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34–734 2010

THE ECONOMIC AND SOCIETAL 

COSTS OF POVERTY 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

JANUARY 24, 2007 

Serial No. 110–2 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

CHARLES B. RANGEL, New York, Chairman 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL JR., New Jersey 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

CHRIS VAN HOLLEN, Maryland 

KENDRICK MEEK, Florida 

ALLYSON Y. SCHWARTZ, Pennsylvania 

ARTUR DAVIS, Alabama 

JIM MCCRERY, Louisiana 

WALLY HERGER, California 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

JERRY WELLER, Illinois 

KENNY HULSHOF, Missouri 

RON LEWIS, Kentucky 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

DEVIN NUNES, California 

PAT TIBERI, Ohio 

JON PORTER, Nevada 

JANICE MAYS, Chief Counsel and Staff Director 

BRETT LOPER, Minority Staff Director 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to prepare 

both printed and electronic versions of the hearing record, the process of converting between 

various electronic formats may introduce unintentional errors or omissions. Such occurrences 

are inherent in the current publication process and should diminish as the process is further 

refined. 


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C O N T E N T S 

Page 

Advisory of of January 17, announcing the hearing ............................................. 2 

WITNESSES 

Sigurd R. Nilsen, Ph.D., Director, Education, Workforce, and Income Security, 

U.S. GAO .............................................................................................................. 7 

Harry J. Holzer, Ph.D., Professor at Georgetown University and Visiting 

Fellow at the Urban Institute, Georgetown University Public Policy Institute ........................................................................................................................ 34

David R. Jones, President and Chief Executive Officer, Community Service 

Society of New York, New York, New York ....................................................... 37 

Ron Haskins, Ph.D., Senior Fellow, Economic Studies and Co-Director, Center 

on Children and Families, The Brookings Institution ...................................... 41 

Jane Knitzer, Ph.D., Director, National Center for Children in Poverty, New 

York, New York .................................................................................................... 50 

SUBMISSION FOR THE RECORD 

Child Welfare League of America, statement ........................................................ 104 

Eberstadt, Nicholas, American Enterprise Institute, statement ......................... 110 

Legal Momentum, New York, NY, statement ....................................................... 118 

MacGregor, Theo, and Jerrold Oppenheim, joint statement ................................ 120 

Schlimm, Richard, Wisconsin Community Action Program Association, Madison, WI, letter ....................................................................................................... 126 

Zero To Three Policy Center, statement ................................................................ 129 


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(1) 

THE ECONOMIC AND SOCIETAL 

COSTS OF POVERTY 

WEDNESDAY, JANUARY 24, 2007 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:07 a.m., in room 

1100, Longworth House Office Building, Hon. Charles B. Rangel 

(Chairman of the Committee) presiding. 

[The advisory announcing the hearing follows:] 


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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 

January 17, 2007 

FC–2 

Chairman Rangel Announces a Hearing on 

the Economic and Societal Costs of Poverty 

House Ways and Means Committee Chairman Charles B. Rangel today announced the Committee will hold a hearing on the economic and societal costs of 

poverty. The hearing will take place on Wednesday, January 24, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 

a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. 

FOCUS OF THE HEARING: 

There are 37 million Americans living in poverty, an increase of over 5 million 

since the year 2000 (after prior years of steady decline). The average weighted poverty threshold in 2005 (latest data available) was $15,577 in annual income for a 

family of three and $19,971 for a family of four. Poor Americans suffer various hardships, including reduced access to economic and educational opportunities, substandard housing, inadequate diet, greater levels of crime victimization, and diminished health. Less recognized, however, are the costs poverty exacts on society as 

a whole. Nevertheless, studies indicate that poverty reduces our Nation’s economic 

growth and directly increases crime, health and other expenses absorbed by all 

Americans. The Committee’s hearing will examine the nature and extent of these 

costs. 

In announcing the hearing, Chairman Rangel said, ‘‘We have a clear moral imperative to address poverty. It is a stain on our Nation’s legacy to have one of the highest child poverty rates in the industrialized world. But we also should be driven by 

self-interest. Poverty is a drag on our economy, and it causes or worsens a variety 

of other costly social problems. Simply accepting, or even ignoring high rates of poverty is likely more expensive for our Nation than any comprehensive effort to address the problem.’’ 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

Web site and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘110th Congress’’ from the menu entitled, 

‘‘Committee Hearings’’ (http://waysandmeans.house.gov/Hearings.asp?congress=18). 

Select the hearing for which you would like to submit, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, completing all informational forms and clicking ‘‘submit’’ on the 

final page, an email will be sent to the address which you supply confirming your 

interest in providing a submission for the record. You MUST REPLY to the email 

and ATTACH your submission as a Word or WordPerfect document, in compliance 

with the formatting requirements listed below, by close of business Wednesday, 

February 7, 2007. Finally, please note that due to the change in House mail policy, 

the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

Buildings. For questions, or if you encounter technical problems, please call (202) 

225–1721. 


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FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons, and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

Chairman RANGEL. The Committee will come to order. This 

morning we are going to have witnesses to share with us the impact of poverty on our economy and how it relates to future economic growth. 

We have 37 million Americans in poverty, millions more only one 

step away from poverty. It just seems to some of us that if we are 

going to grow our way out of debt, we cannot be impeded by the 

fiscal consequences of poverty, lack of education and unemployment. We have experts who come here not with bleeding hearts, 

but trying to share with us what the costs of poverty are now, as 

well as their projected costs, so that we can try to find out whether, 

from an economic point of view, it would make sense to make some 

initial investments to stop the hemorrhage. 

I would like to recognize the ranking Member, Mr. McCrery, for 

whatever remarks he would like to make. 

Mr. MCCRERY. Thank you, Mr. Chairman. Again, I have prepared remarks that I will submit for the record, and I will summarize those as we will ask the witnesses to summarize their testimony. 

Certainly all of us agree that too many of our citizens in the 

United States are living in poverty, and we all want to reduce that 

number or have that number reduced. The question is, how do we 

do it? 

In the 1996 Welfare Reform Act, we included a very strong work 

requirement that was successful in moving literally millions of people into work, and the result of that was a dramatic reversal in the 


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growth of the rate of poverty. We also included in that legislation 

an emphasis on marriage and encouraging folks to get married to 

have children, and those two items, work and marriage, seem to be 

the most important indicators of preventing poverty. 

So, while we look at programmatic changes at the Federal level, 

I hope that this Committee will continue to look at the importance 

of work and family, work and marriage when it—as it relates to 

the reduction of poverty. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. McCrery follows:] 

Prepared Statement of The Honorable Jim McCrery, 

a Representative in Congress from the State of Lousiana 

I think we would all agree that too many Americans today live in poverty. At the 

same time, we have made great strides in reducing poverty over the past ten years, 

and it is important to learn from our experience. 

Poverty rates fell in 2005 after rising in the years following the 2001 recession. 

Today’s poverty rates—both overall and child poverty—are below the levels seen 

throughout all of the 1980s, and most of the 1990s. But with 37 million Americans 

still poor in 2005, it is important to ask what works to reduce poverty, and what 

doesn’t, and what should we be doing to make further progress. 

From the mid-1960s through the mid-1990s, the Federal government spent literally trillions of dollars on programs designed to reduce poverty. While these programs offered many poor Americans cash and other assistance, the overall poverty 

rate, after declining in the late 1960s, generally stabilized at between 12 and 14 percent. 

Republicans, and many Democrats, now realize that promoting work and healthy 

marriage are the key steps to reducing poverty. 

The evidence suggests the pro-work reforms in the 1996 welfare reform law, coupled with generous work supports like the Earned Income Tax Credit, and a strong 

economy, have spurred record numbers of poor parents to go to work and lift their 

families out of poverty. 

Since the 1996 welfare reforms, child poverty has fallen 13 percent, and over 1.4 

million children have been lifted from poverty. Poverty has declined sharply among 

blacks and Hispanics, and in families headed by single mothers. By 2001, our Nation recorded the lowest poverty rate in U.S. history for black children. That number—30 percent—was still far too high, but it was a remarkable improvement from 

41.5 percent in 1995. 

While poverty rose somewhat following the 2001 terrorist attacks and recession, 

today’s rate remains below levels throughout the 1980s and most of the 1990s. And 

that’s using the ‘‘official’’ definition of poverty—which ignores tens of billions of dollars in tax credits, welfare, food, and housing benefits millions of poor families receive. In fact, numerous studies, based on solid Census Bureau data and taking into 

account all the income poor households receive, suggest the ‘‘real’’ poverty rate is 

closer to 5 percent, instead of today’s ‘‘official’’ poverty rate of nearly 13 percent. 

That is likely the most accurate picture of the persistent poverty rate, as well. The 

fact is, most poor families in America don’t stay poor for long, which is important 

in the context of how can we best help poor parents lift their incomes and improve 

their children’s prospects. 

But despite the remarkable progress we have seen on the work side of the equation, we have seen less progress in building strong, married families. That is exactly 

what we need to make long-term progress against poverty, and especially among 

families that are most likely to be in poverty year after year. 

In 2004, a record number of babies—nearly 1.5 million—were born to unmarried 

parents. Despite recent progress, today almost one-half of first unwed births are to 

teenagers. The odds that these children will be poor are extraordinarily high. For 

example, a recent study found that a child born to an unmarried teen mother who 

has not finished high school is nine times more likely to be poor than if the mother 

is a married adult who has finished high school. Overall, nearly four in ten children 

are born to unmarried mothers today; in some communities the share of unmarried 

births is 70 percent or more. 

That’s why Republicans reprogrammed some welfare funds last year to support 

faith-based and other private groups interested in promoting more healthy marriages and stronger families. These programs provide voluntary services and supports for teens, couples, and parents designed to inform them about the benefits of 


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marriage—for them and their children. If these efforts are successful, young families 

will have dramatically improved chances of getting out of poverty and into the economic mainstream. 

f 

Chairman RANGEL. Thank you. 

I would like to concur because sometimes poverty and unemployment is an impediment to the institution of marriage, and so I 

want to work with you on that aspect of the problem. 

We have an outstanding panel this morning. Dr. Sigurd Nilsen 

is the Director of Education, Workforce, and Income Security for 

the United States Government Accountability Office (GAO); Dr. 

Harry Holzer, a Professor at Georgetown University at the Public 

Policy Institute; my long-time friend, David Jones, President and 

CEO of the Community Service Society of New York (CSS)—who, 

I would like to report, coordinates his statistical data from many 

institutions in New York; and I am working with him, with Columbia Teachers College, with New York University, and any other institutions that would want to coordinate the data that we have. 

Also joining us is Dr. Ron Haskins. Dr. Haskins, is Senior Fellow, Economic Studies and Codirector of the Center on Children 

and Families at the Brookings Institution. Also, Dr. Jane Knitzer, 

Director, National Center for Children in Poverty (NCCP) in New 

York. 

As you may know, all of you will have 5 minutes to summarize 

your testimony. That would give us an opportunity to ask questions 

that are on our minds, and all of your testimony, your written testimony, will be entered into the record without objection. 

[The prepared statement of Mr. Weller follows:] 

Prepared Statement of The Honorable Jerry Weller, a Representative in 

Congress from the State of Illinois 

Today’s hearing reviews a critical topic—poverty. Even as our Nation has made 

progress in reducing poverty through welfare reform and other pro-work policies, too 

many children and families live in poverty today. So it is important to consider what 

has worked, what has not, and what more we need to do to prevent more children 

from growing up in poverty. 

We have seen that pro-work Republican welfare reforms reduced poverty following 

the 1996 welfare reform law, which encouraged more work and less welfare dependence. Through 2005, the most recent year available, the overall poverty rate fell 7 

percent, child poverty fell 13 percent, and over 1.4 million children left poverty. Poverty declined sharply especially among African Americans and Hispanics, and in 

families headed by single mothers. 

Previously, we saw how massive government spending didn’t solve poverty. The 

U.S. spent literally $5 trillion on welfare, food, health, and housing for the poor 

since President Johnson declared war on poverty in the 1960s; yet progress against 

poverty generally stalled after 1970. A key lesson is that massive government 

spending alone won’t eliminate poverty. 

One reason why spending alone won’t eliminate poverty relates to a key cause of 

poverty—the decline of marriage and increased number of nonmarital births. The 

steady decline of marriage in the past generation has greatly contributed to higher 

poverty, especially among children. As Robert Rector of the Heritage Foundation put 

it in testimony before this committee in 2005, ‘‘Nearly 80 percent of long term child 

poverty occurs in broken or never-married families. Each year government spends 

over $200 billion on means-tested aid to families with children; three quarters of 

this aid flows to single parent families.’’ 

A recent report by the nonpartisan Congressional Research Service (‘‘Children in 

Poverty: Profile, Trends, and Issues,’’ January 16, 2007) drives home this point in 

terms of the number of children raised in poverty today due to changing patterns 

of marriage and childbearing in the past generation: ‘‘(I)n 2005 the child poverty 


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rate was 17.1 percent, but had family composition in 2005 been the same as in 1960, 

the overall adjusted child poverty rate would have been 12.4 percent; instead of the 

observed 12.3 million children being counted as poor in 2005, the number of poor 

children estimated by this method would have been 8.9 million, or 3.4 million fewer 

than the number observed.’’ 

To put this into perspective, in the decade following work-based welfare reform 

about 1.4 million children have been removed from poverty; if we were able to restore past patterns of marriage and childbearing, the effect in terms of removing 

children from poverty would be roughly two and a half times as great. 

I am struck by the similarities between the report released at this hearing about 

the costs of child poverty and another report released in 2005 about the costs for 

children associated with changing family structures. This report by Paul Amato of 

Penn State University (‘‘The Impact of Family Formation Change on the Cognitive, 

Social, and Emotional Well-Being of the Next Generation,’’ Fall 2005) compares family structure and adolescent well-being, by various measures including repeating a 

grade, delinquency, violence, smoking, and attempted suicide: ‘‘The results are striking. Adolescents living with single parents consistently report encountering more 

problems that those living with continuously married parents. Thirty percent of the 

former reported that they had repeated a grade, as against 19 percent of the latter. 

Similarly, 40 percent of children living with single parents reported having been 

suspended from school, compared with 21 percent of children living with continuously married parents. . . . The increase in risk associated with living without both 

parents ranged from about 23 percent (for being involved in a violent altercation) 

to 127 percent (for receiving emotional therapy).’’ (p. 86) 

Clearly, we won’t be able to solve child poverty without reversing the decline in 

marriage and ensuring more children live in stable, married households. 

Despite these high hurdles, it is important to note that most poverty is temporary. 

Most of the poor are not ‘‘trapped’’ in poverty for long. One out of three U.S. households experienced poverty in at least one year of a recent 13-year stretch. But only 

one out of 20 families was poor in at least 10 years, and only one out of 60 stayed 

poor in all 13 years. So the ‘‘permanent’’ poverty rate is less than 2 percent, even 

though the ‘‘official’’ annual poverty rate is about 13 percent. 

A related set of issues involves how we measure poverty, which includes several 

obvious flaws. 

First, current methods of measuring poverty effectively ignore tens of billions of 

dollars in taxpayer benefits meant to reduce poverty. In effect, this makes families 

appear poorer than they really are, inflating the number in poverty. If such benefits 

and associated income available to poor households were counted as income, studies 

suggest the ‘‘real’’ poverty rate would drop to as low as 5 percent, instead of today’s 

official poverty rate of nearly 13 percent. 

A second flaw involves the use of income data, as opposed to data about how much 

households spend—which some argue is both more reliable and a better indicator 

of child wellbeing. One study (Bruce D. Meyer and James X. Sullivan, ‘‘The WellBeing of Single-Mother Families after Welfare Reform,’’ Brookings Institution, August 2005) found that ‘‘First, consumption is probably measured with less error than 

income for poor families, and is more strongly associated with other measures of 

well-being such as health and housing conditions. Second, there is overwhelming 

evidence that income is underreported by these mothers and that the underreporting, especially of income from welfare and other transfer programs, has increased in recent years.’’ The study notes that in 2004 spending by the poorest fifth 

of American families exceeded income by 95 percent—in effect, spending was nearly 

twice as much as income for this group, which included many families officially 

counted as poor, but whose spending patterns suggest they may not be. 

We know what works and what doesn’t to reduce poverty. Recent research confirms Republican policies of promoting full-time work and healthy marriage are the 

strongest weapons against poverty—both of which are far more effective than even 

doubling welfare benefits, or example. Republicans stand ready to work to strengthen the progress we have made reducing poverty through promoting work and marriage. But we will resist those who would simply spend more on welfare benefits 

or ease access to welfare checks without work or other measures of personal responsibility. Such misguided efforts will not only fail to reduce poverty, but they threaten to undo the progress we have made under welfare reform. Worst of all, such efforts will lead to more dependence, more poverty, and ultimately worse outcomes 

for children. 

f 

[The prepared statement of Mr. Porter follows:] 


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Prepared Statement of The Honorable Jon Porter, a Representative in 

Congress from the State of Nevada 

Good Morning, Mr. Chairman. I am pleased that the committee is holding today’s 

hearing on the economic and societal costs of poverty. I share your concern that poverty is a major issue of concern to the United States and the world. 

As leaders we have a moral responsibility to reduce poverty. We also have a responsibility to reduce poverty responsibly. As Congress continues to address this 

issue that we see everyday in our districts, we need to recognize the importance of 

a vibrant business community and a robust educational system. If we fail to utilize 

these sectors of our society in providing tools to the impoverished, we have failed. 

We cannot treat the symptoms of poverty alone. We must treat the syndrome itself. 

Again, Mr. Chairman, thank you for calling this hearing today on this most important issue. I look forward to the testimony of our witnesses and am hopeful that 

we can work together in addressing this important issue. 

f 

We will start with Dr. Nilsen. 

STATEMENT OF SIGURD R. NILSEN, PH.D., DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Dr. NILSEN. Chairman Rangel, thank you, Mr. McCrery and 

other Members of the Committee. I am pleased to be here today to 

discuss a report requested by Chairman Rangel, that is being 

issued today from GAO, that summarizes the findings from recent 

economic research on the linkages between poverty and economic 

growth. 

While the empirical research is limited, recent studies point to 

the negative association between poverty and economic growth consistent with the theoretical literature’s conclusion that higher rates 

of poverty can result in lower rates of economic growth. For example, one study found that economic growth is slower in U.S. metropolitan areas characterized by higher rates of poverty when compared with metropolitan areas with lower rates of poverty. Another 

study using data from 21 wealthy countries found a similar negative relationship between poverty and economic growth. 

In the United States, poverty can impact economic growth by affecting the accumulation of human capital. Research has shown 

that accumulation of human capital is one of the fundamental drivers of economic growth. Human capital consists of the skills, abilities, talents and knowledge of individuals as used in employment. 

Therefore, schooling at the secondary and higher levels is a key 

component for building an educated workforce that is better at 

learning, creating, and implementing new technologies. 

Health is another important component of human capital, as it 

can enhance workers’ productivity by increasing their physical capabilities, such as strength and endurance, as well as their mental 

capacities, such as cognitive functioning and their reasoning ability. Improved health increases workforce productivity by reducing 

incapacity, disability and the number of days lost to sick leave. 

The accumulation of human capital can be diminished when significant portions of the population have experienced long periods of 

poverty or were living in poverty at a critical developmental juncture. For example, research has found that a slowdown in human 

capital development is most heavily concentrated among youth 

from impoverished backgrounds. When individuals who have expeVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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rienced poverty enter the workforce, their contributions may be restricted or minimal while others may not enter the workforce in 

any significant way. 

In addition, the economic literature suggests that poverty can affect economic growth due to its association with crime, violence and 

social unrest. It is suggested that when citizens engage in unproductive criminal activities, they deter others from making productive investments or their actions force others to divert resources toward defensive activities. The increased risk due to insecurity can 

unfavorably affect investment decisions and, hence, economic 

growth in areas afflicted by concentrated poverty. 

In addition, people living in impoverished conditions generate 

costs for the Government, which spends billions of dollars on programs to assist low-income individuals and their families. 

Economic research suggests that individuals living in poverty 

face an increased risk of adverse outcomes, such as poor health and 

criminal activity, both of which may lead to reduced participation 

in the labor market. Health outcomes are worse for individuals 

with low incomes than for their more affluent counterparts. Lowerincome individuals experience higher rates of chronic illness, disease and disabilities and also die younger than those with higher 

incomes. While mechanisms by which poverty affects health are 

complex, research suggests that adverse health outcomes are due 

in part to more limited access to health care as well as more exposure to environmental hazards and engaging in risky behaviors. 

