Marika N Ripke Aletha C Huston

INTRODUCTION

The United States faces a social problem of major proportions: child poverty. In 2002 approximately 12 million, or one in six children in the United States, lived in poverty (Bureau of the Census, 2003; U. S. Department of Health and Human Services, 2002). Compared to other industrialized nations, the United States has both a high percentage of children in poverty and a large disparity between incomes of the rich and poor. The poorest U.S. children are very poor indeed, and the richest are very affluent (Rainwater & Smeeding, 1996).

Child poverty is not new. In the 1960s, President Lyndon Johnson launched the War on Poverty, introducing Head Start, Medicaid, federal aid to education for low-income students, job training programs, and many other programs to address the barriers faced by low-income children and adults. By the end of the 1960s, the poverty rate for children was reduced from 27% to 14%, but it has fluctuated since that time, rising to 23% in 1993, then dropping to 16% in 2002 (Bureau of the Census, 2003). Although the 1995-2001 decrease was especially large for African American and Hispanic children, both groups continue to be disproportionately represented among the poor (Bureau of the Census, 2003).

Most analysts attribute these fluctuations to three major causes (Huston, 1991). First, economic conditions that affect wages and the availability of jobs influence the average incomes of families at the low end of the income distribution. During the 1980s and 1990s, increasing numbers of families with poverty-level incomes were "working poor"; that is, one or both parents worked but did not earn a "living wage" (Bernstein, 2003) in the jobs that were available to them. Nevertheless, their opportunities for earnings rose and fell with rates of unemployment and job availability.

Second, during the 1970s and 1980s, increasing numbers of children lived with single mothers, and poverty in single-mother families is much more prevalent than in two-parent families. African American and Hispanic families are more likely than Anglo families to be headed by single mothers; the social disadvantage suffered by these ethnic groups adds to their likelihood of being poor.

Third, public policies for families in poverty changed. From the 1970s on, welfare or cash assistance to poverty-level families was increasingly under attack and payments declined in value. This trend culminated in the 1996 welfare reform legislation (entitled the Personal Responsibility and Work Opportunity Reconciliation Act or PRWORA) that imposed work requirements and time limits on cash assistance. At the same time, the maximum payment under the Earned Income Tax Credit (EITC), a federal program providing cash benefits for low-income working adults, more than doubled from 1993 to 2000. The end result was an increase in support for low-income people who were employed, but a decrease in cash assistance for other low-income parents. As employment opportunities declined in the early 2000s, this combination led to increases in poverty for families of children.

POVERTY AND CHILD DEVELOPMENT

Children who grow up in low-income families begin life with several disadvantages, many of which continue through adulthood. Poor children are at risk for problems of health (e.g., low-birth weight, infant mortality, childhood death and injury, contagious diseases, and injuries), developmental delays in intellectual development, low levels of school achievement, and social-emotional and behavioral problems. By adolescence, these problems take the form of higher rates of juvenile crime, early pregnancy, and dropping out of school; in adulthood, individuals raised in poverty have lower average levels of intellectual functioning, educational attainment and income than do those from more affluent families (Chafel, 1993; Duncan & Brooks-Gunn, 1997a; Garbarino, 1992; Hill & Sandfort, 1995; Huston, 1991; Huston, McLoyd, & Garcia Coll, 1994; Luthar, 1999; McLoyd, 1997, 1998).

Poor children are more likely to experience problems with school readiness and academic performance, and are at least twice as likely to be kept back in school as children from higher income families (see Corcoran, 1995; Duncan & Brooks-Gunn, 1997a; Haveman & Wolfe, 1994; National Center for Children in Poverty, 1999). Material deficiencies related to poverty (e.g., malnutrition, inadequate health and child care, homelessness or unsafe housing conditions and neighborhoods, and insufficient schools) have detrimental effects on children's motivation and ability to learn, and can contribute to social and emotional difficulties, hamper learning, academic performance, and cognitive development (Korenman, Miller, & Sjaastad, 1995; Kotch & Shackelford, 1989). In adolescence, poverty or economic hardship predicts delinquency (Sampson & Laub, 1994) and depression and loneliness (Lempers, Clark-Lempers, & Simons, 1989).

Definitions of Poverty

Some conceptual muddiness stems from the complexity of "poverty" as a construct. For many purposes, poverty is defined simply by cash income. If a family receives less money in a year than the federal poverty threshold, they are officially defined as "poor" for most statistical analyses. The poverty threshold originally was calculated from the estimated cost of food multiplied by 3. It is adjusted for family size, but not for geographic region, despite the widely varying costs of living by city and state. Annual adjustments are made for changes in the Consumer Price Index.

There are several problems with the threshold. A family's income is defined by pretax rather than disposable income, and there are no adjustments for such nondiscretionary expenses as the costs of child care and transportation for employed parents. On the other hand, noncash benefits (e.g., food stamps) are not counted as income. In 1995, a National Academy of Sciences expert panel (Citro & Michael, 1995) recommended changing the definition of poverty to remedy these deficiencies, but virtually all available data are based on the flawed index. In recent reports, however, federal statistical agencies compare data based on revised poverty indices to that derived from the standard definition. The poverty threshold is an absolute dollar amount intended to index the minimum income needed for adequate living conditions, not a percentage of the median income or a percentile. Therefore, it is theoretically possible for everyone to be above the poverty threshold.

The income-to-needs ratio (the ratio of family income to the poverty threshold) provides a continuous index reflecting how far below or above the poverty threshold a family's income falls. A family with an income at the poverty threshold has an income-to-needs ratio of 1.0; at half the poverty threshold, the ratio is 0.5, and so forth. This ratio is a better and more complete predictor of many child outcomes than a dichotomy between poor or not poor because it takes into account the depth of poverty and variations in resources above the poverty threshold (e.g. Duncan, Brooks-Gunn, & Klebanov, 1994; Smith & Brooks-Gunn, 1994).

The effects of poverty depend on its depth and duration (Huston et al., 1994; McLoyd, 1998). Most definitions of poverty are based on current income, but longitudinal studies demonstrate that many people move in and out of poverty from year to year (Duncan, 1984). Families that experience "transitory poverty," lasting only a year or two, are demographically similar to the rest of the population (Duncan, 1991). Although income loss can cause considerable stress (e.g., Elder, 1974; McLoyd, 1998), such families usually do not live in conditions of serious material hardship for long periods of time.

Persistent poverty, lasting over several years, is another matter. Families experiencing persistent poverty have fewer savings and other assets to buffer the effects of low income than do those in transitory poverty (Duncan, 1991). Children experiencing persistent poverty are at elevated risk for negative health outcomes and deficits in cognitive and socio-emotional achievement (Korenman, Miller, & Sjaastad, 1995). A nationally representative study following children who were 4 years old in 1968 for 15 years revealed that one third of these children experienced poverty for at least 1 year, and another 5% experienced poverty during at least two thirds of their childhood (Duncan & Rodgers, 1998). Finally, annual income does not provide a perfect index of material goods (e.g., the amount of food, quality of housing, and supports for basic needs; Mayer & Jencks, 1989).

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