, food, energy, and housing—that help the poor, most notably in his 2019 and 2020 budget plans, which received the GOP’s fulsome support.
Finances, lobbyists, and demagoguery aren’t the only barriers to increasing welfare programs and reducing poverty. These are accompanied by a lack of deep public support for spending more on welfare programs, and the prevailing misunderstanding of the roots of poverty. Madrick presents a withering critique of analyses that attribute poverty to individuals’ unwillingness to work hard and that dismiss the importance of class, race, and the circumstances people are born into. He also lambastes explanations that blame a “culture” that promotes crime, teen pregnancies, and households headed by unmarried women.
Yet Madrick is well aware that these explanations resonate with the public. Many white people perceive poverty as an African-American problem, partly because Black people feature prominently in media coverage of the topic, even though poor white people greatly outnumber poor people of color. There is a widespread belief that African Americans are the primary beneficiaries of welfare programs, whereas in fact more white people receive public assistance (though a higher proportion of African Americans do). A 2016 study by the Center for Budget and Policy Priorities (CBPP) found that government programs helped pull 6.2 million working-class white people who lacked a college degree out of poverty, compared to 2.8 million black people and 2.4 million Hispanic people. Despite abundant reportage and scholarship devoted to countering the mistaken beliefs surrounding social programs, these stereotypes have proven resilient. Will books like Madrick’s turn the tide? Unlikely, especially now that social media has made it easy to spread lies, distortions, and inflammatory tropes.
Given the political realities, Madrick’s program could prove a Sisyphean undertaking, though he believes that the political atmosphere has changed in ways that have increased its appeal. Yes, politicians such as Bernie Sanders and Elizabeth Warren have made the progressive wing of the Democratic Party stronger; yet, still, Joe Biden won the nomination. Though Biden may well enact policies to reduce child poverty, there’s virtually no chance that they will resemble Madrick’s most ambitious proposals. Even if Biden were to surprise us and adopt some of them, powerful groups with a stake in thwarting big change would work overtime to prevent them from surviving in Congress and becoming law.
So how might the opposition to welfare programs be countered? First, progressives must recast the prevailing militarized concept of “national security,” which automatically conjures up images of Special Forces, spies, drones, and air- and missile-strikes to defeat threats from abroad. In actuality the real, day-to-day threats to Americans’ security are mainly economic and social: wages outstripped by inflation, manufacturing jobs lost to automation and outsourcing, a failing healthcare industry. There are no military solutions to these threats, which, moreover, are internal. Reframing “national security” to encompass the day-to-day sources of insecurity could help widen and deepen support for economic justice, particularly in the wake of a COVID-19 recession, which has revealed just how devastating they can be.
Second, progressives must rejuvenate class-based politics. The fight against race-based inequities and injustices are, without a doubt, important. However, class-based strategies that highlight the extent to which economic inequities are shared by Americans of all races—though rarely in equal measure—can help foil the right’s efforts to appeal to working-class whites through racially-charged messages designed to persuade them that policies that seek to promote economic justice will shortchange them. The GOP has been masterful in deploying this race-baiting, divide-and-conquer strategy.
The Democratic party has failed to develop a compelling narrative to garner support for its vision of a just society. That must change.
Third, proponents of economic justice must puncture the myth propagated by the right that the Republican party is the paragon of responsible fiscal stewardship. Conservatives have excelled at making this case and contrasting themselves to the proverbial tax-and-spend liberals besotted with break-the-bank social programs. In fact, Republican administrations have racked up colossal deficits: Reagan increased the deficit from $78.9 billion to $152.6 billion, George H. W. Bush left behind a $225 billion worth of red ink, George W. Bush $1.2 trillion. At the end of 2019—that is, before COVID-19 struck—the Trump deficit totaled $984 billion. By contrast, Clinton bequeathed a $128.2 billion surplus. Barack Obama, faced with the Great Recession that required emergency spending to prevent an economic meltdown, ran up $1 trillion deficits annually from 2008 through 2012, but the shortfall then shrank steadily during the remainder of his presidency and by 2016 was down to $587 billion—about half of what it was in 2012. Yet, regardless of this record, the GOP-fueled myth that the social programs of the left are a recipe for financial ruin persists. Progressives have been inept at dispelling it, just as they have been in puncturing the claim that economic growth rates (and stock market returns) have been higher under Republican administrations. In fact, since 1947 the reverse has been true, even when we omit the Great Recession and the present COVID-19 pandemic. Democrats have been timidly reactive and accepted the role of playing defense against Republican attacks. In consequence, the Democratic party has failed to develop a compelling narrative to garner support for its vision of a just society and show that it can be achieved without breaking the bank. That must change.