For example, research has shown that increased availability of 

health insurance, such as Medicaid for low-income mothers, led to 

a decrease in infant mortality. Likewise, exposure to high levels of 

air pollution from living in urban areas close to industrial areas or 

highways can lead to acute health conditions. 

In conclusion, maintaining and enhancing economic growth is a 

national priority that touches all aspects of Federal decision-making. Our report highlights that economists have long recognized the 

strong association between poverty and a range of adverse outcomes for individuals, and empirical research has also begun to 

help us better understand the impact of poverty on our Nation’s 

economic growth. The interrelationships between poverty and various adverse social outcomes are complex, and our understanding 

of these relationships can lead to vastly different interventions to 

address each specific outcome. Furthermore, any such interventions 

could take years or even a generation to yield significant and lasting results, as the greatest impacts are likely to be seen among 

children. 

Nevertheless, whatever the underlying causes of poverty may be, 

economic research suggests that improvements in the health, 

neighborhoods, education and skills of those living in poverty could 

not only have impacts far beyond individuals and families, but lead 

to improving the economic well-being of the Nation as a whole. 

Mr. Chairman, this concludes my prepared statement. I would be 

happy to answer questions. 

Chairman RANGEL. Thank you so much. 

[The prepared statement of Dr. Nilsen follows:] 


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f 

Chairman RANGEL. Dr. Holzer. 

STATEMENT OF HARRY J. HOLZER, PH.D., PROFESSOR AT 

GEORGETOWN UNIVERSITY AND VISITING FELLOW AT THE 

URBAN INSTITUTE, GEORGETOWN UNIVERSITY PUBLIC POLICY INSTITUTE 

Dr. HOLZER. Mr. Chairman, thank you very much for inviting 

me today to speak to the economic costs of poverty to the United 

States. I would like to share with all of you some recent findings 


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from a paper that I coauthored with several colleagues for the Task 

Force on Poverty of the Center for American Progress; and this 

paper attempts to estimate the economic costs of child poverty to 

the United States Essentially, we try to put dollar figures on all 

of the costs that Dr. Nilsen just emphasized. 

Like Dr. Nilsen, we focus on several mechanisms by which poverty reduces economic success in the United States. When children 

grow up in poverty, they are more likely as adults to have low employment and earnings, reflecting their lower skill levels and their 

lower productivity in the workforce. They are more likely to engage 

in crime; they are more likely to have poor health later in life. 

Their reduced productivity generates a direct loss of goods and 

services to the U.S. economy. 

The crime that they engage in imposes monetary and other personal costs on their victims, as well as costs to the taxpayers for 

administering an enormous criminal justice system. Their poor 

health generates illness and early mortality that requires large 

health care expenditures, impedes productivity and ultimately reduces the quality and quantity of life for poor people. 

Now, in each of these three areas—productivity, crime and 

health—we reviewed a range of rigorous research studies that estimate an average statistical relationship between growing up in 

poverty and each of those outcomes—earnings, crime and health. 

We had to make a number of critical assumptions that folks might 

quibble with, but wherever possible, we tried to make conservative 

assumptions in order to generate lower bound estimates for this 

total cost. 

Our results suggest that the costs to the United States associated with childhood poverty total about $500 billion per year, or the 

equivalent of nearly 4 percent of Gross Domestic Product (GDP). 

More specifically, we estimate the childhood poverty each year reduces productivity and economic output by about 1.3 percent of 

GDP, poverty raises the costs of crime each year also by about 1.3 

percent of GDP, and poverty raises health expenditures and it reduces the value of health by about the equivalent of 1.2 percent of 

GDP. 

If anything, these estimates almost certainly understate the true 

costs of childhood poverty to the U.S. economy. For one thing, we 

omit the costs associated with poor adults who did not grow up 

poor as children. There was no way to incorporate those estimates. 

Our estimates ignore all of the other costs that poverty might impose on the Nation besides those associated with those specific 

three factors—low productivity, crime and health. There are other 

costs, such as environmental costs and such as the suffering of the 

poor themselves, that we didn’t incorporate into our estimates. 

What does all of this imply for public policy? Well, the high cost 

of childhood poverty to the United States suggests that investing 

significant resources in poverty reduction might be more cost effective over time than we previously thought. 

Of course, determining the cost effectiveness of each policy requires careful evaluation research in a whole variety of areas. However, a range of policies, including high-quality pre-kindergarten 

programs, various school reform efforts, higher access to higher 

education for the poor, expansions of the Earned Income Tax Credit 


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1See Harry J. Holzer (Georgetown University and the Urban Institute), Diane Whitmore 

Schanzenbach (University of Chicago), Greg J. Duncan (Northwestern University), and Jens 

Ludwig (Georgetown University and the National Bureau of Economic Research. ‘‘The Economic 

Costs of Poverty in the United States: Subsequent Effects of Children Growing Up Poor.’’ Center 

for American Progress, January 2007. 2We define the effects of poverty to be all those associated with growing up in poor environments, including the effects of being raised by parents with low incomes, attending poor schools 

and living in poor neighborhoods. We also use families with incomes at twice the official poverty 

line as the benchmark with which to compare those living in poverty. 

(EITC) and other supports for the working poor, job training for 

poor adults, higher minimum wages, more collective bargaining, 

special efforts for disadvantaged youth, marriage promotion and 

faith-based initiatives all might potentially be involved in this effort. Given the strong evidence that already exists on some of these 

factors, like high-quality pre-K programs and on the EITC, some 

investments through these mechanisms seem particularly warranted. 

At a minimum, the costs of poverty imply that we should work 

hard to identify cost-effective strategies of poverty remediation, and 

we should not hesitate to invest some significant resources when 

these strategies are identified. Some have already been identified. 

In the meantime, we should also experiment with and evaluate a 

wide range of other promising efforts. 

Thank you. 

[The prepared statement of Dr. Holzer follows:] 

Prepared Statement of Harry J. Holzer, Ph.D., Professor at 

Georgetown University and Visiting Fellow at the Urban Institute, 

Georgetown University Public Policy Institute 

Mr. Chairman, 

Thank you for inviting me to speak today on the economic costs of poverty to the 

United States. 

I’d like to share with all of you some recent findings of a paper I coauthored with 

several colleagues for the Task Force on Poverty of the Center for American 

Progress.1 The paper attempts to estimate the economic costs of child poverty in the 

U.S. 

Most arguments for reducing poverty in the U.S., especially among children, rest 

on a moral case for doing so—one that emphasizes the unfairness of child poverty, 

and how it runs counter to our national creed of equal opportunity for all. 

But there is also an economic case for reducing child poverty. When children grow 

up in poverty, they are more likely as adults to have low earnings, which in turn 

reflect low productivity in the workforce. They are also more likely to engage in 

crime and to have poor health later in life. Their reduced productive activity generates a direct loss of goods and services to the U.S. economy. Any crime in which 

they engage imposes large monetary and other personal costs on their victims, as 

well as the costs to the taxpayer of administering our huge criminal justice system. 

And their poor health generates illness and early mortality that requires large 

health care expenditures, impedes productivity and ultimately reduces their quality 

and quantity of life. 

In each case, we reviewed a range of rigorous research studies that estimate the 

average statistical relationships between growing up in poverty, on the one hand; 

and one’s earnings, propensity to commit crime and quality of health later in life, 

on the other. We also reviewed estimates of the costs that crime and poor health 

per person impose on the economy. Then we aggregated 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. We had to 

make a number of critical assumptions about how to define and measure poverty, 

what level of income to use as a non-poverty benchmark, and which effects are really caused by growing up in poverty and not simply correlated with it.2 Wherever 

possible, we made conservative assumptions, in order to generate lower-bound estimates. 


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3Our estimates include the value of lost earnings to the poor themselves, but not other nonpecuniary costs associated with poverty, except for estimates of the value of morbidity and early 

mortality to the poor. 

Our results suggest that the costs to the U.S. associated with childhood poverty 

total about $500B per year, or the equivalent of nearly 4 percent of GDP. More specifically, we estimate that childhood poverty each year: 

• Reduces productivity and economic output by about 1.3% of GDP; 

• Raises the costs of crime by 1.3% of GDP; and 

• Raises health expenditures and reduces the value of health by 1.2% of GDP. 

If anything, these estimates almost certainly understate the true costs of poverty 

to the U.S. economy. For one thing, they omit the costs associated with poor adults 

who did not grow up poor as children. They ignore all other costs that poverty might 

impose on the Nation besides those associated with low productivity, crime and 

health—such as environmental costs, and much of the suffering of the poor themselves.3

What does all of this imply for public policy? The high cost of childhood poverty 

to the U.S. suggests that investing significant resources in poverty reduction might 

be more cost-effective over time than we previously thought. Of course, determining 

the effectiveness of various policies requires careful evaluation research in a variety 

of areas. But a range of policies—such as universal pre-kindergarten (or pre-K) programs, various school reform efforts, expansions of the Earned Income Tax Credit 

(EITC) and other income supports for the working poor, job training for poor adults, 

higher minimum wages and more collective bargaining, low-income neighborhood revitalization and housing mobility, marriage promotion, and faith-based initiatives— 

might all be potentially involved in this effort. Given the strong evidence that already exists on some of these efforts (like high-quality pre-K and the EITC), some 

investments through these mechanisms seem particularly warranted. 

At a minimum, the costs of poverty imply that we should work hard to identify 

cost-effective strategies of poverty remediation, and we should not hesitate to invest 

significant resources when these strategies are identified. In the meantime, we 

should also experiment with and evaluate a wide range of promising efforts. 

f 

Chairman RANGEL. Thank you so much. 

Now we hear from David Jones, President and CEO of the CSS 

of New York. 

Thank you for being with us. 

STATEMENT OF DAVID R. JONES, PRESIDENT AND CHIEF EXECUTIVE OFFICER, COMMUNITY SERVICE SOCIETY OF NEW 

YORK 

Dr. JONES. Thank you, Mr. Chairman and Members of the Committee. I am Dave Jones, President and CEO of CSS, an independent not-for-profit organization, virtually one of the oldest in 

the Nation at 160 years. We have been solely committed to the 

issues of poverty in the city of New York during that time. 

Our legacy includes the creation of the Nation’s first free lunch 

program and organizing some of the courses that led to the creation of the Columbia School of Social Work as well, much to the 

advantage of tourists, the first public baths and the Hospital for 

Special Surgery in the city, New York. CSS has always come to the 

aid of people in need in the city. Thank you for allowing me to report what is going on in the city of New York from our research. 

Before I start, I would like to commend Congressman Rangel for 

focusing on this issue. He has been a lifelong supporter of people 

in need in the city. 

Almost 42 years ago, the 88th Congress took the extraordinary 

step of supporting Lyndon Johnson’s antipoverty agenda. That 


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council report, the Council of Economic Advisers, in 1965 said they 

thought they had the means to break poverty for good, to end it 

for the next generation of Americans. I appear before you today to 

report that at least from New York City’s vantage, it is not happening, that we have to reinvigorate our efforts if we are going to 

break a cycle that seems, if anything, more entrenched than it was 

before. 

My focus today, obviously, is on New York. It has 8 million people. It has unique challenges, but some of the research, I think, is 

illustrative of other areas of the Nation. 

CSS research has revealed that 170,000 young people, ages 16 to 

24, are out of school and out of work; they are disconnected. This 

is a population that rivals many cities in America. The majority of 

these youth are black and Latino with this predicament most pronounced in the Latino community. 

In a related study, we examined New York City joblessness. That 

study revealed that nearly 40 percent of black men, 16 to 24, in 

New York City are completely severed from the workforce and 

labor market. As Members of the Committee recognize, this is not 

unemployment; this is actual job holding in this category of individual. 

Our findings go on. In our latest yearly assessment of poverty in 

New York City, we have identified single mothers falling behind 

yet again in terms of being a growing segment of families in poverty despite a major economic recovery in the city of New York. 

Following that, the latest CSS survey of low-income New Yorkers, the largest such survey in America, finds that while nearly 60 

percent of low-income people are working, they are reporting significant problems, from losing their apartments to forgoing health 

care to having food crises. 

That survey led us to collaborate with a local union, Local 32BJ 

of the Service Employees International Union, to look at security 

guards in New York. Of 63,000 security guards, virtually none of 

them get a wage of more than $10 an hour, we couldn’t find one 

that had health insurance, and most of them report having problems staying in an apartment in any one year. 

I think rather than wringing our hands about it, our city has 

done something about it. Under Congressman Rangel’s prodding, 

the mayor created a construction opportunities group, which started reserving some of the jobs for young men and women in the categories we are talking about. The City Council in the city of New 

York has put $20 million to try to do workforce development activity, and the mayor has put together a panel, on which I am honored to serve, which has put forward $150 million to deal with the 

problems of chronic poverty in the city of New York. 

This can’t be done by a city or locality alone. It is going to take 

very aggressive activity by the Congress, and I think we have to 

start crafting interventions that can have some immediate impact. 

Some of them involved doing some rigorous skill-based work of developing further kinds of job corps settings and a renewed commitment to career and vocational education. 

We have to do interventions that will bring young people who 

were totally out of the economy into it, and we have to do even 

more. This particular Committee has to look at the EITC and conVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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1See Out of School, Out of Work . . . Out of Luck? New York City’s Disconnected Youth at 

http://www.cssny.org/pubs/research/poverty.html. 

sider whether we may draw more young people into that purview 

by expanding the low-income tax credit to include childless adults 

between 18 and 24. 

Again, I think the description of that panel nearly 40 years ago 

was right. I think we can do it, but it is going to take an extraordinary focus to get it done, and I think it has enormous consequences of what kind of Nation we are putting together. 

Thank you. 

[The prepared statement of Dr. Jones follows:] 

Prepared Statement of David R. Jones, President and Chief Executive 

Officer, Community Service Society of New York, New York, New York 

Good morning, Chairman Rangel and members of the Committee. I am president 

and CEO of the Community Service Society of New York or CSS, an independent, 

not-for-profit organization. Throughout our more than 160-year history, we have 

been committed to improving the life chances of New Yorkers living in poverty. 

Our legacy of achievement includes such innovations as setting up the prototype 

for the free school-lunch program; starting the first shelter for homeless men; organizing the Society for the Ruptured and Crippled, now New York City’s Hospital for 

Special Surgery; and organizing courses in social work that evolved into the Columbia University School of Social Work. 

Thank you for inviting me to share with you my thoughts on poverty in our Nation, in particular what we have witnessed in New York City. 

Let me begin by commending you, Congressman Rangel, for your exemplary service to our Nation, the passion you bring to this institution, and your lifelong commitment to those in need. We stand ready to assist you and this committee in any way 

we can to strengthen our national resolve to address poverty. 

Forty-two years ago the 88th Congress took the monumental step of supporting 

President Lyndon Johnson’s anti-poverty agenda. It was a hopeful time, as is evident in the 1965 annual report of the Council of Economic Advisers that stated: We 

have the means to break the bonds that tie today’s children to the poverty of their 

parents. With proper measures, we could eliminate poverty in the next generation. 

I appear before you today to suggest while some progress has been made, we must 

return to the task at hand and reinvigorate our efforts on behalf of the poor. My 

focus today is on the dimensions of poverty in New York City, what we are facing 

on the ground. And, while the magnitude of the challenge we face is unique due 

to the sheer size of our city, I know that similar conditions exist in urban communities across the country. 

In 2005, CSS issued a report that revealed 16 percent of young people in our city, 

ages 16 to 24 years old, are neither enrolled in school nor employed.1 These nearly 

170,000 young people—a number that rivals the total population of Providence, 

Rhode Island—are what researchers have deemed ‘‘disconnected,’’ separated from 

any opportunities that could lead to a life of self-sufficiency and achievement. 

The report found that the city’s Black and Latino youth—particularly young 

men—are twice as likely as Whites and Asians to be out of school and out of work. 

This predicament is most pronounced in the Latino community, where four in ten 

young men are disconnected. 

Low-income young men of color are being left out of the city’s growing prosperity. 

And therein lies the problem: Growing the economy is not enough to correct this 

situation. The presence of so many disconnected young people of color not only endangers families and communities. It also jeopardizes the city’s economic growth. 

We need a comprehensive policy to address the needs of disconnected youth. It 

must reflect the realities of today’s economy, penetrate populations of young people 

who are outside of mainstream institutions, and provide targeted investments with 

measurable outcomes. Ultimately, the goal must be to create a well-defined path to 

economic security for these young people. 

And we need a second chance policy specifically to reach out to young men and 

women who have dropped out. For those with deep educational deficits, this will not 

be a cheap, quick fix. Short-term, superficial training programs don’t make up for 

12 years of inadequate education. It will require a more focused approach, with a 

series of steps from rigorous skill development in a Job Corps type setting, a reVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00043 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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2See A Crisis of Black Male Employment: Unemployment and Joblessness in New York City, 

2003 at http://www.cssny.org/pubs/research/poverty.html. 3See Unemployment and Joblessness in New York City, 2005 at http://www.cssny.org/pubs/research/poverty.html. 4See Poverty in New York City, 2005 at http://www.cssny.org/pubs/research/poverty.html. 5See http://www.cssny.org/research/unheardthird/index.html. 

6See Shortchanging Security: How Poor Training, Low Pay and Lack of Job Protection for Security Guards Undermine Public Safety in New York City at http://www.cssny.org/pubs/research/ 

poverty.html. 

newed emphasis on vocational and technical education, to transitional jobs in public 

service or emerging sectors of the economy. 

Our attention must also focus on individuals who can find no place in our labor 

market. CSS released a report in 2004 that revealed the magnitude of Black male 

joblessness in New York City that reverberated through the media and city government.2 The report found that nearly half of all Black men were jobless in 2003. 

And as the members of this committee know, joblessness is not the same as unemployment. Our jobless figures account for all Black men of working age, including 

those who have dropped out of the job market, a growing group that the government’s unemployment statistics ignores. 

Since that initial finding, the situation has improved somewhat. Our latest figures 

show nearly 40 percent of the city’s Black men are jobless, a number that is still 

unacceptable.3 That’s about 250,000 people, more people than in many of the cities 

and small towns or counties represented by members of this committee. Clearly, in 

addition to engaging Black men in the labor market, we must also re-commit to nondiscriminatory practices and government oversight and enforcement mechanisms. 

This isolation from opportunity is not limited to Black men. Our most recent annual examination of poverty in New York City revealed that single mothers heading 

households comprise a larger share of families in poverty.4 It is another example 

of why there is not an easy fix or a one-size-fits-all solution that can be applied 

across the spectrum of crises we are encountering. 

CSS is also confronting the problems of the working poor. Working poor ought to 

be an oxymoron, but in fact it is an ever-expanding group of Americans. 

We conduct an annual survey of New York City’s low-income residents, aptly 

named ‘‘The Unheard Third’’ since one-third of the city’s residents live in or near 

poverty. As far as we know, this is the only regular survey of low-income opinion 

and attitudes in the Nation.5 It gives us vital information for our work since we get 

direct feedback from our primary constituency. 

Our latest survey found that nearly 60 percent of low-income New Yorkers were 

working, nearly half working full time. A report CSS produced and commissioned 

by the Service Employees International Union, Local 32BJ, on New York City’s private security guards, reinforced our survey data on the working poor.6

New York City’s 63,000 private security guards provide the first line of defense 

for tenants and visitors in office buildings as well as retail stores, schools, and religious institutions. Almost 95 percent are non-union. Over eight in ten are male and 

mostly men of color. The median hourly wage for guards in the New York City area 

is only 55 percent of the median for all workers in the New York metropolitan area. 

Most labor without a single day of paid sick leave and few receive health benefits 

on the job. The result is a workforce with low morale and high turnover. 

What we have learned from the aforementioned example is that unions continue 

to play an important role in securing livable wages and benefits and raising workplace standards to the benefit of workers and employers. The absence of unions 

leaves hard-working men and women with little protection from the often-arbitrary 

actions of employers and the unpredictable nature of market forces. 

We also need to reward legitimate, steady work. The Earned Income Tax Credit 

has been one of our most successful policies in making work pay and especially in 

drawing more low-income parents into the labor force and enabling them to rise out 

of poverty. But the EITC leaves out exactly the group with the highest rates of joblessness. The Earned Income Tax Credit should be extended to childless adults ages 

18 to 24, comparable to that available to parents of two children. 

To their credit, our city’s elected leadership has reacted responsibly to what CSS, 

and other organizations, have identified as a crisis in our city. 

Mayor Bloomberg recognized the possibilities for employment in the city’s burgeoning construction industry. But it was Chairman Rangel who induced the mayor 

to create the Commission on Construction Opportunity. And we have seen the results of the commission’s work: a new High School for Construction Trades, Engineering, and Architecture that opened last fall; and 40 percent of construction industry apprenticeships earmarked for formerly excluded groups and individuals—an 

unprecedented agreement with the city’s trade unions. 


