How much does poverty cost our nation?  

While no one can provide the complete and precise answer to this question, a recent study by four economists looked at just the cost of childhood poverty in the United States. These economists describe their work in the following way: 

In this paper, we review a range of rigorous research studies that estimate the average statistical relationships between children growing up in poverty and their earnings, propensity to commit crime, and quality of health later in life. We also review estimates of the costs that crime and poor health per person impose on the economy.

Then we aggregate all of these average costs per poor child across the total number of children growing up in poverty in the U.S. to estimate the aggregate costs of child poverty to the U.S. economy.

Our results suggest that the costs to the U.S. associated with childhood poverty total about $500 billion per year, or the equivalent of nearly 4 percent of GDP.

How many Americans live in "concentrated poverty" (in areas where at least 40 percent of residents are poor)?  

About 8 million Americans live in neighborhoods of concentrated poverty.

What percentage of all workers in the United States have jobs in which the wages, when working full time and year-round, are not sufficient to keep a family of four above the poverty threshold? 

Twenty-five percent of all workers are in jobs that have wages insufficient to keep a family of four above the poverty line.

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How many children in America live in families with low incomes? 

Because the official poverty guidelines are widely considered to be inadequate, many individuals and organizations have begun to use the label "low-income" as a more accurate description of those who cannot make ends meet. "Low-income" is defined as having income below twice the official poverty rate.  Using this definition of low income, we find that 39 percent of America's children live in low-income families.

Children by Family Income, 2006

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What are the effects of economic hardship on children?

Poverty can have severe and long-lasting effects on a child's development and prospects for the future. This is especially true for those who are poor when they are very young and those who experience poverty over a long period of time. The National Center for Children in Poverty is a research and educational organization at Columbia University. In describing the effects of poverty on children, they write:

Low family income can impede children’s cognitive development and their ability to learn. It can contribute to behavioral, social and emotional problems. And it can cause and exacerbate poor child health as well.

The negative effects of low income on young children are troubling in their own right, but they are also cause for concern because they are associated with difficulties later in life – dropping out of school, poor adolescent and adult health and poor employment outcomes.

Parents who face chronic economic hardship are much more likely than their more affluent peers to experience severe stress and depression – both of which are linked to poor social and emotional outcomes for children.

Research presented in 2008 at the American Association for the Advancement of Science explained what neuroscientists have found:

"Poverty in early childhood poisons the brain.... many children growing up in very poor families with low social status experience unhealthy levels of stress hormones, which impair their neural development. The effect is to impair language development and memory – and hence the ability to escape poverty – for the rest of the child’s life."

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 Are "poor people" a distinct group of people who are different from the "rest of us?"

Americans often talk about "poor people" as if they were a distinct group with uniform characteristics and somehow unlike the rest of "us."  Poverty in the United States is typically depicted as a static, entrenched condition, with families living in poverty characterized by chronic unemployment, large numbers of children, drugs, violence and family turmoil. But the realities of poverty and economic hardship are very different. Consider these facts:

• About 40 percent of Americans will experience poverty at some point in their lives. Only a  small minority experience multi-generational poverty and chronic dysfunction.
• The majority of people living in poverty are white, although in relative terms, white people have the lowest incidence of poverty when compared to other racial groups.
• The majority of families living in poverty have at least one member who is working, either full time or part time.
• More than 90 percent of low-income single mothers have only one, two or three children.

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