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7See http://www.nyc.gov/html/om/pdf/ceolreport2006.pdf. 

The New York City Council, under the leadership of former Speaker Gifford Miller and continued by Speaker Christine Quinn, has piloted the New York City 

Works program—a citywide effort to stem the tide of joblessness by identifying prospects for employment, providing job preparation, and connecting individuals to 

work. So far, nearly $20 million has been earmarked for this program. 

Likewise, Mayor Bloomberg’s Commission for Economic Opportunity, on which I 

served, is a significant milestone for our city.7 The commission took a targeted approach, focusing on three distinct groups of the poor in New York City: working poor 

adults, young adults ages 16 to 24, and children age five and under. The mayor has 

committed $150 million to develop policies that address their immediate needs and 

create avenues for sustained mobility throughout the course of their lifetimes. 

This is a start. With the proper political will, we can turn hope into reality. Imagine an America where poverty is not accepted as a permanent condition. I am encouraged that the 110th Congress will, without the rancor of partisan rhetoric, see 

fit to build upon the tremendous legacy of the men and women who served in this 

institution four decades ago. Our finest hour has yet to come but the clock is ticking. 

As was expressed in 1965: we do have the means to break the bonds that tie today’s 

children to the poverty of their parents. 

I can provide copies of our reports or survey findings to the members of the committee or the committee staff. And I’ll be happy to answer questions about our experiences in New York City and the implications across urban communities throughout our Nation. 

Thank you. 

f 

Chairman RANGEL. A long-time staffer and friend of this Committee and well-known author, Dr. Ron Haskins, who is now the 

Codirector of the Center on Children and Families with the Brookings Institution. Welcome back to your Committee. 

STATEMENT OF RON HASKINS, PH.D., SENIOR FELLOW, ECONOMIC STUDIES AND CODIRECTOR, CENTER ON CHILDREN 

AND FAMILIES, THE BROOKING INSTITUTION 

Dr. HASKINS. Thank you so much, Mr. Chairman and Ranking 

Member McCrery and Members of the Committee. 

Before I came to Washington, I used to think the name of this 

Committee was the ‘‘Powerful’’ Committee on Ways and Means and 

only when I got here did I find out that ‘‘powerful’’ was just how 

you are regarded by other people. So, it is a great privilege to be 

here, and I greatly appreciate your invitation. 

I also want to congratulate the Committee for starting with poverty. I think poverty is a very serious problem. I spend most of my 

life now studying poverty and inequality and social mobility, and 

I am extremely pleased that the Committee is going to, not just in 

this hearing but in subsequent hearings, perhaps develop a legislative agenda, hopefully bipartisan. 

This Committee, of course, was really the source of the 1996 welfare reform bill, which has had dramatic impacts on poverty. I 

think you could argue that it is the most effective thing we have 

ever done at the Federal level, and it was, in the end, a bipartisan 

bill even though many of the prominent members of this Committee did not support it, it has been quite successful; and I hope 

that that same outcome can be achieved this time, that this Committee can work together and create an antipoverty strategy. 

I would like to make three brief points about the report. First, 

it is a superb report—I am referring now to the Holzer report. It 


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is a superb report. All of the authors are extremely prominent professionals and scholars, and I think there could be other people 

who can pick a nit here and there, as Harry said, but I think all 

experts that study this material would agree that poverty is a serious problem, that it does have long-term impacts on the economy; 

and if we could reduce childhood poverty, there would be positive 

impacts on the economy. 

I doubt anybody would argue very much with $500 billion. I 

think it is a reasonable outcome. 

I would like to point out two things that are very important. 

First, the $500 billion figure does not include the cost of anything 

that we would do to eliminate poverty. We already spend well over 

$600 billion on means-tested programs. So, we would have to spend 

more, presumably, unless we can make those programs more efficient, to actually reduce poverty. So, we should not think that we 

are going to suddenly realize a windfall of $500 billion if we could 

eliminate childhood poverty, because it is going to cost something. 

Secondly, do not think that the implication of this report is that 

if we gave a bunch of money to people, that poverty, childhood poverty, would be reduced. The logic of the report is, not only do poor 

people need more money, but they have to change in every other 

way to make them more like nonpoor people. The parenting behaviors have to change, the neighborhoods have to change, the schools 

have to change; and in my estimation, this puts us right back 

where we started. This Committee and other Members of Congress 

and members of the private sector, like Mr. Jones, still have to figure out what we should do to reduce poverty. 

In that regard, I think we actually have learned something. If 

members would like to look at Chart 3 in my testimony, I think 

this will give you a very good clue about what we have learned and 

about the strategies that we should pursue. 

First, I want to call your attention—these are three bar graphs 

in two sets, one set for 1990 and one set for 1999. These bar graphs 

are—it is a broad measure of poverty, but it is one that is used by 

the Census Bureau, so there is no tricky stuff here. 

Dr. HASKINS. Notice each—the bar graph in each set; these are 

moms who were never married, the most likely to be poor, the least 

likely to have a high school education. In 1990, their market poverty rate—think of it as life in the state of nature—was 50 percent. 

Half of them were poor and their children were poor. 

In 1999 it was 39 percent, and that figure went down specifically 

because of earnings, probably a net increase of 2 million mothers 

in the labor force, granted, working minimum-wage jobs, but earning enough to take themselves and their children out of poverty. 

Now look at what happens when you add government programs. 

When you add the cash programs and the cash in kind, not including the tax programs, poverty drops to 37 percent in 1990, but it 

still drops quite considerably in 1999. Then when you add the tax 

benefits, especially earned income tax benefits—and other benefits 

as well, but especially the EITC—it has no impact in 1990 because 

of the low levels of work. However, because of the high levels of 

work in 1999, poverty still goes down even further to 25 percent. 

So, think of this: 25 percent, 37 percent, why? For three reasons: 


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1 Harry J. Holzer and others, ‘‘The Economic Costs of Poverty in the United States: Subsequent Effects of Children Growing Up Poor’’ (Washington, D.C.: Center for American Progress, 

January 2007). 2 Congressional Research Service, Domestic Social Policy Division, Knowledge Services Group, 

Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and 

Expenditure Data, FY2002–FY2004, CRS Report for Congress (Washington, D.C.: Author, March 

2006). 3 Carmen DeNavas-Walt, and others, U.S. Census Bureau, Income Poverty, and Health Insurance Coverage in the United States: 2005, Current Population Reports, P60–231 (Washington, 

D.C.: Government Printing Office, 2006), Table B–2. 

First, we used the market. We insisted that people have market 

incomes. Government is not going to do anything. 

Secondly, individual responsibility, in this case work. We insisted 

that people do the responsible thing, namely quit welfare and go 

to work. It is not good to be on welfare, you should work. We sent 

very clear signals that were originated from this Committee that 

people had to go to work. 

Third, we supported them once they began to work with government programs, especially EITC but also child care, to some extent 

food stamps, which we changed very substantially in 2002. 

In short, this is a deeply bipartisan approach. For Republicans, 

there is personal responsibility, the Republicans like to emphasize. 

For Democrats, there is a crucial role for Government. I would say 

to this Committee that whatever you do to attack poverty, that you 

need to focus on these three bulwarks of any antipoverty strategy, 

and especially on more work. I suggest some things in my testimony about how we could do that, especially marriage, and especially education and, in particular, preschool. 

Thank you, Mr. Chairman. 

Chairman RANGEL. Thank you. Thank you. 

[The prepared statement of Dr. Haskins follows:] 

Prepared Statement of Ron Haskins, Ph.D., Senior Fellow, 

Economic Studies and Co-Director, Center on Children and Families, 

The Brookings Institution 

Chairman Rangel, Ranking Member McCrery, and Members of the Committee: 

My name is Ron Haskins. I am a Senior Fellow at the Brookings Institution and 

a Senior Consultant at the Annie E. Casey Foundation. I also spent 14 of the interesting years of my professional life working for this Committee and I am very grateful to have this opportunity to testify during today’s hearing on poverty and the 

economy. 

The report by my friend Harry Holzer and his colleagues that you are releasing 

today is a challenging and exceptionally interesting product of sophisticated social 

science methods.1 I suspect that economists and other experts would challenge some 

of the assumptions underlying the report and might come up with slightly different 

results than those reported by Holzer. But I think the conclusion that if we eliminated childhood poverty we would save on the order of $500 billion a year because 

of increased labor, reduced crime, and reduced need for health care is reasonable. 

Regardless of the exact level of savings, nearly every expert would grant that eliminating poverty would produce economic benefits and that the benefits would be substantial. In short, I applaud this report, especially because it gives us yet another 

reason to do everything possible to reduce poverty. 

I would, however, like to emphasize a cost that is not part of the calculations 

made by Holzer and his colleagues. Even if we reduce childhood poverty and prevent 

some of the costs childhood poverty imposes on the economy, whatever actions we 

take to end poverty would themselves have substantial costs. Thus, even if $500 billion is an accurate estimate of the costs of childhood poverty, we would need to 

spend money to reduce childhood poverty in order to reduce its long-term costs. In 

2005 we spent well over $600 billion on programs for poor and low-income individuals and families2 and yet the child poverty rate was 17.6 percent.3 It’s anyone’s 


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4Susan E. Mayer, What Money Can’t Buy (Cambridge: Harvard, 1997), p. 148. 5 Actually, the comparisons in the study are between poor children and children from families 

at twice the poverty level (about $30,000 for a family of three in 2006). Thus, the full savings 

they estimate would not be achieved unless we could develop policies that brought the families 

of poor children to twice the poverty level. 

guess how much more we would have to spend to greatly reduce the current child 

poverty rate. 

Further, the report tells us little about the causes of poverty, or more important 

for this committee, how it could be reduced. My concern here is directed especially 

to those who think that poverty is a random event that strikes indiscriminately, 

that our economy or our schools are the primary causes of poverty, or that the only 

difference between the poor and the middle class is money. The poor are poor in 

large part because they make decisions that greatly increase the likelihood that they 

will be poor. Yes, many of the poor begin life with disadvantages—lousy neighborhoods, bad schools, single-parent families—that are difficult to overcome. But both 

research and experience show that many people born with disadvantages manage 

to overcome them. 

Another complication arises. I think Professor Holzer and his colleagues would 

agree that in order to realize the gains to the economy they calculate would require 

changes in the behavior of both poor parents and poor children. Indeed, the underlying implication of their analysis is that the savings they estimate can only be 

achieved if we can figure out a way to boost poor children into an entirely different 

developmental trajectory than the one that currently limits their potential. We can 

have a big argument about whether it is possible to achieve this kind of impact on 

children, but virtually every student of poverty thinks that just giving money to 

poor parents would not be enough. Professor Susan Mayer of Northwestern University, in a remarkable study cited by Professor Holzer and his colleagues, found that 

influencing child outcomes requires more than just money. The title of her book, 

What Money Can’t Buy, hints at her message that ‘‘once basic material needs are 

met, factors other than income become increasingly important.’’ 4

This point is worth emphasizing. The nature of Professor Holzer’s analysis is to 

compare productivity, crime, and health of children from poor families with children 

from non-poor families.5 It is inherent in the logic of their analysis that any differences they find in the labor force productivity, health, or criminal behavior of 

children from poor and non-poor families cannot be attributed just to family differences in income. The authors are admirably explicit about this point: 

[Our estimates] include not only the effects of low parental income, but also 

of the entire range of environmental factors associated with poverty in the 

U.S., and all of the personal characteristics imparted by parents, schools, 

and neighborhoods to children who grow up with them or in them. . . . Of 

course, in defining poverty this way, we also assume that the entire range 

of negative influences associated with low family incomes would ultimately 

be eliminated if all poor children were instead raised in non-poor households. (p. 6) 

I think we have some fairly good ideas about how to influence children’s development, but no intervention has shown that it is possible to have these sweeping effects on the child’s home, neighborhood, and school environment. In short, I would 

not expect to be designing interventions any time soon that will enable us to capture 

a major portion of the $500 billion Professor Holzer estimates is lost to our economy 

every year because children are reared in poverty. 


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6 Adam Thomas and Isabel Sawhill, ‘‘For Richer or for Poorer: Marriage as an Antipoverty 

Strategy,’’ Journal of Policy Analysis and Management, 21(4): 587–599; Ron Haskins and Isabel 

Sawhill, ‘‘Work and Marriage: The Way to End Poverty and Welfare’’ (Welfare Reform and Beyond Brief #28), Washington, D.C., Brookings, September 2003. 

Rather than chase a goal that is far out of our reach to eliminate child poverty, 

a more modest but potentially more effective set of strategies lies close at hand. Figure 1 portrays the results of an analysis performed by Isabel Sawhill, my colleague 

at Brookings. Based on Census Bureau data for 2002, the analysis systematically 

varies factors correlated with poverty and then, based on the magnitude of each factor’s correlation with poverty and on data from a random sample of Americans, estimates how changing that factor would change the poverty rate.6 The figure shows 

the impact on poverty of assuming everyone works full time, of increasing the frequency of marriage to match the rate that prevailed in 1970, of assuming everyone 

completed high school, of reducing family size so that no family had more than two 

children, and of doubling cash welfare. As you can see by the height of the bar 

graphs, the most effective way to reduce poverty would be to increase work levels; 

the second most effective way would be to increase marriage rates. Increasing education, reducing family size, and doubling cash welfare are much less effective in 

reducing poverty. 


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7 Ron Haskins, Work over Welfare: The Inside Story of the 1996 Welfare Reform Law (Washington, D.C.: Brookings, 2006), Chapter 15. 8 According to tables from the U.S. Census Bureau, in 2005 the poverty rate among children 

living in married-couple households was 7.4 percent; the rate for children living in households 

headed by females was 38.0 percent. Thus, the poverty rate among children in female-headed 

households is 5.1 times greater than among children living with a married couple. 

This analysis, like the study being released today by the Committee, is based on 

statistical manipulations of data and not what actually happens when something in 

the environment (such as work or marriage rates) changes. But, thanks in large 

part to this Committee, the Nation has conducted a huge experiment that shows 

what happens to poverty rates when more people work. In the welfare reform legislation of 1996, welfare rules were dramatically changed so that mothers on welfare 

had to look for work or have their cash benefit reduced or even terminated. In addition, mothers were confronted with a 5-year time limit. In part because of these new 

rules, the mid- and late-1990s saw the largest increase ever in work by females 

heading families. As many as two million poor mothers left or avoided welfare and 

found jobs. Figure 2 shows what happened to child poverty during the period of increased employment by single mothers. Child poverty declined for seven consecutive 

years beginning in 1993, falling by nearly 29 percent over the period. Black child 

poverty fell even more, by about 32 percent, reaching its lowest level ever. Even 

after some mothers lost their jobs during and following the recession of 2001 and 

child poverty increased, it peaked in 2004 (it declined again in 2005) at a rate that 

was more than 20 percent below its mid-1990s peak.7

In line with the prediction of the Sawhill analysis, these results present a vivid 

demonstration that poverty can be reduced by people making the right decisions— 

in this case the decision to go to work. Congress and President Clinton encouraged 

work; many poor mothers went to work; child poverty dropped. 

Another decision that people make that greatly increases their odds of living in 

poverty is the decision to have a baby outside marriage. Children in female-headed 

families are four or five times more likely to be poor as children living with their 

married parents.8 The Brookings analysis referred to above shows that if we had 

the marriage rate we had in 1970, we could reduce poverty by well over 25 percent. 

The analysis does not assume any higher levels of employment or any government 

spending above the level that actually occurred in 2002. The analysis proceeded by 

randomly matching single men and single women with the characteristics (including 


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9 Haskins, Work over Welfare, p. 126. 

employment and income) they actually had in 2002. The matches, based on age, 

education, and race, proceeded until enough virtual marriages had been created to 

equal the 1970 marriage rate. Clearly, the decision to marry by millions of young 

adults could have a major impact on poverty rates. As it is now, the decision not 

to marry and to have babies outside wedlock contributes greatly to the high level 

of poverty in America, especially the poverty level among children. 

Dropping out of high school is yet another individual decision that has a major 

impact on poverty. As Figure 1 shows, we could reduce poverty by about 15 percent 

if everyone would simply finish high school. Of course, if more youth went on after 

high school and achieved 2-year or 4-year degrees, the impact of education on poverty would be even greater. 

So far, I have emphasized work, marriage, and education because not only are 

these effective levers to manipulate to fight poverty, but they are all primarily 

under the control of individuals. The major lesson from welfare reform is that increased personal responsibility is vital to reducing poverty. No matter what we do 

as a nation to fight poverty, increased levels of responsible decision-making by individuals should be at the heart of our strategy. If we can increase the number of 

parents who decide to work, if we can encourage young people to marry before having children, and if we can help young people complete high school or even achieve 

additional years of schooling beyond high school, we will greatly reduce poverty and 

realize the economic gains predicted by the Holzer report. 

I am emphatically not arguing that we should create a brave new world in which 

disadvantaged individuals must slog it out in a low-wage economy without help 

from government. Government has a vital role to play. But government is already 

doing a lot. Members of this Committee undoubtedly hold a wide range of views 

about how much government should do to help the poor and what particular actions 

government should take to fight poverty. But since roughly the 1980s, the legislative 

and executive branches of the Federal government have dramatically shifted the 

focus of American social policy. As Kate O’Beirne testified before this Committee 

during the 1995 hearings on welfare reform, the watchword of the old welfare system seemed to be ‘‘Spend more, demand less.’’ 9 But the welfare reform legislation 

of 1996 has brought dramatic change. Now low-income families are expected to 

work, but when they do the Federal government meets them in the labor market 

with a host of work-conditioned benefits including the Earned Income Tax Credit 

(EITC), a partially refundable child tax credit, child care, a worker-friendly food 

stamp program, and Medicaid coverage. In the bad old days, a poor mother who left 

welfare for low-wage work could actually lose money—and lose her family’s Medicaid coverage as well. Now she can get up to $4,500 in cash from the EITC, she 

might qualify for the refundable part of the child tax credit, she could qualify for 

around $1,500 in food stamps, her children are covered by Medicaid as long as she 

has low earnings, and there’s a very good chance her child care would be covered. 


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10 Committee on Ways and Means, 2004 Green Book (Washington, D.C.: U.S. Government 

Printing Office, 2004), table H–21. 

Figure 3, based on data taken from the Ways and Means Green Book, shows how 

successful the policy shift to mandatory work combined with federal work supports 

has been.10 The figure compares progress against poverty among children living 

with their unwed mothers in 1990 (the first set of graphs) and in 1999 (the second 

set of graphs). The first bar shows that before any government transfer programs, 

the poverty rate based just on market income was 50 percent in 1990 but only 39 

percent in 1999. The 1999 market poverty rate was more than 20 percent lower 

than the comparable rate in 1990 because so many more unwed mothers were working in 1999. The second bar shows what happens when non-tax transfers from cash 

welfare, food stamps, and housing are added to family income. These programs took 

a big bite out of poverty in 1990, causing it to fall from 50 percent to 37 percent. 

But the same programs also had a major impact on poverty in 1999, despite its 

lower initial level, causing it to fall from 39 percent to 30 percent. When tax benefits, notably the EITC, are added to income, there is virtually no impact on poverty 

in 1990. But in 1999, the EITC and other tax benefits brought poverty down by another 5 percentage points or 15 percent. As can be seen by comparing the last bar 

in each set, the combined effect of government programs in 1990 was to bring poverty down by about 25 percent, from 50 percent to 37 percent. But the impact of 

government programs in 1999 was even greater, reducing poverty by over 35 percent—despite the fact that increased incomes from work by mothers had caused the 

market poverty rate to be 20 percent lower. It would be difficult to imagine a clearer 

demonstration that the new federal strategy of requiring personal effort and then 

rewarding it with work-contingent benefits is functioning just the way this Committee and Congress hoped it would. 

The beauty of what has happened to work and poverty in America over the past 

decade is that our current approach to fighting poverty is deeply bipartisan. For Republicans there is the reliance on personal responsibility and the market; for Democrats there is the use of government programs to provide work incentives and boost 

incomes. If the Members of this Committee base their decisions on how to fight poverty on the lessons of the past, they will build their policies on a foundation with 

three bulwarks that would make the policies inherently bipartisan: jobs in the private sector (even if they are low-wage), work requirements to spur individual responsibility, and government programs that support work (‘‘make work pay’’). 


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11 Ron Haskins and Isabel Sawhill, ‘‘What a Winning Presidential Candidate Should Do About 

Poverty and Inequality’’ (Washington, D.C.: Brookings, forthcoming). 12 Ron Haskins, ‘‘Putting Education into Preschools,’’ in Paul E. Peterson, ed., Generational 

Change: Closing the Test Score Gap (Lanham, Maryland: Rowman & Littlefield, 2006); Jens 

Ludwig and Isabel Sawhill, ‘‘Success by Ten’’ (Washington, D.C.: Brookings, forthcoming). 

My Brookings colleague Isabel Sawhill and I have just completed work on a paper 

that is part of a larger Brookings project designed to bring attention to critical 

issues of foreign and domestic policy that should be addressed by candidates during 

the 2008 presidential campaign.11 Our paper is based in part on an issue of the 

journal The Future of Children that Brookings and Princeton University publish 

twice a year. Our next issue contains eight specific recommendations, made by some 

of the Nation’s leading scholars, about policies to fight poverty. Here are brief descriptions of four proposals for fighting poverty that meet the criteria of building 

on the low-wage economy, spurring individual responsibility, and supporting work: 

• Raising work levels is a proven strategy for reducing poverty. Yet the only federal program that has strong work requirements is Temporary Assistance for 

Needy Families. The Federal government should work with states and local 

housing authorities to increase the incentives for work in both the food stamp 

and housing programs. • Simulations like the Sawhill analysis cited above show that increasing marriage 

rates could have a major impact on poverty. However, there is only modest evidence that programs such as marriage education will increase marriage rates 

or strengthen families. Fortunately, the Bush administration has funded a series of scientific studies, now being conducted by highly qualified research companies, to examine a range of marriage programs working both with young unmarried parents and with young married parents. In addition, the Administration has recently funded over 120 marriage programs around the Nation. The 

Ways and Means Committee should follow the progress of these research and 

demonstration programs and from time-to-time conduct hearings to examine the 

findings. If the programs are effective in building strong families and boosting 

children’s development, they should be expanded. • A large number of poor and low-income men, especially minority men, continue 

to have serious problems in the labor market and to exhibit low rates of marriage, high rates of impregnating their unmarried partners, low rates of paying 

child support, and high rates of crime and imprisonment. The primary government program for these young men is child support enforcement, which uses all 

available means—including incarceration—to force them to pay child support. 

A reasonable approach to helping these young men would be to use both prison 

release programs and interventions implemented through the Child Support 

Enforcement program to provide incentives for work. In addition, Congress 

should provide funds for a few states to experiment with large-scale demonstrations of the effects of providing these young males with a large income supplement comparable to the EITC; • The intervention program that has the best evidence of having long-term impacts on children’s development is high-quality preschool.12 Evidence from 

model programs shows that preschool can reduce placements in special education and retentions in grade, boost school graduation rates, reduce delinquency and crime, reduce teen pregnancy, and increase college attendance, 

among other effects. But there is little or no evidence that large-scale programs 

like Head Start can produce these long-term effects. More than forty states now 

spend their own money on preschool programs, indicating a high level of state 

commitment to preschool. Congress should offer additional funding to a few 

states that agree to coordinate all their child care and preschool funding, to 

focus on boosting school readiness, to cover all poor 4-year-olds (or both 3- and 

4-year-olds), to use highly qualified teachers, and to submit their programs to 

third-party evaluations. Although model programs show what can be accomplished, we do not yet have the knowledge to implement effective large-scale 

programs. 

I believe the Ways and Means Committee should be commended for opening its 

agenda for the 110th Congress by examining poverty. We have learned a lot about 

fighting poverty in the past decade. If we build on what we have learned, and especially if we conduct large-scale demonstrations of new ideas based on the bipartisan 

principles outlined above, I think it is possible to further reduce poverty and to realize some of the savings to the Nation’s economy so impressively documented in the 

Holzer report. 

f 


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Chairman RANGEL. Now we will hear from Dr. Jane Knitzer, 

Director of the NCCP, from New York. 

Thank you for being with us. 

STATEMENT OF JANE KNITZER, PH.D., DIRECTOR, NATIONAL 

CENTER FOR CHILDREN IN POVERTY 

Dr. KNITZER. Thank you, Mr. Chairman and Members of the 

Committee. My name is Jane Knitzer; I direct the NCCP at Columbia University, located in Congressman Rangel’s district, and I personally am a constituent. 

I am going to highlight seven take-home messages from demographic analyses, neuroscience and economic research that have 

profound implications for shaping policies to promote future productivity. 

One, we are talking about a large part of the future workforce, 

39 percent of America’s children, 28 million children, live in lowincome families. 

Two, most low-income children already have parents who work, 

55 percent of them full-time, full-year, but they do not earn enough 

money to support a family. It takes twice the poverty level, even 

minimally. 

Three, the younger the child, the greater the risk of poverty. 

Forty-three percent of children under 6 live in low-income families 

compared to 35 percent of adolescents. We know from research that 

experiencing poverty in early childhood is the most harmful to children. 

Four, economic hardship has been repeatedly linked to adverse 

health education and other outcomes, even in children, the kind 

that you just heard described in adults. By age 4—and it starts 

really early. By age 4, poor children are 18 months behind developmentally and by age 10, they have not caught up. These children 

have more mental health problems, they are more likely to drop 

out of school and become part of the disengaged youth. 

Five, money matters for children’s outcomes. Increased income 

has been linked with better school readiness and achievement and 

with reduced behavior problems, some of it, in our welfare research 

findings. Families with more money can invest in more resources 

to promote cognitive development, and they are less stressed and 

depressed, which impacts how children develop socially and emotionally which, in turn, relates to how well they become workers. 

Six, the earliest relationships matter more than we ever understood. Neuroscientists are teaching us that the earliest relationships, starting in infancy, shape the hardwiring of the brain, which 

in turn shapes later learning, the ability to manage emotions and 

even the immune system. 

A study called Adverse Childhood Experiences has linked problems in childhood with increased cardiovascular problems, hypertension, diabetes, et cetera, done by the Kaiser Foundation. 

Seven, according to economists as well as brain science, investing 

in high-quality early childhood experience has long-term, major 

economic payoff, and I think everybody has mentioned that. So, I 

won’t go into that. My testimony gives examples and the Committee on Economic Development has been doing a great deal of 

analysis of this. 


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So, the take-home messages that are critical, for future productivity, we need to make work pay for families now, not just for 

adults; but adults are parents, and what happens now is that as 

families earn more and lose the work support benefits, they fall 

back into poverty. 

We have developed a tool, the Family Resource Simulator, at 

NCCP that tracks this in 12 States across the country. As they 

earn more, do the American thing, work harder, they lose benefits. 

Some earn twice as much and they end up with very little disposable income. This does not set a good model for their children. 

Two, make sure that all low-income young children enter school 

with the skills they need to learn whatever setting they are in, and 

regardless of the work status of their parents. Right now, 17 percent of children are actually in State-funded preschool programs. 

The vast majority of children are in child care settings, but child 

care is largely seen as a work support for parents, not essentially 

a productivity support for the next generation. We must invest in 

quality child care that includes the same access to high quality 

early learning experiences. 

Three, we need to invest in infants and toddlers and their families, particularly those where the relationships are at risk. We 

must expand programs like Early Head Start. We are now serving 

62,000 children in the United States of America in Early Head 

Start, even in the face of the brain science. 

Finally, for the highest-risk children, particularly those in poverty and extreme poverty, we need to consistently make both parenting supports and work supports a focus. Right now, we focus on 

work and not the parenting supports that these higher-risk families need. We often talk about children and adults separately. We 

need to focus policies on families, particularly for the highest risk. 

I thank you very much, and I would be happy to respond to any 

questions. 

Chairman RANGEL. Thank you. 

[The prepared statement of Dr. Knitzer follows:] 

Prepared Statement of Jane Knitzer, Ph.D., Director, National Center for 

Children in Poverty, New York, New York 

Thank you, Mr. Chairman and members of the committee for this invitation to 

testify today. I am the Director of the National Center for Children in Poverty 

(NCCP). NCCP is a public interest organization at Columbia University’s Mailman 

School of Public Health, with offices in Congressman Rangel’s Congressional District. NCCP’s mission is to promote the health, economic security, and well-being 

of America’s most vulnerable children and families. NCCP uses research to identify 

problems and find solutions at the state and national levels. 

My remarks today focus on what we need to do for the next generation now to 

ensure the future productivity of our economy. To set the stage, I will provide some 

key facts about child poverty, highlight why child poverty matters for the future of 

the economy, and share lessons from research about new strategic ways to address 

child poverty and to ensure a productive future workforce. I will conclude with some 

broad recommendations based on NCCP’s research on how best to improve family 

economic security and increase the odds that poor and low-income children will become productive earners. 

Child Poverty in America, 2007 

Child poverty is widespread. Overall, 39 percent of America’s children—more 

than 28 million children—live in low-income families, that is with income below 

twice the poverty level. This puts them at risk of not making it in the global economy, not having the educational skills they need, not being healthy both mentally 

and physically, and not being effective parents when they become adults. 


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Nationally, 18 percent, or nearly 13 million children are poor by official standards. 

Half of these children are in families with incomes at or under $10,000. 

Another 21 percent of children live in families with incomes between 100 and 200 

percent of poverty. Although not poor by official standards, these families face material hardships and disadvantages that are similar to those who are officially poor. 

Missed rent payments, utility shut offs, inadequate access to health care, and unstable child care arrangements are common. These families are but one or two crises 

away from official poverty (National Center for Children in Poverty, 2006). 

Most low income children have parents who work. As the recent GAO report finds, the majority of the parents of these children work—55 percent of children 

in low-income families have a parent who works full-time, 52 weeks a year. The 

problem is they do not earn enough money to support a family, even when they 

work more. They are held back by low-wage jobs that provide few benefits and few 

prospects for advancement, even when they have a high school degree or even some 

college. Three quarters of low-income children have parents with at least a high 

school diploma, but this no longer guarantees economic success (National Center for 

Children in Poverty, 2006). 

Research shows that it takes an income of about twice the poverty level to provide 

even basic necessities for a family, $40,000 for a family of four, not the official 

$20,000, and, depending upon the local cost of living, it can take even more. It takes 

a full-time job at more than $19 an hour to produce an annual income of $40,000, 

or two full-time jobs at nearly $10 an hour (Cauthen, 2006). 

Not having enough money reduces the odds that children will have access to the 

kinds of resources and experiences that are essential for children to thrive and to 

grow into productive adults. Too often they lack access to the things that higherincome parents routinely provide for their children—high quality health care, stimulating early learning programs, good schools, money for college as well as books and 

other enriching activities. Instead, low-income parents struggle with more basic 

choices: When the money runs out, is it heat or the medical bills? Is it good child 

care or unstable arrangements that cost less? Is it keeping young children indoors 

and out of unsafe parks, risking obesity? 

The younger the child, the greater the risk of poverty. 20 percent of children under age 6—1 in 5—live in poor families; 16 percent of children age 6 or older 

live in poor families. In half the states, more than 20 percent of children under age 

6 are growing up in poverty, whereas only 13 states have a child poverty rate for 

children up to age 18 that is as high. The pattern is the same for low-income children: 42 percent of children under age 6 live in low-income families, whereas 33 percent of adolescents live in such families. Research tells us that experiencing poverty 

in early childhood, along with persistent poverty, is the most harmful to children. 

States’ poverty and low-income rates vary considerably. There is considerable state variation in the rate of children in low-income families. In the states represented on this committee for example, the percentage of low-income children varies from 24 percent to 44 percent of all children in the state. This suggests the possibility of a combined state and federal policy agenda providing incentives to states 

to implement poverty reduction strategies. 

Why Child Poverty Matters for Future Productivity 

Economic hardship has been linked to a myriad of adverse educational, 

health and other outcomes for children that limit future productivity. Lowincome children face elevated health, educational, environmental and family risks 

that jeopardize their successful transition to adulthood, with African American, 

Latino and American Indian children facing compounded risks (Shonkoff, 2000). For 

example: 

Health 

Good health is the foundation for healthy development. Low-income children are 

more likely to be in fair or poor health (Centers for Disease Control analysis of 2001 

National Health Interview Survey—NHIS) and to lack access to quality health care. 

Low-income children are not as likely as their well-off peers to receive preventive 

health care and their parents are less likely to receive guidance about child development. Three percent of low-income families report receiving advice and education 

from their physician compared to more than half for more affluent families (Young, 

1996). Even with Medicaid and the State Children’s Health Insurance Program 

(SCHIP), 11 percent of poor children lack access to health insurance, and for the 

first time in more than a decade, the number of uninsured children is increasing 

(See: www.statehealthfacts.org). 


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Education 

Researchers repeatedly document that there is a direct linear relationship, in the 

aggregate, between family income and children’s achievement. Higher family income 

leads to higher academic achievement (Gershoff, 2003; Lee & Burkham, 2002). 

Less well known is that the achievement gap is real and significant from children’s earliest years. Both math and reading scores are negatively related to poverty 

at kindergarten entry and for the most part, poor children either do not catch up 

or the gap worsens. A review of national data sets on preschool and child care shows 

that at age 4 years, poor children are 18 months below the developmental norm for 

their age group. By age 10, that gap is still present. Of particular concern is that 

there is a dramatic difference in early language by income. By the time children 

from middle-class families are in the third grade, they know about 12,000 words. 

Children in low-income families with undereducated parents have vocabularies of 

4,000 words (Klein & Knitzer, 2007). 

Mental Health 

Healthy social and emotional development is a core ingredient of successful adulthood. But low-income children are disproportionately exposed to circumstances that 

pose risks to such development. 

Low-income children, especially young children, are more likely to be exposed to 

parental depression and other parental adversities including substance abuse and 

domestic violence. These risk factors have been linked with an array of short and 

long term consequences for children, including depression, acting out behavior, and 

significant school problems. 

For older children, the toll poverty takes is reflected in higher rates of diagnosable 

disorders, along with learning problems (Knitzer & Cooper, 2006) that frequently 

translate into school drop out and sometimes child welfare and juvenile justice involvement. Two-thirds of youth with mental health problems drop out of high school 

(Wagner, 2005). 

What Research Says Can Help 

It is widely accepted that high quality education is a major pathway out of poverty. But research also points to two other critical ingredients that promote future 

productivity. 

Adequate Family Income 

Too often, discussions about children and poverty focus only on the risks associated with poverty—low educational achievement, social and behavioral problems, 

and poor health—and then the policy solutions follow suit. While it is critically important to address these problems, it is equally important for children’s growth and 

development to address poverty itself. In short, money matters. 

More than a decade of research shows that increasing the incomes of low-income 

families—without any other changes—can positively affect child development, especially for younger children (Cauthen, 2002). Experimental studies of welfare programs offer some of the strongest evidence to date about the importance of income. 

For example, welfare programs that increase family income through employment 

and earnings supplements have consistently shown improvements in school achievement among elementary school-age children; other studies have also shown links between increased income and improved school readiness in young children (Dearing, 

McCartney, & Taylor, 2001). 

In contrast, welfare programs that increase levels of employment without increasing income have shown few consistent effects on children. Moreover, findings from 

welfare-to-work experiments show that when programs reduce income, children are 

sometimes adversely affected (Cauthen, 2002). Other studies have shown links between increased income and reductions in acting out disorders in low-income children and youth (Costello, Compton, Keeler, & Angold, 2003). And it’s not just the 

amount of income that matters but also its predictability and stability over time; 

research has shown that unstable financial situations can have serious consequences for children as well (Cauthen 2002; also Wagmiller, Lennon, Kuang, & 

Aber, 2006). 

Research suggests that income, controlling for other factors, affects children primarily through two mechanisms. The financial investments that parents are able 

to make in their children—both to meet basic needs as well as to invest in materials, activities, and services that are developmentally enriching—are critical for 

child development. The inability to make such investments helps to explain why 

poverty negatively affects children’s cognitive development. Likewise research shows 

that low levels of family income negatively affect children’s social and emotional deVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00057 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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1For further information, see the National Scientific Council for the Developing Child Web 

site: www.developingchild.net. 2Longitudinal studies of three model projects serving low-income children and families—the 

High/Scope Perry Preschool Project, the Abecedarian Project, and the Chicago Child-Parent Centers—have followed participants into adulthood, comparing their adult earning and other outcomes with those of randomly chosen or comparable non-participants (Reynolds, 2002; 

Schweinhart, 2004; and Ramey, 2000). 

velopment by increasing levels of parental stress and depression and by affecting 

parenting behavior. 

Healthy Relationships in the Early Years 

Developmental research has for two decades pointed consistently to the importance of parents and to other ‘‘protective’’ relationships (Luthar, 2003) for all children of all ages. It also teaches us that the more risk factors, whether demographic 

(single parent family, low maternal education) or environmental (parental substance 

abuse, community violence), absent effective interventions, the more likely children 

are to experience poor long-term negative outcomes. 

Recent neuroscience research has dramatically deepened these understandings 

and focused attention on what happens in the earliest years. There are three core 

take home messages that have especially profound implications for how we design 

programs and use public dollars to improve school outcomes and future productivity 

of children and youth. All findings point in the same direction—a strengthened focus 

on young children.1

The earliest experiences shape the hard wiring of the brain. Early experiences and relationships interact with genetics to shape the ‘‘architecture’’ of the 

brain. How the early brain develops impacts later learning, the ability to mange 

emotions and even the immune system. Depending upon the early experiences, that 

architecture is either sturdy or fragile. When it is sturdy, children are more likely 

to grow up and be productive, when it is not, they risk problems not just as children, but also into adulthood. 

The active ingredient in early brain development is relationships. When relationships with primary caregivers (including families, but also child care providers, home-visitors and teachers) are appropriately nurturing, stimulating and 

stable, young children thrive. When they are not, young children show signs of early 

learning, language and social and emotional challenges. At the extremes are the infants, toddlers and young children who experience ‘‘toxic stress,’’ that is, exposure 

to persistently harmful environments, inconsistent caregiving, abuse and abandonment. Research documents how these experiences frequently leave life long scars 

(Luthar, 2003). 

Once brain circuits are built, it becomes harder to change them. That is 

why adults who learn a language as adults even if fluent continue to have an accent. It is harder to change a four year old than a baby, and harder to change an 

adolescent than a four year old. It is also much more costly. Children who do not 

develop the skills to succeed in the early grades, particularly the social and emotional skills, are more likely to end up as problem learners and later dropouts 

(Raver & Knitzer, 2002). Estimates are that between one-quarter and one-third of 

children are at risk of early school failure. The potential health costs of poor early 

experiences are also high. Children who experience high levels of stress, as adults, 

turn out to be at much greater risk for cardiovascular diseases, diabetes, hypertension and substance abuse (Fellighetti, Anda, & Nordenberg, 1998). 

What Economists Say About the Return on Investments in the Earliest 

Years 

Economic analyses of three high-quality intensive early childhood demonstration 

programs that have followed children as they became adults reinforce the rationale 

for increased, strategic early childhood investments.2 While the program specifics 

differed, each of the programs: began early in children’s lives; had clearly focused 

goals that emphasized the whole child; maintained sustained contact with the children—often including through their transition to elementary school; had teachers 

who were well educated, trained, and compensated; had small class sizes and high 

teacher-child ratios; and, involved and supported parents intensively (Galinsky, 

2006). 

By early adulthood, participants generally had: higher IQ’s and mathematical 

ability; higher academic achievement; reduced need for special education, lower 

grade retention rates, fewer school drop outs. At age 21, those in one preschool program studied were more than four times more likely than non-participants to be enrolled in a 4-year college degree program; were less likely to be unemployed and 


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more likely to have higher earnings; had lower juvenile and adult crime rates; were 

less likely to depend on public assistance, and less likely to be a teenage parent. 

Economists are examining the implications of these findings to address the problem of lower skills and motivation among disadvantaged children, their diminished 

productivity as adults, as well as their costs to society. One study estimates that 

by age 21, participants in its preschool program earned an average of $20,517 more 

than non-participants, and that the public saved a net of $19,097 on grade retention, special education, child welfare, juvenile and adult justice expenditures (Reynolds et al., 2004). 

Other analyses found that disadvantaged children from ages 8–13 with low levels 

of parental investments (time, activities, and family resources) without preschool 

had a 29 percent chance of graduating from high school. With preschool, the chance 

of high school graduation rose to 53 percent (Heckman & Masterov, 2004). 

The implication is clear. If we address poverty in the earliest years—when it is 

in fact most widespread in this country—and apply the lessons from this research 

on investments in the early years, we stand the greatest chance of changing in a 

positive way what happens to a child in a poor or low-income family and subsequently, that child as an adult. 

The Policy Implications 

I would like to conclude with some broad recommendations that our research at 

the National Center for Children in Poverty indicates must shape the future policy 

dialogue about how to improve outcomes for the close to 40 percent of children who 

live in low-income families. 

Ensure that families have enough resources to raise their children in 

ways that will promote future productivity. For the next generation to thrive, 

we need to make sure that parents have enough money to raise their children, 

whether it be through income, refundable tax credits, benefits, or some combination 

of all the above, as well as opportunities for increased education. 

We need to make work pay for children and families now in order to promote future productivity. This is a different rationale than is usually offered for 

investments in the current workforce. But given that research findings show the 

positive impact of increased family income on children, it is an important one. Many 

low-income families qualify for ‘‘work support’’ benefits (e.g., earned income tax 

credits, Medicaid, child care assistance) that can help make up the difference between low earnings and a basic family budget. But these benefits are means-tested, 

so as earnings increase—particularly as they rise above the official poverty level— 

families begin to lose eligibility even though they are not yet economically self-sufficient. The result is that working and earning more may not leave a family better 

off. In the worst case, higher earnings can actually lead to a family doing worse financially. A tool developed by the National Center for Children in Poverty, the Family Resources Simulator (www.nccp.org/modeler/modeler.cgi), provides concrete examples of this phenomenon. 

With the help of work support benefits, a single-mother of two in Chicago can 

cover the cost of basic necessities for her family by working full-time earning about 

$15,000 a year. But as she earns more, the family loses its food stamps and child 

care subsidy, benefits less from the Earned Income Tax Credit, begins to incur premiums for public health coverage. The result? The family is no better off financially 

at $36,000 in earnings than it was at $18,000 (Cauthen, 2006). So what message 

does this send to children? They see their parents working hard and not getting 

ahead. This should not be the American way. 

Ensure that every low-income child has access to quality early education 

and care and for poor or otherwise at risk children access to comprehensive programs like Early Head Start from birth through age 3. 

We need to make sure that all low-income children enter school with the 

skills that they need to learn, whatever setting they are in and regardless 

of the work status of their parents. The states are moving to increase funding 

for pre-k, but the reality is that overall, low-income young children still have significantly less access to any formal early childhood program than their more affluent 

peers (a pattern that has not really changed over the years) and only 17 percent 

of 4-year-olds have access to state-funded pre-k. In fact, most children are in some 

kind of child care setting, but child care is seen as a work support, not a next generation productivity support. Thus, although over 30 states include child care as 

part of their delivery of pre-k services, when parent’s employment status changes, 

children lose eligibility, and lose the relationships that they have come to count on. 

Only 20 states certify eligibility for child care for one year. Yet we know that continuity of relationships reinforces positive brain circuitry. 


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We need to invest in a new set of intentional, integrated policies to promote healthy brain development in children from birth to three that are designed with brain science in mind, starting with an expansion of Early 

Head Start. We lose too much time if we what until four. It is shocking, when juxtaposed against brain science that we have a national Early Head Start program 

that is serving only 62,000 children, even though we have research that shows that 

for most of the children enrolled, Early Head Start improved parenting practices 

and behavioral and cognitive outcomes. We also know that when children in Early 

Head Start continue with high quality child development and early learning programs, they maintain their gains and the achievement gap is reduced. Yet as 3- 

years-olds, half of the Early Head Start sample were not in programs that supported the gains of the first two years. This is not smart investing, given what we 

know from brain science. 

For the highest-risk children, particularly those in poverty and extreme 

poverty, we need to consistently make both parenting and work a focus of 

our policies, right now, rather than just work or just children. For example, 

there has been important attention in workforce and TANF policies to ‘‘barriers to 

employment’’—low education, poor work histories, substance abuse and domestic violence, and, in reality, if not in law, mental health issues. These ‘‘barriers to employment’’ are also ‘‘barriers to effective child development’’ and hence to future productivity of the children. The children in these families are at special risk; they are the 

most likely not to have health care, to have developmental delays that are not identified, and not to be enrolled in formal early childhood programs. But TANF does 

not require attention to the children in the families as part of a family plan. 

Similarly, as part of a broad poverty reduction strategy, we need to make it possible for states to use current entitlement dollars in ways that actively promote 

healthy development. Right now, states have to engage in fiscal contortions to pay 

for what science says is needed. For example, maternal depression, which cuts 

across class and race, is an anchor risk factor, negatively impacting behavior, cognitive functioning and language development. Studies show that rates of depression 

in low-income mothers are very high—in the 40 percent across multiple studies. 

However, parents of poor children can only access treatment if they are Medicaideligible. The average eligibility rate for working parents is 65 percent, for non-working parents, 42 percent. State eligibility rates for non-working parents (those who 

are most likely to have unaddressed health and mental health problems) vary. In 

five states the eligibility rate is under 20 percent of the Federal poverty level (FPL); 

in 26 states it is between 20 and 50 percent of the FPL, in 9 states it is between 

50 and 100 percent of the FPL, and in the remaining 9 states, it is between 101 

percent and 200 percent of the FPL. (Forthcoming NCCP report). 

The policy challenge is large. It is to reassess our work support policies through 

a lens that integrates a stronger focus on children, and to strengthen our child focused policies to have a stronger focus on families. Before we lacked the science and 

the economic analysis to justify attention to children before they become costly problems to society. But now, we have data that says we can reduce the societal costs 

of child poverty across generations if we are smarter about making different kinds 

of up front investments in our public policies. 

I very much appreciate this opportunity to testify before you and NCCP would be 

happy to work with the Committee staff to provide any additional information that 

might be useful. 

References 

Cauthen, N. K. (2002). Policies that improve family income matter for children. 

New York, NY: National Center for Children in Poverty, Columbia University Mailman School of Public Health. 

Cauthen, N. K. (2006). When work doesn’t pay: What every policymaker should 

know. New York, NY: National Center for Children in Poverty, Columbia University 

Mailman School of Public Health. 

Costello, E. J, Compton, S., Keeler, G., Angold, A. (2003) Relationships between 

poverty and psychopathology: A natural experiment. Journal of the American Medical Association, 290(15), 2023–2029. 

Dearing, E., McCartney, K., & Taylor, B. A. (2001). Change in family income-toneeds matters more for children with less. Child Development, 72, 1779–1793. 

Fellighetti, V. J., Anda, R. F., Nordenberg, D., et al. (1998). The relationship of 

adult health status to childhood abuse and household dysfunction. American Journal of Preventive Medicine, 14(4), 245–258. 


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Galinsky, E. (2006). The economic benefits of high-quality early childhood programs: What makes the difference? Washington, DC: Committee for Economic Development. 

Gershoff, E. T. (2003). Low-income and hardship among America’s kindergartners 

(Living at the Edge, No. 3). New York, NY: National Center for Children in Poverty, 

Columbia University Mailman School of Public Health. 

Heckman, J. J. & Masterov, D. V. (2004). The productivity argument for investing 

in young children (Invest in Kids Working Group Working Paper No. 5). Washington, DC: Committee for Economic Development. 

Klein, L. & Knitzer, J. (2007). Promoting effective early learning: What every policymaker and educator should know. New York, NY: National Center for Children 

in Poverty, Columbia University Mailman School of Public Health. 

Knitzer, J. & Cooper, J. (2006). Beyond integration: Challenges for children’s mental health. Health Affairs, 25(3), 670–670. 

Lee, V. E. & Burkham, D. T. (2002). Inequality at the starting gate: Social background differences in achievement as children begin school. New York, NY: Economic 

Policy Institute. 

Luthar, S. S. (Ed.). (2003). Resilience and vulnerability: Adaptation in the context 

of childhood adversities. Cambridge, UK: Cambridge University Press. 

National Center for Children in Poverty. (2006). Basic facts about low-income children: Birth to age 18. New York, NY: National Center for Children in Poverty, Columbia University Mailman School of Public Health. 

Ramey, C. T., 2000. Persistent effects of early intervention on high-risk children 

and their mothers. Applied Developmental Science, 4(1), 2–14. 

Raver, C. C. & Knitzer, J. (2002). Ready to enter: What research tells policymakers 

about strategies to promote social and emotional school readiness among three- and 

four-year-old children. New York, NY: National Center for Children in Poverty, Columbia University Mailman School of Public Health. 

Reynolds, A. J, Temple, J. A., Robertson, D., & Mann, E. A. (2002). Age 21 costbenefit analysis of the Title I Chicago child-parent centers (Discussion Paper No. 

1245–02). University of Wisconsin-Madison, Institute for Research on Poverty, Table 

5A. 

Schweinhart, L. J. (2004). The High/Scope Perry Preschool Study through age 40: 

Summary, conclusions, and frequently asked questions. Ypsilanti, MI: High/Scope 

Press. 

Shonkoff, J. P. & Phillips, D.A. (Eds.). National Research Council & Institute of 

Medicine. (2000). From neurons to neighborhoods: The science of early childhood development. Washington, DC: National Academies Press. 

Wagmiller, R., Lennon, M.C., Kuang, L., Alberti, P. & Aber, J.L (2006). The dynamics of economic disadvantage and children’s life chances. American Sociological 

Review, 71(5): 847–866. 

Wagner, M. (2005). Youth with disabilities leaving secondary school. In Changes 

Over Time in the Early Post School Outcomes of Youth with Disabilities: A Report 

of Findings from the National Longitudinal Transition Study (NTLS) and the National Longitudinal Transition Study-2 (NTLS2) (pp. 2.1–2.6). Menlo Park, CA: SRI 

International. 

Young, K. T., Davis, K., & Schoen, C. (1996). The Commonwealth Fund Survey 

of Parents with Young Children. New York, NY: Commonwealth Fund. 

f 

Chairman RANGEL. Let me thank the panel. None of you have 

any differences about the negative impact that poverty has on our 

society. I hope that you would help us by reaching out to your colleagues suggest to us what kind of programs you think should be 

given priority. 

When we created the Empowerment Zones, as some of you know, 

we asked the communities to get together with local and State governments and the private sector to come up with a plan; and at 

this point, those discussions should include social agencies when 

they ask what they would do in their community to deal with this 

problem? What impact they think this would have in their community? 


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It is unfortunate that poor people don’t carry the type of stigma 

of emergency and national security and those things as others do. 

Hurricane Katrina is a classic example of this. We are now dealing 

with this from an economic viewpoint, a national security viewpoint. Certainly, we are concerned that poverty and its continuation could have a negative impact on the strong economic growth 

we will need if we are going to try ever to get our great Nation out 

of debt. 

Mr. Jones, we hear a lot about the great economic recovery we 

are going through now, and that one would believe that unemployment is down to 4.5. Your report indicates it is over 40 percent. 

Could you share with us the reason why we have this disparity in 

the reports? 

Dr. JONES. Well, I don’t think this is new news, certainly to the 

people on this panel, that basically unemployment looks at people 

who are actively seeking work. What we have in New York and I 

think we have in other urban areas is a number of different cohorts 

of people who are not in the workforce for a variety of reasons. 

We are just finishing another examination of—actually, a qualitative examination of why people are out of work, and we are starting to get a very wide range of reports back. 

One of them that was a shock is, there are a lot of people who 

are out of work, particularly the African-American men, who are 

reporting health-related problems. They are guys my age who basically start to have—who did heavy labor and have never been out 

of work, basically they never had a lot of skills and suddenly they 

run into a problem of having a bad back. So, you have this whole 

cohort of particularly African-Americans with limited skills, men 

who can’t participate in the workforce because they don’t have 

skills to do anything but heavy labor and no employer in New York 

can bear the health care costs of taking an employee who has 

those. That is one. 

The other is we have an enormous problem of dropouts in the 

city of New York. About—more than 50 percent of young people 

never graduated, less than 10 percent of African and Latino males 

ever get a Regents degree, which is sort of the lowest level you 

need to really go on, and many of them just can’t compete in the 

low-wage workforce. They are trying, which is interesting—we hear 

again and again, these people—these young people are not trying 

to sit around; they just can’t find a door open. 

Another cohort has to be admitted, which is the problem of— 

under the Rockefeller drug laws in New York, a lot of young people 

made mistakes early on, and in New York particularly for black 

and Latino young men, once that happens, you are basically never 

going to work again. 

I was somewhat hopeful that if we took work as the solution for 

welfare reform, we would certainly want to beat up our former 

prisoners, but that doesn’t seem to be the way it is going; and they 

are not working, they are becoming a real drain and damage to the 

communities they are in. Those are just some of the things. 

This is a complex issue, but that 40 percent is reality. The 4.5 

percent is basically people actively trying to get work and doing it 

the right way, but we have a real problem in New York, and we 

think it is a real urban problem at the very least. 


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Chairman RANGEL. I am working with the Conference of Mayors, and they will be compiling the cost to the cities for that 40 or 

50 percent that we are talking about. 

Dr. Haskins, what number did you use in terms of the moneys 

that we are now expending for the poor, that you said has to be 

considered when we talk about reducing poverty? What was that 

number? 

Dr. HASKINS. According to the CRS, State and Federal dollars on programs that are means tested, it is over $600 billion. It was 

$583 billion in 2004. 

Chairman RANGEL. Now, it is my understanding that that reflects the inflated medical costs, at least half of it does. 

Dr. HASKINS. I don’t think it is quite half, but it is substantial, 

and that is the biggest increase. 

Chairman RANGEL. Okay. I would like—— 

Dr. HASKINS. There are many other areas as well. 

Chairman RANGEL. You have spent your life in this thing, and 

after marriage and health care, you must have some ideas on what 

it takes to stop poverty at some stage. Maybe it is before the kid 

gets to kindergarten; maybe it is at that stage that something is 

done. 

You are right, it is complex, and it takes into consideration a lot 

of other issues besides throwing money at the problem. We need 

you at the table, as well as economists, to find out what return we 

are going to get on our investment, because quite frankly, if we can 

just give money to the poor to keep them from having crime and 

going to the hospital and imposing a large cost on the economy, 

that is the way to handle it. 

If, however, our job is to make certain that we are saving some 

money and get productive people into the labor force as we move 

into a global market, then we have to look at the problem in terms 

of what this Committee would want to do. We must determine 

what can we do to work together to resolve this problem and make 

certain that we never run away from the individual responsibility, 

or the community’s responsibility, to say one size doesn’t fit all, and 

to not expect the Federal Government alone to bring a solution to 

the problem, but instead to be a part of that solution. 

So, I wish all of you in some way would share with us what you 

would do, because someone had suggested earlier asking the mayors if they assumed this was their responsibility. Mayor Bloomberg 

is going out of his way to see what role can the private sector play 

with these kids that obviously are not going to succeed in the public school system as we know it. These institutions are not job preparation facilities. They prepare students to get into universities, 

and if they don’t make it, there is no door left to the kids in the 

street as it relates to getting back on board into the education system or labor force. 

In other words, unlike me as a high school dropout, I had a second chance through the GI Bill (P.L. 346, Chapter 268). There are 

no second chances out there for these kids, and it would seem to 

me that if we can find some way where they don’t need a second 

chance and get it done the first time—it may be, in my opinion, 

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mas, but just is able to know what they need in order to be successful; that as the mayor got together with the developers in the city 

of New York and the unions, it turns out that with the baby 

boomers retiring and with the Irish and Italians who have had 

locks on the jobs, their kids going to school, it turns out there is 

a labor shortage in the construction trades. So, it came at the right 

time. 

I would like to believe that the Verizons and the cable companies 

have ways to develop high wage producing occupations if we can 

initially help these kids get into these jobs. 

So, I want to thank all of you and hope that you do send some 

papers in to me. Don’t be surprised if in a more informal setting 

we ask you to come to develop something, always remembering 

that the major problem that we are going to face in this Congress 

is, we have to be fiscally responsible, and at the same time make 

certain that we stop things from hemorrhaging so that it causes 

more damage in the future than if we did make the investments 

now. 

You have been a terrific panel. I would like to yield to Mr. 

Stark—I am sorry, Mr. McCrery. 

Mr. MCCRERY. Thank you, Mr. Chairman. 

Dr. Haskins, let’s explore for just a minute this question of current Federal and State programs designed to assist poor families 

and poor individuals. You use the figure of $600 billion a year right 

now that State and Federal Governments are spending on incomerelated programs. Mr. Stark pointed out that over half of that is 

medical care, and that is correct, a little over half of that figure is 

medical care, whether it is Medicare, Medicaid or charity hospitals 

or whatever it might be. 

Then the second-highest category is cash which—there are a 

number of ways that we give cash to low-income people, whether 

it is the earned income credit or direct cash payments under Social 

Security Insurance or other programs, or welfare; and then the 

next highest is food and then housing. 

Well, I think we have just ticked off the main elements of being 

poor. How do you define being poor? Well, if you don’t have a roof 

over your head, if you don’t have housing, if you don’t have food 

on your table, if you don’t have access to health care, you are poor. 

So, the money that Mr. Stark talked about is important. That is 

an important expenditure for the poor, just as is housing, just as 

is food and, yes, cash. The total of all that is about $600 billion this 

year that the Federal and State governments are spending, no 

small sum. I think most people in this country would be surprised 

to learn that we are spending that much on income-related programs. 

Now let’s talk about some of the things that you mentioned as 

being most important, Dr. Haskins, in reducing poverty. Could you 

review the progress that has been made in reducing poverty since 

the 1996 Welfare Reform Act? 

Dr. HASKINS. Yes. I think the key to understanding it is that 

most of the progress was made among female-headed families, 

which is where the probability of being poor is four or five times 

as high as in a married-couple family. So, if the Nation is going to 


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make progress against poverty, that is a very good place to focus 

and that is what we did. 

The Census Bureau data shows absolutely clearly that these 

mothers, and I say maybe an increase of 2 million left welfare and 

got jobs, mostly in the low-wage economy; their average was about 

$7.50 or $8 an hour. If you look at the Census Bureau data, you 

can see every year between 1993 and 2000 their earned income 

from welfare, defined as housing, food stamps and cash, decline, 

and every year their earnings and EITC increased; and if you put 

them together, they were better off by about 25 percent. As a result 

of that, of course, the kids, fewer of the kids were poor. Their mothers worked and took their kids out of poverty. 

So, child poverty had a sustained 7-year decline, again based primarily on earnings, not on government benefits, and in fact, the 

biggest benefit, EITC, doesn’t even enter into these calculations because of our rules, the way we compute poverty. Child poverty declined, poverty in female-headed families reached by far its lowest 

level ever, and black child poverty reach its lowest level ever. Even 

after 4 consecutive years of increase from 2000 to 2004, because of 

the recession, child poverty is still 25 percent below where it was 

in 1993 when the decline started. 

Mr. MCCRERY. Are there still many families on welfare in this 

country where one or both parents don’t work? 

Dr. HASKINS. Yes. Mostly it is one parent. The States reported 

to Department of Health and Human Services (HHS)—the States 

kind of dispute this data, but they reported that about 60 percent 

of the families who were still getting cash welfare, keeping in mind 

that that is down by over 60 percent, but of the ones still remaining, about 60 percent, according to the States, did nothing. 

This is completely against the spirit and the letter of the bill that 

we passed in 1996. The deal was, half of them are always going to 

be engaged in work or work preparation, and the States didn’t do 

it. That is why I think that this Committee and the Congress responded, and HHS wrote a tough regulation that is now causing all 

kinds of difficulty out there. 

Mr. MCCRERY. So, how did Congress respond to that? How did 

Congress respond to that declining number of welfare recipients 

put in the workforce? 

Dr. HASKINS. Congress asked HHS to define the categories, 

who worked, that were laid out but not defined in the 1996 law and 

then to have regulations about how we would actually count those 

various activities—I believe there were 12 of them—and that the 

States would have to report better data. In other words, they are 

tightening it up to make sure that the States are actually doing 

what they promised to do in 1996. 

Of course, there was a big complaint, especially over the data reporting requirements; and that is all a big issue right now. I think 

it would be great for this Committee to have hearings and look into 

this in some detail. 

Mr. MCCRERY. Then, Dr. Haskins, we passed the Deficit Reduction Act (P.L. 109–171) which put new work requirements for the 

States for their welfare loads; isn’t that correct? 

Dr. HASKINS. Well, that is what I was referring to. Actually, 

what the act did was tell HHS to define work, because a lot of stuff 


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was being counted as work that wasn’t work, and then to get better 

data to make sure the States were actually doing it. 

That was the general strategy of the reconciliation bill. 

Mr. MCCRERY. Thank you. 

Chairman RANGEL. Thank you. 

Mr. Stark. 

Mr. STARK. Thank you, Mr. Chairman. I heard testimony from 

Dr. Haskins this morning about increasing the marriage rates to 

the level of 1970, yet in 1970, the poverty rate was 15 percent, and 

6 years earlier immediately before President Johnson’s Great Society, the poverty rate was 22 percent with a marriage rate that is 

higher than today. 

In the 1990s, the poverty rate decreased and the marriage rate 

did as well. So, it is hard for me to believe that the marriage rate 

alone would have any impact on poverty. It seems to me marriage 

promotion is simply something that works in theory, such as when 

academics randomly match single men and women in virtual marriages, sort of like playing grand theft auto on the Brookings’ computers. I think it is interesting but it is right up there with abstinence training and a bunch of these wacky issues that don’t mean 

much in the modern environment. 

I would like to ask Dr. Knitzer if she could expand in her testimony on the importance of early childhood education, on children’s 

health care and the problems created by the Temporary Assistance 

for Needy Families program (TANF), when people actually may increase their income some and then lose vital assistance, which 

makes them actually more poor than when they started. I think 

that is something that bears pointing out to the Committee. 

Dr. KNITZER. I think that it is really important to think about 

two different types of challenges that we face through the children’s lens. One is, there are a lot of families who just need either 

higher wages or benefits that don’t disappear as they start to earn 

more money and need stable income. We also know that instability 

of income, volatile incomes, is not particularly good for outcomes 

for children. 

On the income side, there was a very interesting experiment, by 

chance, on a reservation in North Carolina. They had been tracking 

the mental health of children there, and that is when the casinos 

came in, and many of the families had an increase in money because of that, and the mental health issues and the school performance of the children improved. That was just a natural experiment; 

that was because of increased money. 

So, we have to really pay attention to what money can do. 

The second, I think, really powerful set of learnings—and this is 

about the earliest relationships; and, for example, in those 60 percent of TANF families who aren’t working, we have to take a look 

at those women. Many of those women have been traumatized. 

They experienced major depression, substance abuse, domestic violence. Unless we help them deal with those things both as adults 

and as parents, they are not going to be on a successful pathway 

to work; and I think that we know that both the health of the 

adults and the children in poverty is significantly worse. 

The other thing that is striking, when you compare the health 

access of poor children to more affluent children, is that they don’t 


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have as good preventive care and their parents don’t get as much 

developmental guidance. 

So, we also know that it takes not just early education but 

health, social emotional competence, all domains of development, 

physical skills, to produce a healthy child. The early learning, there 

have been remarkable strides in starting at 4, but as I said, for the 

poorest families, 4 is too late. 

We have to focus on the relationships. 

Mr. STARK. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman RANGEL. I have talked with the ranking Member, 

and we recognize those that are on the lower tier are not getting 

a chance to question. So, I want you to know, in the future, we will 

try to work out something where we can start off with the lower 

tier and try to compensate for that. 

Meanwhile, because of the difference in the number of people 

that are here, I will be calling on two of the majority to one in the 

minority to try to work that out. Mr. Herger? 

Mr. HERGER. Thank you, Mr. Chairman. 

Dr. Haskins, we had some comments that came up that perhaps 

marriage doesn’t matter, and I would like to refer to a study from 

CRS which reported on its Children in Poverty: Profile, Trends, 

and Issues, January 16, 2007, that says, quote, ‘‘In 2005, the child 

poverty rate was 17.1 percent, but had family composition in 2005 

been the same as in 1960, the overall adjusted child poverty rate 

would have been 12.4.’’ 

So, instead of 17.1, it would have been 12.4. Instead of the observed 12.3 million children being counted as poor in 2005, the 

number of poor children estimated by this method would have been 

8.9 million, or 3.4 million fewer than the number observed on page 

19. 

Also, there is a Heritage study that indicates that nearly 80 percent of long-term child poverty occurs in broken or never-married 

families, and that each year the Government, as you have mentioned, spends several billions of dollars on means-tested aid to 

families with children which—three-fourths of this aid flows to single parents and families. 

Dr. Haskins, has there been a trend towards more child-bearing 

outside of marriage? Has this changed in recent years? Doesn’t the 

significant impact of marriage and child-bearing decisions on poverty suggest that there is a large behavior component to poverty in 

the United States? 

Dr. HASKINS. Yes. We have about one out of four American children at any given moment living in a single-parent family. Their 

poverty rates are four to five times as high as kids in married-couple families, and if it is a non—if it is a single-parent family created by a nonmarital birth, the probability of poverty is even higher. 

Since we passed the legislation in 1996, although the rate of increase in nonmarital births has leveled off, if you look at the graph, 

it clearly levels off, but it is still increasing. So, it is increasing at 

a much lower rate. I would call that progress; you have to slow it 

down before you can turn it around, and this plays a huge role in 

poverty, yes. 


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I would like to say your question bears a relationship with Mr. 

Stark’s question. I would like to first say that marriage is not a 

wacky idea, as most members of this Committee, I think, would 

recognize from their own personal lives, but secondly this analysis 

that we did at the Brookings Institution is exactly like the analysis 

you cited from the Congressional Research Service (CRS). By the 

way, our estimate was that marriage rates from 1980, if they prevailed today, or actually 2002, would reduce poverty 27 percent— 

their estimate was 28 percent. 

Dr. HASKINS. There are a number of other academic studies by 

scholars all over the country, certainly not conservative scholars, 

who come up roughly the same as us. There is no doubt that if we 

did nothing else except increase marriage rates, poverty would 

drop, and it would drop substantially. There is no doubt. 

Mr. HERGER. Well, would you conclude from that that we 

should, as a Congress, be—at least be taking, attempting to do 

what we can to increase this, increase marriage? What steps have 

been taken in recent years, starting with the 1996 welfare reform 

law, to strengthen families and promote more marriages? 

Dr. HASKINS. There were several provisions—I count about 10 

or 11—that were directed especially at nonmarital births, such as 

causing young ladies who have babies outside marriage to live at 

home and to go to school. Otherwise, they would not qualify for 

welfare benefits. 

There was a huge debate about other provisions like the family 

cap and not giving cash to moms under 18 that was eventually removed on the Senate floor. There were a number of other provisions in the bill as well. 

Marriage was one of the goals, and the States were free to spend 

on marriage. Frankly, there was nothing mandatory in the bill to 

increase marriage rates per se. 

Some States have undertaken activities. I would say we have two 

or three or four times the number of activities going on at the State 

level, often involving churches and private organizations, nonprofit 

organizations, that attempt to either strengthen existing marriages 

or promote marriage upon young couples who have babies but are 

not married. 

So, there is a lot more going on. They have not been well evaluated. We don’t know if they are successful, but there certainly is 

a lot more going on now than there was in the past. 

I mentioned several things in my testimony that I think we 

should do. The Congress has done things such as reduce the marriage penalty, and I think we could do more things like that. I 

think the most important thing is that the Administration has paid 

for large-scale demonstrations to find out if you can promote marriage and if that impacts on children’s development, very much in 

accord with the report. It would be very consistent with the thrust 

of this report. 

So, there is a lot going on, and we should do more. 

Mr. HERGER. Thank you, Dr. Haskins. 

Chairman RANGEL. Thank you. 

Mr. Levin. 

Mr. LEVIN. Listening to this, I often wonder what we are arguing about. Truly. I don’t think anybody questions the impact of 


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marriage rates on poverty. The question is, is Congress or any 

other Government agency in a position to impact the marriage dynamic within our society? Mr. Haskins, you yourself say in your 

testimony that there is only modest evidence that the programs 

have any impact. At the same time, we have testimony here—I just 

read one piece of it—only 62,000 children are in national Early 

Head Start programs. 

So, we have some fairly strong evidence that doing things like 

that will have some impact; and, somehow, we get polarized and 

you all on the Republican side start talking about marriage programs. Well, we are not—— 

Mr. MCCRERY. Will the gentleman yield? 

Mr. LEVIN. Sure. 

Mr. MCCRERY. It wasn’t we who brought up terms like radical—Mr. Stark is the one who—whacky, ideas like that, Mr. Levin. 

It wasn’t us. 

Mr. LEVIN. He wasn’t talking about—— 

Mr. MCCRERY. He wasn’t talking about marriage and impact on 

poverty? I believe he was. 

Mr. LEVIN. He was talking about programs of the Federal Government that attempt to impact on the rate of marriage. I heard— 

look, we have talked about this. We are good friends. I heard your 

opening remarks with the emphasis in those opening remarks, and 

I don’t understand why we fall into this kind of polarization. I don’t 

understand it. 

Dr. Haskins, you and I have talked about this, and we talked 

about welfare reform. Look, we have a shortage of data as to what 

has happened to people who have left welfare, who have gone to 

work and how many of them remain in poverty. We don’t really 

know this. 

We know that a substantial number of them are working in minimum wage and, therefore, are likely to be still in poverty, which 

doesn’t mean that it isn’t wise for them to move from welfare to 

work. 

Then we get into arguments as to whether we should raise the 

minimum wage so that people who have moved from welfare to 

work, by working, work their way out of poverty; and we get into 

arguments about whether we should provide them training so they 

can move up the economic ladder. 

So, we can just fall into this pit of polarized talk, if you want, 

but we are not challenging the economic benefits in terms of the 

poverty rate for those who are married and those who are not. 

So, let me just ask the panel, do you want to comment on this 

discussion? Anybody want to say a word? Dr. Holzer and then Dr. 

Nilsen? Briefly, because there is just a minute left. 

Dr. HOLZER. I think the issue of wage levels is very important 

and has not been mentioned in this panel before you raised it. The 

average wages of less-skilled workers in our economy for the last 

30 years, adjusting for inflation, have been declining for men with 

a high school diploma. They have been declining even more for men 

without a high school diploma. So, lots of people grew up—lots of 

children grow up in families with one or two parents with even a 

full-time worker and they are still in poverty because the wages 

their parents earn are not sufficient to get them out of poverty. 


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Even marriage—we focus on marriage, and those of us who agree 

that marriage certainly matters for the poverty rate—I don’t understand. It is very hard to raise marriage rates dramatically without 

improving the marriageability of a lot of these young people, especially the young men. Their attractiveness as marriage partners is 

going to be very low if their earnings are going to be very low. 

In fact, a lot of these young people, especially the ones that 

David Jones described, very early in life they looked down the road 

and they see a lack of opportunity for earning of higher wage; and 

their incentives to take school seriously and to take the labor market seriously and stay out of trouble, those incentives diminish. 

As we talk about all these issues, as we talk about marriage and 

schooling, I think it is very important to keep in mind what is 

going to improve the ability of these young people to earn higher 

wages, to see those higher wage opportunities. How can we link not 

only skill-building opportunities but link those skills to jobs that 

actually exist in the labor market that pay above poverty level 

wages and maybe how can we even improve the number of jobs in 

different sectors of the economy that give young people this opportunity. 

Mr. LEVIN. Thank you. 

Dr. KNITZER. To shift the frame for a minute, we know that it 

takes twice the poverty level for a family to provide basic necessities to their child so they can thrive. So, if we want to shift and 

say what does it take for the next generation to thrive, that is what 

we should be aiming. If you are talking about a family with two parents, it takes $19 an hour if one parent is working and two parents at $10 an hour 

to get to that $40,000 level. So, we have to really be quite concrete 

about with we are talking about. 

That is two comments on the economic side. 

The other thing I want to say—— 

Chairman RANGEL. The gentleman’s time has expired, and we 

have so many people who have to be heard. Thank you so much. 

Dr. McDermott. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

The great hope and promise of the United States is certainly the 

American dream; and everybody in this room, practically speaking, 

has been a beneficiary of it. We know that millions of people 

haven’t. 

I commend the Chairman for bringing this issue up right after 

the State of the Union message. It is an issue that we will deal 

with in the Income Security and Family Support Subcommittee and 

hope that, with the Chairman’s support, we can go some distance 

with it, because it is an issue that faces this country. 

I have been talking with Mr. Weller about trying to find the common good, because poverty isn’t Democrat or Republican. It is people. Whether you are talking about food or clothing or shelter or 

sense of personal security, that is not a political party issue. 

We basically need to begin to deal with this. There are really 

three fundamental questions we have to ask. 

One is, does work provide the opportunity and mobility that we 

expect? Dr. Haskins talks about we got everybody off welfare and 

now they are working. Well, are they getting out of poverty? 


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The second one is, do we have adequate access to job training to 

succeed in this globalized economy? 

Finally, can we provide an adequate lifeline to people when they 

fall out of the workforce in order to bring them back in? 

Now I would like to start with the issue that we just heard 

about. We know real wages have declined, despite the economic expansion. The President’s talk last night—witnesses said here today 

the first time in the history that poverty grew for four straight 

years during an economic recovery. 

Now the first slide shows that these are the people—these are 

the children in families where somebody is working, and they are 

still in poverty. That largest section up there, if you look at it, that 

section right there, is the section of people whose parents—onethird of the parents are working full time. The kids are in poverty. 

The other third up there is people whose parents are working parttime, and then you have the third who are the slackers. They are 

not doing anything. They are just sitting around, can’t get into the 

workforce. 

So, that is where these poverty—these kids that are living in 

poverty are from. 

The second thing is that we know that education has a tremendous impact on personal income. Forty-seven percent of the kids 

living in poverty have a parent that didn’t finish high school. There 

is a direct correlation between levels of education and how you do, 

and we know that that also has to do with kids’ health care. If the 

parents have education, they also know more about health care and 

take care of their kids so they go to school healthy and well-fed and 

so forth. 

The third slide we have measures ourselves against the rest of 

the world. Now this is the slide that shows you how much we 

spend on programs for poverty, and you will see the United States 

is right down here. We spend practically nothing. Only Mexico 

spends less per capita on the poverty section of our society. It again 

directly correlates the lowest rates of poverty are in the countries 

that spend the most money—Sweden, Norway, Netherlands—and 

then you get to the United States way out here with Mexico. 

My question is to—Dr. Haskins said we don’t need more money, 

so there is no sense in asking him, but if we could end the Iraq 

war 1 month early and had $8 billion, where would the members 

here put it? What would be your priority for spending $8 billion in 

the present circumstance? You could start, Dr. Holzer, Mr. Jones, 

and Ms. Knitzer and then go back to—— 

Dr. HOLZER. One comment on the spending, I think you are 

right, that I think the right way to think about how much we 

spend—— 

Chairman RANGEL. Let me say, we won’t have time for a lot of 

comments, because the gentleman has 26 seconds left, but we are 

going to yield to your expertise but please take into consideration 

the time restrictions we have. Thank you. 

Dr. HOLZER. I will say simply then, directly in response to your 

question, I would spend a good chunk of that money on education, 

not just pre-K but K through 12, high-quality career and technical 

education, apprenticeship programs linking young people to good 


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jobs, as well as things like expansion of the EITC to folks that have 

low earnings capacity. 

Dr. JONES. I clearly join Dr. Holzer, but I would also talk about 

the disconnected youth. I think this is a national problem. If you 

are talking about marriage problems and why young men aren’t 

marriageable, if they are not working, not in school, we have to 

find intense programs to start to move them into some kind of 

work readiness and income production. 

Mr. MCDERMOTT. Dr. Knitzer? Dr. Haskins doesn’t want to 

spend money. 

Dr. KNITZER. I would focus part of it on Early Head Start and 

part of it on health, in addition to what we just said, but Early 

Head Start because it helps parents and children build new kinds 

of relationships, including dads, that leads to other good things, including marriage. 

Mr. NILSEN. I just want to say, I agree with the comments here, 

dividing the money up between those which will have more immediate impacts like skilled training and those investments that will 

have a longer term payoff like investing in the health care of children. 

Mr. MCDERMOTT. Thank you. 

Chairman RANGEL. Mr. Haskins. 

Dr. HASKINS. I would spend several billion of it doing largescale experiments that would provide an EITC-like wage mechanism that would apply especially to men so you wouldn’t have to 

have a dependent child. I think you boost the men’s reward for 

work, and it would have exactly the same effect that it had for 

women. 

Mr. CAMP. Thank you, Mr. Chairman. Thank you for having 

this hearing. 

I would note that the last slide that my colleague showed was 

really the spending of the percent of GDP, and the United States 

has a very large GDP, so the percentage of spending is actually 

quite large in terms of poverty. 

My question is really based on trying to get the accurate information; and the question I have is, Dr. Haskins, what kind of income and benefits get counted or get excluded in determining official poverty rates? 

Dr. HASKINS. Primarily two categories, anything that is in 

kind, such as housing and food stamps, that is 60 or so billion, and 

anything through the Tax Code. So, that includes EITC and the 

child tax credit. So, it is well over $100 billion. 

Mr. CAMP. So, these items are not counted as benefits to individuals when calculating poverty rates, even though they are taxpayer-provided benefits? 

Dr. HASKINS. Correct. 

I would point out to you, Mr. Camp, that the Census Bureau was 

well aware of this and they developed several alternative definitions of poverty which are really spectacular. If you look at those 

definitions, you will see that the actual poverty rate is often 10 percentage points—not percent—percentage points lower, which is 

about 50 percent if you include all these other benefits. 

Mr. CAMP. So, the, quote, unquote, official poverty rate is at 

what level? 


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Dr. HASKINS. Right now, the overall rate is something like 13 

percent or 17 point something. 

Mr. CAMP. You are saying that the U.S. Census Bureau’s research says that if taxpayer-funded benefits were counted in determining the poverty rate, what level would it be at? 

Dr. HASKINS. Not just for children, but the overall poverty rate 

would be about 50 percent lower. For children, it would be not 

quite that much. 

Mr. CAMP. So, it would be significantly lower than the statistics 

we are given in this Committee? 

Dr. HASKINS. Right, the official poverty rate. Correct. 

Mr. CAMP. Well, then if Congress followed through on Dr. 

Holzer’s recommendation, I would agree it is a very worthy study 

to increase EITC. That would have no effect on the poverty rate, 

since it is not counted anyway. 

Dr. HASKINS. Which is precisely why the Census Bureau does 

these alternative measures although I do think it would have some 

effect. You know why? The same reason I think we ought to have 

an EITC for males, is their work ethic would increase and their 

earnings would count. So, there would be some effect but much less 

than you would have if you counted the whole thing. 

Mr. CAMP. Well, I appreciated your testimony and the figure 

you had about showing the comparison between poverty rates and 

actually the government policy we have—we had and the fact that 

requiring work and having work-related or work-contingent benefits has actually dramatically reduced the poverty rates between 

’90 and ’99. I think that was a very helpful approach. 

So, Dr. Knitzer, I realize you said money matters, and it sounds 

as though money does matter, but the way the money is spent matters more, and that when there are work-related benefits and a 

work requirement, do you agree with the data that shows that poverty rates declined between ’90 and ’99, children particularly? 

Dr. KNITZER. What I meant was that having resources matters 

for child development outcomes. Having families having resources 

matters. There are clearly problems with poverty measures. They 

undercount benefits. They undercount taxes. There are lots of problems with that, and we are all aware of that. That is why we talk 

about twice the poverty level, because that is what research shows 

is necessary for a child to thrive. 

Mr. CAMP. Thank you. 

Dr. Haskins, it seems as if we are trying to make important policy in this area that we would need the most accurate information 

before us. Why do we have one arm of the Government, the Census 

Bureau, saying we need to include these benefits yet the, quote, official rate does not? Is there any explanation for that? 

Dr. HASKINS. I think I can give you a political answer. There 

are billions of dollars of government benefits that are dependent on 

the official poverty rate. If we change the official poverty rate, it 

would have disproportionate impacts on less politically powerful 

States. 

Everybody on this Committee is well aware of what happens 

when Congress gets into a formula fight about how the money is 

going to be distributed. I really think that is the primary reason. 

Mr. CAMP. Thank you. 


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Thank you very much, Mr. Chairman. 

Chairman RANGEL. When was the last we updated the definition of poverty as you and Mr. Camp described it? 

Dr. HASKINS. I must have missed your first word. There is a 

question there? 

Chairman RANGEL. Yes. When? When was the last time the 

definition of poverty was updated as you and Mr. Camp discussed 

it? 

Dr. HASKINS. I would not use the word ‘‘updated.’’ The Census 

Bureau has something like 12 or 13 years ago heard all these criticisms. In fact, the National Academy wrote a 500-page book about 

all the problems and recommendations about poverty. What they 

did—— 

Chairman RANGEL. Let me frame the question this way: The 

definition that you gave of what poverty is today, when was that 

created? When was that defined as poverty? 

The reason I ask the question is because it was created sometime 

in the ’90s and I assume—’60s, rather—that there has been a lot 

of changes since then. If that is so, we hope you will help us in trying to get a definition that would be more appropriate as we deal 

with the lives and the communities and the economy of our great 

Nation. 

Dr. HASKINS. The official poverty rate was developed, I believe, 

1965. Since then, the Census Bureau, because of all these problems, has developed the alternative measures. Primarily, I believe 

they started that in the ’80s, and some of their data series go back 

to the ’80s. So, you can see the poverty rate by a lot of different 

definitions. 

Chairman RANGEL. Yes, but you professionals should not accept 

that, and the Congress should not have you dealing with different 

definitions. We all are trying to find out the best data we have 

available, and we are going to help you to get it. 

Dr. HASKINS. Mr. Rangel, I would agree to join you to change 

the definition of poverty, but, honestly, I don’t think it will pass the 

Congress, because it will have a huge impact on how money is distributed among the States. 

Chairman RANGEL. Well, then if we can’t do it, then we can’t 

use poverty as a definition, now can we? We are not talking the 

same language. Everyone will use the figures most favorable to 

whatever their point is. 

Dr. HASKINS. People always cherry-pick their data. That is 

nothing new. 

Chairman RANGEL. All right. We will try to get away from it. 

Mr. CAMP. Mr. Chairman, I have the Census Report 2004 that 

calculates poverty in different ways. It might be helpful. I would 

like to have unanimous consent to place that in the record. 

Chairman RANGEL. Without objection. 

Mr. CAMP. Thank you. 

[The information follows:] 


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f 

Chairman RANGEL. Mr. Neal is not here. Mr. Lewis is here, Mr. 

McNulty, then Mr. Becerra. 

I called his name first, Mr. Lewis, and then—— 

Mr. LEWIS OF GEORGIA. Thank you very much, Mr. Chairman. 


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Let me thank members of the panel for being here this morning. 

We are about a year and a half out from Katrina. I would like 

to know—I don’t think the President of the United States last 

night in the State of the Union mentioned Katrina at all. When you 

saw hundreds and thousands of Americans struggling to survive in 

New Orleans a year and a half ago, what came to your mind? Was 

it race or poverty? What happened in New Orleans, could it have 

happened in any other American city? Could it happen in New 

York or Boston or someplace else? 

Dr. JONES. I think for us in New York there is no question. We 

knew that a catastrophe of this sort in New York would lead to 

very much the same thing. People were asking why people were 

carrying things on their back out of their homes. There is no— 

when we survey people of how much income reserves they have in 

their whole household, most of them report they have less than 

$100 in total reserve. Their furniture is it. So, I didn’t see the outcome being much different for—at least as I looked through New 

York and some of its neighborhoods. There is no cash in these 

neighborhoods. There are no reserves. Any kind of disaster like 

that will wipe people out immediately. There is no backstop. 

Mr. LEWIS OF GEORGIA. Other members of the panel? 

Dr. KNITZER. Yes. I think it really focuses on the importance 

of the development of assets and individual development accounts 

and children’s development accounts and building up the reserves 

of some of these families. 

These are families, even at the low-income level, twice the poverty level, who are one or two crises away from this. When you 

don’t have any public transportation, as New Orleans didn’t and 

the South didn’t, it is very difficult for these families to survive. 

Mr. LEWIS OF GEORGIA. Other members? 

Dr. HOLZER. Even before Katrina, poverty rates in New Orleans 

were very high, employment levels were low. A lot of the issues, 

a lot of the costs that we have been talking about were there. It 

just means that those families were so much more vulnerable when 

the disaster occurs. 

I think it also indicates that even in many cities around the 

country predisaster they need to increase the employment levels; 

and once we include some employment and earnings and skills, 

presumably assets would rise and people would be less vulnerable 

to these potential catastrophes. 

Mr. LEWIS OF GEORGIA. Other members of the panel would 

like to comment? 

Mr. Jones, let me just ask you, does the unbelievable economic 

condition of many African American males in our large urban centers and maybe in rural areas prompt them not readily to get married because they cannot support a family? 

Dr. JONES. Again, I am more of a practitioner than a researcher. 

Mr. LEWIS OF GEORGIA. People get married, I believe, because 

they fall in love and they get married. I am not so sure the Government should be in the business of trying to force people to get married if you are not in love. 

Dr. JONES. This is my personal sense. I am very nervous about 

trying to legislate morality. I have worked in the corporate sector. 


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I have worked for one of the largest law firms in America. I have 

worked in Government. I see morality being about level across 

groups. It is a little more difficult when you don’t have any money, 

but for suddenly us to start imposing our value system because 

people are poor is a little insulting, to say the least. 

If you read the history—and we do; I go back 160 years—this is 

very similar to the discussion of the Irish in New York and the condemnation by the Herald Tribune that they weren’t quite human 

because they didn’t seem to marry and they drank a lot. Don’t do 

this again just because these groups happen to be on their uppers 

and they don’t have enough reserves. 

So, I am very concerned more about that 170,000, 200,000 young 

men and women who have no jobs, no skills and no education who 

are being pumped into New York and other societies and then we 

start wondering about a lot of single parents because there is no 

incentive to marry someone who is not working and not in school. 

So, there—I think there is a lot of stuff here that it can’t be just 

dictated here. I would rather focus on the things that we can work 

on, which is getting people skills, education and support, rather 

than getting into their morality. 

Mr. LEWIS OF GEORGIA. Thank you. 

Thank you, Mr. Chairman. 

Chairman RANGEL. Mr. Becerra. 

Mr. BECERRA. Thank you, Mr. Chairman; and thank you all for 

your testimony. 

Let me ask a quick question; and, Mr. Jones, perhaps you can 

answer this best. 

Minimum wage, we are talking about—I am over here—— 

Dr. JONES. I am sorry. I am not good—my kids make fun of me 

because I can’t track. 

Mr. BECERRA. The minimum wage, $5.15 an hour today, hasn’t 

been increased in 10 years. It is by far the lowest it has been since 

the 1960s. What effect would an increase to the modest amount of 

$7.25 an hour by 2008 or ’09 have on those 37 million people who 

we say are living in poverty? 

Dr. JONES. This is where it gets a little separate from New 

York. I can say what we have seen as we have moved toward minimum wage, it does have a boost, particularly on that category of 

workers—when we have—start looking at security guards at 

63,000, you started to see inching up of their wage rate. It does 

have an impact. 

What seems to be a very little for us can be the difference in 

terms of someone holding on by their fingertips to some kind of 

rental housing. So, I don’t think it is something to be dismissed. 

I think a move toward minimum wage is something that we have 

to, at least coming from what I am trying to serve, we support. 

Mr. BECERRA. I am sympathetic to what you are saying, because, coming from Los Angeles, where our minimum wage is 

above $7.25 an hour today, obviously, in an urban area that is as 

costly as New York or Los Angeles, you wouldn’t be able to live on 

$7.25, let alone $5.15. 

Let me ask another question; and perhaps, Dr. Holzer, you can 

answer this one. 


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The President has enacted several tax cut measures since 2001. 

My understanding is that, so far, we have seen about $2 trillion in 

the tax cuts that have gone out. For the 37 million people who are 

living in poverty that we are talking about and the 9 million or so 

of those 37 million being children, how much have they received in 

those $2 trillion in tax cuts that this Congress has enacted for 

President Bush? 

Dr. HOLZER. I don’t know the exact numbers on that. I think 

we do know that 40 to 50 percent of the dollars in tax cuts of the 

top 1 percent of the earnings distribution; there have been, also 

been cuts at the bottom, and there was an expansion of the child 

tax credit that did provide some benefits to low-income people. 

Mr. BECERRA. That was actually a proposal proposed by the 

Congress, not so much the President. 

Dr. HOLZER. Most of us thought that was a good thing. 

So, there are some pieces of the tax cut I think that are more 

beneficial than others, but a lot of dollars have been thrown to the 

very top end, and I think the unanimity on this panel really that 

there are some investments—no one is talking about throwing cash 

at low-income people. We are talking about investments to improve 

people’s skills, improve their connections to the labor market and 

create better incentives for work. A good chunk of that money I 

think could have been better spent on the kinds of initiatives that 

all of us here support. 

Mr. BECERRA. Thirty-seven million people in poverty in America. That is 13 percent or so percent of our population. Is it fair to 

say that less than 13 percent of the tax cuts went to those 37 million people? 

Dr. HOLZER. Yes, I believe so. 

Mr. BECERRA. Let me ask this. In terms of the definition—and 

this I will ask Mr. Nilsen—the definition of poverty and the discussion that took place with Dr. Haskins, can you tell us what your 

examination of this issue leads you to conclude if we were to examine what the National Academy of Sciences said about the definition of poverty and what would happen to people in their classification as living in poverty if we changed the definition? 

Mr. NILSEN. Most of the research we looked at used the current 

definition of poverty; and, as Mr. Haskins said, there is a lot of controversy over that definition because it was developed in 1965 and 

largely has just been indexed for inflation. 

In the 1990s, the National Academy of Sciences issued a report, 

1995, that suggested some changes to the measurement of poverty, 

as Mr. Haskins said, add in other benefits as income that people 

get, like the EITC, food stamps and other things. 

The other thing their proposal did was to adjust downward for 

taxes like Social Security that people paid, other costs of employment, transportation, child care and other things and also index it 

or change it for the cost of living in various geographic areas. 

Mr. BECERRA. What was the net result? 

Mr. NILSEN. The net result of this was raising the proportion 

of the population in poverty. I have some statistics from 1998, and 

I think the latest Census Bureau report from 2003 shows about the 

same thing, poverty went up from about 12.7 percent to about 14 

percent. 


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Mr. BECERRA. Thank you. I appreciate that. 

Thank you, Mr. Chairman. I yield back. 

Chairman RANGEL. Thank you. 

Mr. Ramstad. 

Mr. RAMSTAD. Thank you, Mr. Chairman; and thank you for 

holding this hearing, Mr. Chairman, on these very compelling 

issues. 

I have always thought that one of the most noble objectives of 

the public sector—or the private sector, for that matter—is to reduce childhood poverty and the corresponding hunger, childhood 

hunger. 

Before I got into public service back in the late 1970s, I co-founded a major food bank in Minnesota in the Twin Cities and have 

worked in the food bank network for 27 years, and nothing grabs 

me more than—— 

Chairman RANGEL. Gentlemen, the bells indicate that we have 

two votes, which means there will be 20 minutes. We will have 10 

minutes to stay here. Could the members who haven’t inquired indicate how many are willing to come back after the votes? Okay. 

Could I ask the witnesses after this query to stay for another 20 

minutes after? I really appreciate that. 

I am sorry to interrupt. 

Mr. RAMSTAD. Not at all, Mr. Chairman. 

Nothing bothers me more than to hear what is commonly accepted by the—I think it is the consensus of the studies that show at 

least 3 million children in America go to bed hungry every night. 

So, I appreciate the attention that is being brought to this issue, 

the focus that we are bringing here today, and I certainly appreciate the five experts on this panel. 

I would like to direct the question to you, Dr. Holzer. In trying 

to find a solution, I think we have reduced childhood poverty somewhat through welfare reform, and we can debate that, but I think 

the indices of poverty have improved. I want to focus on a more 

narrow issue. In your testimony, Dr. Holzer, you mentioned that 

faith-based initiatives can play a key role in reducing childhood 

poverty in concert with other—other factors. Can you elaborate on 

the types of faith-based initiatives that you believe are effective, 

again in combination with other policies, to reduce childhood poverty? 

Dr. HOLZER. Well, I would like to offer a friendly amendment 

to the summary of what you said. I listed faith-based initiatives as 

being one of many options that potentially could be useful in this 

area. I don’t think—to my knowledge, I haven’t seen rigorous evaluation evidence of faith-based programs. I think they might potentially work, certainly with certain disadvantaged populations like 

ex-offenders and the need to reintegrate them into society, or young 

people, young men at high risk of dropping out or who have already dropped out and we are trying to reintegrate them perhaps 

before they become incarcerated. 

I believe there is much potential for faith-based programs to provide assistance there as well as many non-faith-based programs. 

There is a role at the table. I would like to see those roles evaluated, among many others. 


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Mr. RAMSTAD. I haven’t studied it in a macro sense, as you experts have, but I certainly anecdotally know I can attest to what 

you state. 

Thank you very much for your response and all of you for your 

testimony this morning; and, Mr. Chairman, I would like to yield 

to our ranking Member. 

Mr. MCCRERY. Thank you. 

Mr. Jones, I just want to make it clear that nobody here today 

has talked about the value of marriage as it relates to poverty in 

moral terms. I certainly don’t. That is not my point at all. 

I am looking at data that has been prepared by you and—not 

you, but Dr. Holzer and others over the years that clearly indicate 

an advantage to two-parent families. You go down—repeated 

grades, suspended from school, delinquency, violence, therapy and 

attempted suicide—in every instance, the rate of incidents among 

those from one-parent families as opposed to two-parent families is 

double, or 50 percent higher. 

So, we are just—we would like to work with you and others who 

have experience in the field and try to find ways that we could 

maybe make it more attractive to young men—or to couples—to get 

married. We do that through the tax system, we do that through 

programs, faith-based programs and others. That is all I am asking, is work with us here. 

Dr. JONES. I absolutely will, Congressman. I don’t disagree that 

I like married couples in my communities. I just want to set the 

preconditions so that is possible. I don’t think we have a fundamental difference. 

Mr. MCCRERY. No debate. We can’t force people to get married 

and shouldn’t. If we work together maybe we can find ways to 

make it more attractive. 

Dr. JONES. I am very willing, sir. 

Chairman RANGEL. Mr. Pomeroy. 

Mr. POMEROY. Thank you, Mr. Chairman, for this hearing. It 

has been a topic we haven’t talked about, I believe, during the entire time I have been on the Committee on Ways and Means as a 

focused matter of the hearing. We heard a lot about, have seen a 

lot of fancy statistics about this economy, but I believe that poverty 

has not come under the focus that you brought, Mr. Chairman. I 

appreciate it. 

My time is very short, so I just ask a single question. The President last night indicated that we couldn’t address health care reform without the Tax Code. I would like to basically take up, play 

off of that and talk to you about poverty and the major assault this 

Congress needs to have against poverty. Is that through the Tax 

Code or is it through funding programs that provide assistance? 

My sense is that—and I have supported EITC in the past, and 

I continue to believe strongly in it. I think it is somewhat ineffectual, not nearly as effective as direct program—as a matter of fact, 

we have a lot of people in the poverty ranks not filing and are not 

in taxable circumstances because of their low income. 

So, as you talk to the Ways and Means, the tax-writing Committee, where would you counsel us in terms of an assault on poverty—the Tax Code or the appropriations process or both? If so, 

what aspects should we look at in this Committee? 


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Thank you. 

Dr. HOLZER. I would differ a little bit with your presumption 

that the EITC hasn’t been effective. Remember, the EITC is a refundable tax credit, so even with people with no Federal tax liability benefits, I think the evidence—I think all of us agree the evidence is overwhelming that it has improved work incentives and 

has helped direct income. So, I think the EITC, especially on this 

Committee, ought to be on the table and can be expanded in a 

number of ways. 

Mr. POMEROY. I just want to clarify. I have supported the 

EITC, continued to. It hasn’t worked as perfectly as I would have 

liked, the number of people who are eligible who haven’t claimed 

credit. That is my only point of reservation with it. 

Dr. HOLZER. I think the take-up rates in low-income families 

are relatively high right now, and a lot of mechanisms have been 

developed. H&R Block going into communities and making them 

more aware of the potential. I think the EITC can be a very potent 

force for improving work incentives for people outside the system 

right now. 

Having said that, there are other programmatic efforts as well to 

help prepare people, pre-K programs that all of us have talked 

positively about, programs in the schools, et cetera, that ought to 

be—I don’t know we think it ought to be an either/or choice. I think 

the EITC is a very important mechanism. There are others as well. 

Chairman RANGEL. We will recess for 15 minutes. 

[Recess.] 

Chairman RANGEL. If the Committee will come to order, we are 

going to start with Mr. Blumenauer. 

Unfortunately, there are going to be additional votes; and so, if 

Members do come back, we will be able to hear from them. We can 

start, and we will be here as long as we can, but the next recess 

would have to be an adjournment because of the voting records. 

Mr. Blumenauer. 

Mr. BLUMENAUER. Thank you. Thank you, Mr. Chairman; and 

I appreciate your focus on poverty for the Committee. 

I would like to—if I could just pose two questions to the panel 

and seek at some point your feedback. There isn’t time to hear 

from you all, for which I apologize, but I would like to at least put 

on the table two concepts. 

One, there is evidence that investment in some of the programs 

that you all have mentioned, we can quantify returns. I have 

heard, for example, early childhood, that the return can be up to 

seven to one or more for each dollar invested. We know that there 

are programs dealing with children’s health that are remarkably 

productive. 

What I would hope is that you might reflect for us and provide 

either to the Committee, or at least me, observations you have 

about the capacity we have to capitalize on the savings, how we 

might advance-fund some of the problem, some of these issues that 

relate to poverty. 

I have been struck that when it comes to the physical infrastructure that we are very good at capturing value. Tax increment financing has helped revitalize communities because we know that 

there is going to be value that is captured and we have certified, 


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smart people in the financial community who have enough confidence that they can identify, capture and have that increment returned. 

Now part of it is how we design bond instruments. People are 

pretty sophisticated about that. There is a moral obligation to 

repay. Certificates of participation are building physical infrastructure across the country without really having general obligation 

bonds, for instance. I wonder if you could reflect and perhaps provide to me and the Committee areas where such early investment 

might have the greatest potential for long-term savings. 

If you have some thoughts about mechanisms that we might employ to enforce the fiscal discipline that we have with fiscal, with— 

excuse me, with physical infrastructure, to do it with our human 

infrastructure. 

If at some point you want further elaboration from me, my staff 

or I will be happy to follow up with you. I have had these conversations, for example, with Governor Corzine thinking that might be 

really great, somebody with his background, Goldman Sachs, Governor of New Jersey now facing these issues, that there might be 

some folks who can help us explore this. 

My second question deals with the notion that the poor pay 

more. It is not just putting money in their hands. I was struck, Mr. 

Jones, with your point about the security guards, people who are 

gainfully employed, but they are working for $7, $8, $9 an hour. 

They can’t afford health insurance. Yet in New York I would venture to say they are probably the only people who are paying full 

retail if they have got an appendectomy, that people with health 

insurance pay less—not just because the insurance pays it, but the 

rate that is charged for the operation is a fraction of what this poor 

person or this working poor person pays. 

The reference of the EITC, I agree, terrific boon for the working 

poor and near poor, but we have people who have abused the poor 

in terms of how that is exploited, and they pay more of a percentage of their income for very simple returns than people with complex returns who are very wealthy. 

I could go on. There are studies that show the poor pay more for 

a gallon of milk; they pay more on a capital basis for inferior housing. 

I would love to have your guidance in some feedback for policy 

changes we could consider to deal with the phenomena that the 

poor and 100 million who are struggling for the middle class actually end up paying more for transportation, for housing, for health 

care, for mortgages, they get steered to sub-prime lending, that you 

might help us think about ways with no new subsidy we could help 

the poor and near poor squeeze more out of their investment. 

Mr. Chairman, I appreciate your indulgence, but these are two 

areas that I would love to work on with you and the Committee 

that would actually help them get more without spending more tax 

dollars. 

Chairman RANGEL. Very well-framed questions. I hope that the 

panel would share their responses with you, with the ranking 

Member and me. 

We have a 15-minute vote, and so what I would like to do is to 

give 2 minutes to the people that have come back—Mr. Tiberi, Mr. 


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Davis and Mr. Weller—2 minutes apiece because we have to adjourn. 

Mr. Tiberi. 

Mr. TIBERI. Thank you, Mr. Chairman. 

Dr. Holzer, I will be brief. How do you determine or what does 

it mean to grow up poor for the purposes of your report? 

Dr. HOLZER. Different studies define that in different ways. 

What most of us did is we took a variety of studies that either 

looked at an individual point in time, say on crime, if you are growing up in a family below the poverty line or in the bottom 20 percent of the income distribution, what is the greater likelihood that 

you will engage in criminal activity? So, there are some studies 

that do it that way. 

There are other studies, more on the earnings side, that look at, 

on average, the fraction of years your family spent below the poverty line in your childhood years or your average family income 

averaged over many years and whether that income averaged 

below the poverty line or not. 

So, different studies do it in different ways. 

Mr. TIBERI. So, if I—just a quick question. If I grew up in a 

household where I was eligible for the free and reduced lunch program in a public school in Columbus, Ohio, would that be defined 

as poor? 

Dr. HOLZER. I don’t know the particular details of that program. 

Again, most of these studies either used the poverty line or the 

bottom decile or quintile of incomes distribution. 

Mr. TIBERI. Anyone else? 

Dr. HASKINS. Well above poverty, school lunch is well above 

poverty. 

Chairman RANGEL. Mr. Davis. 

Mr. DAVIS. Thank you, Mr. Chairman. 

Dr. Holzer, I direct this question to you. One of the reasons I 

think we tend to get bogged down in the debate we had early in 

the morning about the impact of culture versus the impact of policy 

is because we tend to presume that a large number of people who 

are poor in this country, that it is a fixed identifiable class of people, it is the same people over a period of time; and I wonder if that 

is accurate. 

I am going to ask you a quick question. What percentage of people in poverty have been in that condition for more than say 18 

months? 

Dr. HOLZER. I don’t know the answer off the top of my head. 

Ron might. 

Dr. HASKINS. I will send you a study. There is one very good 

study based on, roughly speaking, about if you are in poverty at a 

given point about half the people are out within 18 months. 

Mr. DAVIS. The relevance of that, actually, I think undercuts a 

lot of the points that you were making earlier, Dr. Haskins. If we 

have way too permeable a border between class in this country and 

too many people keep slipping from middle class into poverty, it 

strikes me we need to figure out policy that is very targeted toward 

closing those portals. 


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Second point, the data—if I am reading this correctly, 28 percent 

of people who have some level of postsecondary education or higher 

end up below the poverty line. I am sure some of those people are 

becoming alcoholics or developing mental illness or something such 

as that, but that is presumably a narrow class of people. 

Do any of you want to quickly comment? What does this say 

about our—a very basic thing. We are getting people into college, 

they are dropping out of college, and this is an amazing number 

to me. Any of you want to comment on that? 

Dr. JONES. I can only talk from the New York experience. The 

community college system is really showing an incredible attrition 

rate. People are coming in on the front end; and, interestingly 

enough, it is not necessarily their level of educational attainment 

as they come in. The economics make it impossible for them to stay 

in place. 

That seems to be the big driver. They come in, they try to get 

set, and then they can’t sustain it economically. 

Chairman RANGEL. Mr. Weller. 

Mr. WELLER. Thank you, Mr. Chairman; and I commend you 

for conducting this hearing. 

The question you had asked earlier on is, we are looking for 

ideas that work. I would note that welfare reform, which was a 

product of this Committee, a bipartisan effort passed by a Republican Congress, signed into law by a Democrat President, was a bipartisan product. Dr. Haskins, of course, played a big role in that. 

Today, 1.4 million fewer children are living in poverty because of 

welfare reform. So, clearly, the initiatives in that were successful; 

and I hope we can build on that. 

Earlier, we had a discussion regarding marriage, two-parent 

households and the difference that makes. There is an interesting 

statistic here today about 36.2 percent of all households in America 

are headed by a female-headed household, single parent, but they 

represent 61 percent of all the families living in poverty today. 

There was a discussion earlier where one of the panelists made 

the comment that if we encourage marriage as part of our policy, 

we are somehow imposing our moral values on others. I, for one, 

believe it is a good idea to encourage the father of a child to take 

responsibility, because personal responsibility is a good thing if we 

are going to rebuild families and rebuild communities and bring 

children out of poverty. 

Dr. Haskins, what are—the States are innovative laboratories. 

What are some of the ideas out there that appear to be working, 

whether in the District of Columbia or elsewhere in the States, 

where there are initiatives which are actually encouraging the father to take responsibility and to provide a two-parent household, 

whether they are living together in holy matrimony or just living 

together so Mom and Dad are in the same home providing a loving 

home for that child and helping to lift them out of poverty? What 

is working out there? 

Dr. HASKINS. Five seconds. Two things that are interesting— 

there are many, many, many, but two interesting things. One is 

that the District of Columbia is establishing accounts that if young 

couples, they can save money and they get a match and if they get 

married and stay married for a certain period of time they get to 


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have the match for the money. So, it is an inducement. It doesn’t 

force them to do anything, but it is an inducement to marry. 

A second thing is that there is definitely a marriage penalty, 

very good research on this now from the cash programs, not the 

EITC but from the cash programs. So, the District was about to implement a program that Mayor Williams had worked out with 

Brownback in which the mother would get a year’s worth of benefits if she got married. So, let’s say she is getting $3,000 in cash from TANF. If she got 

married normally, she would lose that money. She would get a 

check for $3,000. 

Unfortunately, we are not going to be able to do that, because it 

is going to be cut in the appropriations process. That is the kind 

of thing that the States are looking to do. 

Mr. WELLER. Thank you, Doctor. 

I realize I am limited on time. Thank you, Mr. Chairman. 

Chairman RANGEL. Mr. Meek. 

Mr. MEEK. Thank you, Mr. Chairman. 

I want to thank all of our witnesses for coming before us, and 

I am glad that we are talking about poverty in America. 

We know that we have poverty throughout the world; and to be 

able to move this issue forward, in my opinion, we have a great 

challenge, because to do anything about poverty—we have already 

made the statement as a Congress in a pay-as-you-go kind of rule 

that we have adopted here is to live within our means; and if we 

are going to do something new, how are we going to pay for it? 

Looking at it from that light—and then we have this war that is 

costing quite a bit of money, that is kind of getting the benefits of 

poverty in rural and urban America of individuals enlisting to 

get—to be able to get a higher education, to be able to go into the 

area of providing money for their family. 

I am of the belief for those States—as we passed this devolution 

of taxation down to the States and they are having to balance their 

budgets, tuition rates go up. That makes it even more difficult for 

those that are financially challenged in our country to be able to 

make ends meet. 

I just want to hear from a few of you on the panel how you believe we can move towards not only discussion but action here on 

Capitol Hill of finding the dollars—where are we going to get it 

from—to be able to resolve some of the issues that we are facing? 

One of you mentioned—and I am sorry, opening statements, it 

was like 2 hours ago—mentioned the EITC. How do we continue 

to add on to that and where do we get the money from? That is 

the question. We know we have the super-wealthy getting the big 

breaks right now. What amount of money can be moved from those 

areas to be able to help us with our poverty issues, especially in 

U.S. cities? 

I thought that was a softball. 

Dr. HASKINS. Ignoring political feasibility, there are many, 

many programs that have been shown by evaluations not to 

produce good results. I will mention one right off the bat is title 

1. 

Now it is under—congressional rules get in the way here, because it is not under your jurisdiction, but title 1 is billions of dolVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00106 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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lars every year that—and, I don’t know, hundred and maybe 200 

billion dollars have been spent since it was enacted in 1965, and 

their evaluation after evaluation after evaluation, no effects. 

Another program that enjoys very weak political support are farm subsidies. Now we spend something like $25 billion a year on 

farm subsidies, and as far as I can tell there are no—very few positive effects and lots of negative effects. 

So, the point is, in this era of budget scarcity, we are going to 

have to cut programs in order to invest the money more productively; and that is what we should do. 

Dr. HOLZER. I would add also two options. One is to save money 

on other expenditures that Ron emphasizes and there is generating 

more revenue, and allowing the tax breaks at the very high end of 

the income spectrum to expire would generate some revenue. 

Dr. HASKINS. I swore on a stack of Bibles I would never say 

that. 

Dr. HOLZER. I am sure. 

Mr. MEEK. I see the red light is on. That is the quickest 5 minutes. I don’t know if we are going by 5 minutes, Mr. Chairman. 

Chairman RANGEL. No, 2. 

Mr. MEEK. Oh, 2. I am sorry. I thought it was—okay. 

Chairman RANGEL. We do that for members who had to vote. 

Mr. MEEK. I thought it was because I was on the bottom row 

here. I am just joking. 

Thank you, Mr. Chairman. I am glad that the Chairman said we 

are going to continue this discussion, because this is a square table 

kind of discussion, and we are going to have to make some decisions, and we are going to have to have some results. 

So—I am sorry, Mr. Nilsen. You wanted to say something? 

We have to have some results, and I am along the lines of thinking where can we get the money and make the justification to the 

American people and to the Congress? 

You talk about the political will to be able to change some things 

that are not working, to be able to identify those dollars that are 

already in the pool. I believe it will be much more difficult to— 

maybe in the 109th Congress you could step out and borrow money 

from foreign nations to pay for programs here and even put us further into debt. Since we don’t have—we don’t want to do that, we 

have to find within what is not working and do the tweaking that 

we need to do that is going to make the ultimate change in rural 

and urban America and in suburbia. 

This is where the rubber meets the road, and I am excited about 

being here part of this discussion. I am looking forward to not only 

receiving more information from you all, but future meetings 

maybe in a workshop setting that the Chairman has already spoken of on a bipartisan basis would be able to help us make conclusions to get ourselves out of this situation. As long as Iraq is going 

on, there is going to continue to be a major sucking sound, pulling 

the will or the means to be able to carry out a way to work towards 

some sort of resolution on poverty in America. 

Thank you, Mr. Chairman. I yield back. 

Chairman RANGEL. Mr. McCrery. 

Mr. MCCRERY. No more questions. Thank you very much, 

panel, for coming. 


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1Lieberman Research Worldwide. (1999, April). Assessing public opinion and perceptions regarding child abuse in America: Final report. Prepared for the Child Welfare League of America, 

Washington, DC. 2Parker, S., Greer, S., & Zuckerman, B. (1988). Double jeopardy: The impact of poverty on 

early child development. The Pediatric Clinics of North America, 35(6), 1227–1240. 3 Ibid. 

Chairman RANGEL. Well, this is just the beginning. I hope that 

all of you will share with us—and we will contact you—anything 

you can think of that will show the economic impact on the economy. We have to think differently. This is not a moral or spiritual 

thing. It is for the national security of our great country. Since we 

find the economists know how to do things creatively, we are going 

to have to get everybody on the same page, because an emergency 

is an emergency and we have to deal with it. 

I can’t thank you enough for the expertise that you brought to 

this. I apologize for the votes on the House floor interfering with 

this hearing, and I would want the record to remain open for at 

least 2 working days for the other members to get their statement 

in the record. 

Please feel free to get in touch with me and the ranking Member 

if you come up with anything that you think that could be helpful 

to us. 

This meeting will stand adjourned. 

[Whereupon, at 12:45 p.m., the hearing was adjourned.] 

[Submissions for the Record follow:] 

Statement of Child Welfare League of America 

The Child Welfare League of America (CWLA), representing public and private 

nonprofit, child-serving member agencies across the country, is pleased to submit 

testimony to the Ways and Means Committee this morning. The issue of the economic and social costs of poverty to our country is one that deserves a great deal 

more attention than it has received in recent years. The attention of this congressional committee and the priority that Chairman Rangel has placed on this issue 

is greatly appreciated and is to be commended. We look forward to working with 

you on this and related issues in the coming months. 

Parents and other caregivers require certain economic resources to provide their 

children with proper nutrition, adequate housing, and sufficient health care. Although economic resources provide no guarantee of a child’s healthy development 

or well-being, poverty is correlated with a wide range of negative outcomes that 

begin in childhood and can forever impact a child’s future.1 Children raised in poverty are likely to experience more risks and have fewer protective factors and resources than children living above the poverty threshold.2

Many children raised in poverty begin their lives at a disadvantage because of inadequate prenatal care, poor maternal nutrition, or birth complications. They often 

also face a wide array of familial and other environmental obstacles, including low 

levels of parental education, increased levels of familial stress, poor social support, 

and limited community assistance. Compared with other children, children living in 

poverty are more likely to experience difficulty in school and have a higher high 

school drop-out rate. Poverty during early childhood may be more damaging than 

poverty experienced later in life because much of the foundation for learning is built 

in the early years. Poor children score lower on measures of vocabulary, language 

skills, understanding of number concepts, organization, and self-regulation. In addition, children living in poverty are more likely to become teen parents, and, as 

adults, earn less and be unemployed more frequently.3

CWLA believes that as a country we must confirm our commitment to prevent 

child abuse and neglect and to support children who have been abused and neglected. A fundamental building block to reaching this goal is to tackle poverty 

head-on. 

POVERTY AS A NATIONAL ISSUE 

In August 2005, for a brief moment, the Nation’s attention was focused squarely 

on the issue of poverty in America. Everyone’s eyes were glued to their television 


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4 U.S. Census Bureau, 2005 American Community Survey. (2005). Data profiles: Selected economic characteristics. Retrieved January 23, 2007, from http://factfinder.census.gov/servlet/ 

ADPTable?lbm=y&-geolid=01000US&-qrlname=ACSl2005lESTlG00lDP3&-dslname= 

&-redoLog=false&-format. Washington, DC: Author. 5 Ibid. 

6 Ibid. 

7 U.S. Department of Health and Human Services, Administration on Children, Youth, and 

Families. (2006). Child maltreatment 2004 (Table 2–1). Retrieved January 23, 2007, from 

www.acf.hhs.gov/programs/cb/pubs/cm04/index.htm. Washington, DC: U.S. Government Printing. 8 U.S. Department of Health and Human Services, Administration on Children, Youth, and 

Families. (2006). Child maltreatment 2004. Retrieved January 23, 2007, from www.acf.hhs.gov/ 

programs/cb/pubs/cm04/index.htm. Washington, DC: U.S. Government Printing. 

screens as the levees broke in New Orleans, Louisiana, and significant tragedy unfolded. Images of individuals and families trapped by floodwaters and testimony of 

those mourning the loss of loved ones, homes, and personal belongings destroyed 

any ideas of poverty as merely an illusion. This attention was unfortunately fleeting, however, and the commitments that had been made to address the poverty 

issue quickly faded. 

In fact, if you were living in Washington, DC, on that August 2005 day, you might 

have attended a forum hosted by the prestigious Brookings Institute that included 

a panel discussion interpreting the meaning of the new census data on poverty. As 

has been the case in other discussions and in other forums over the last several 

years, much of that discussion focused on how we measure poverty and whether or 

not it is as severe as some would argue. We will not continue that debate here because, in our view, poverty is severe and the United States is not doing enough to 

combat the issue. 

CWLA sees poverty as a serious matter that impacts individuals across the country and shapes the direction we are headed as a nation. Poverty touches on our economic preparedness, the effectiveness of our schools, the health of our Nation, and— 

most significantly to CWLA—the welfare of our Nation’s children. 

In 2005, the national poverty rate stood at 13%.4 For children under the age of 

18, the poverty rate was higher at 18%, which meant that approximately 12.8 million of our Nation’s children were being raised in poverty.5 For children under the 

age of 5, the percentage was even higher at 21%.6 One out of five children in the 

critical child developmental period of 0 through 5, then, live in poor conditions that 

will certainly affect their chances at future success and well-being. 

POVERTY AND CHILD ABUSE 

According to the CWLA Standards of Excellence for Services for Abused or Neglected Children and Their Families, neglect is defined as ‘‘Failure of parents or 

other caregivers, for reasons not solely due to poverty, to provide the child with 

needed age-appropriate care, including food, clothing, shelter, protection from harm, 

supervision appropriate to the child’s development, hygiene, education, and medical 

care.’’ 

In 2004, the most recent data available, an estimated 3 million children were reported as abused or neglected and received an assessment or screening to determine 

whether or not there was evidence of abuse or neglect. Approximately 872,000 children were substantiated as abused or neglected.7

Of the 872,000 substantiated cases of abuse or neglect, 62.4% of these children 

experienced neglect, 17.5% were physically abused, 9.7% were sexually abused, 7% 

were psychologically maltreated, and 2.1% were medically neglected. Nearly threequarters (or 72.9%) of child victims age 0 to 3 years were neglected—higher than 

any other age category.8

In 1996, the U.S. Department of Health and Human Services released the Third 

National Incidence Study (NIS) of Child Abuse and Neglect. The NIS is a congressionally mandated, periodic research effort to assess the incidence of child abuse and 

neglect in the United States. The fourth study is currently underway. The NIS gathers information from multiple sources to estimate the number of children who are 

abused or neglected and to provide information about the nature and severity of the 

maltreatment, the characteristics of the children, perpetrators, and families, and the 

extent of changes in the incidence or distribution of child maltreatment since the 

previous NIS. 

In the 1996 study, a significant correlation was found between the incidence of 

maltreatment and family income. It found that 47% of children with demonstrable 


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9Sedlack, A. J. & Broadhurst, D. D. (1996). Third national incidence study of child abuse and 

neglect: Final report. Washington, DC: U.S. Department of Health and Human Services. 10 Ibid. 11 Ibid. 12Gil, D. G. (1970). Violence against children. Cambridge, MA: Harvard University Press. 13 English, D. (1994). Risk assessment: What do we know? Findings from three research studies on children reported to child protective services. In Center for Advanced Studies in Child 

Welfare and the Center for Urban and Regional Affairs, Children of the shadows—The state of 

children in neglecting families: Conference proceedings. Minneapolis, MN: University of Minnesota; National Research Council. (1993). Understanding child abuse and neglect. In G. B. 

Melton & F. D. Barry, Protecting children from abuse and neglect: Foundations for a new national strategy (pp. 132–134). New York: Guilford Press. 14 Child Welfare League of America. (2006). Special tabulation of the Adoption and Foster 

Care Analysis Reporting System (AFCARS). Washington, DC: Author. 15 U.S. Department of Health and Human Services, Administration on Children, Youth, and 

Families. (2005). CPS sample component wave 1 data analysis report. National survey of child 

and adolescent well-being. Washington, DC: Author. 

harm from abuse or neglect and 95.9% of endangered children came from families 

whose income was less than $15,000 per year.9

Children from families with annual incomes below $15,000 as compared to children from families with annual incomes above $30,000, were over 22 times more 

likely to experience some form of maltreatment that fit the study’s harm standard 

and over 25 times more likely to suffer some form of maltreatment as defined by 

the endangerment standard.10

Children from families in the lowest income bracket were 18 times more likely 

to be sexually abused, almost 56 times more likely to be educationally neglected, 

and over 22 times more likely to be seriously injured from maltreatment than children from higher income families.11

The stress created by living in poverty may play a distinct role in child abuse and 

neglect.12 Parents who experience prolonged frustration in trying to meet their family’s basic needs may be less able to cope with even normal childhood behavior problems. Those parents who lack social support in times of financial hardship may be 

particularly vulnerable. Parents who are experiencing problems with employment 

are frequently rated by child protective services staff as being at moderate to high 

risk of child maltreatment.13

POVERTY AND KINSHIP AND FOSTER CARE 

These findings suggest that we could help alleviate the flow of children into other 

parts of the child welfare system by addressing the core issue of poverty. For those 

children who are in care, the challenges and the issue of poverty are no less significant. As of September 30, 2004, 509,662 children were in foster care in the United 

States.14 Foster care, when it is the most appropriate service for a child, should provide a child with protection, care, and nurturance for a temporary period of time 

while services are provided to the child’s parents in order to deal with the problems 

that led to placement. 

When a child cannot remain in his or her own home, it is critical that the child 

welfare system work to provide that child with permanence. All children deserve to 

be a part of, or have a connection with, stability and families that are intended to 

be permanent. Family foster care and foster care services should emphasize safety 

and the well-being of children; recognize that the family is a fundamental foundation of child rearing; and acknowledge the importance of a comprehensive, child-centered, family-focused, culturally competent approach. To fulfill their vital role, then, 

public child welfare agencies need to ensure that children in care are protected and 

cared for and that they receive the services they need. The agency should also ensure that the families of the children in care receive services directed toward early 

reunification with their child or, as an alternative, another permanency goal. 

To meet these goals, it is clear that families must have the needed support to help 

foster children. According to the National Survey of America’s Families (NSAF), 

only 39% of out-of-home care provider families have incomes that place them beyond 

200% of the poverty level. Among all families—in-home, foster, and kinship—those 

involved with the child welfare system are five times more likely to have income 

at only 50% of the poverty level than families in the general population.15

The needs of children in foster care and the support their families provide to them 

is only made more challenging by the fact that less than half of the children in care 

are eligible for federal support. A child in foster care is eligible for federal support 

only if that child was removed from a family that would have been eligible for the 

now nonexistent Aid to Families with Dependent Children (AFDC) as it existed in 

July 1996. 


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16 Congressional Research Service. (2005). Child welfare financing: An issue overview, Congressional Research Service report for Congress. Washington, DC: Stoltzfus, Emilie. 17S. Census Bureau. (2000). Census 2000 summary file 1: Table P28, relationship by household type for population under 18 Years. Available from www.factfinder.census.gov. Washington, 

DC: Author. 18Main, R., Macomber, J. E., & Geen, R. (2006). Trends in service receipt: Children in kinship 

care gaining ground. Washington, DC: Urban Institute. 19 Child Welfare League of America. (2006). Special tabulation of the AFCARS. Washington, 

DC: Author. 20 Cook, R. (1991). A national evaluation of title IV–E foster care independent living programs 

for youth. Rockville, MD: Westat Inc. 21 Ibid. 22 Roman, N. P. & Wolfe, N. (1995). Web of failure: The relationship between foster care and 

homelessness. Washington, DC: National Alliance to End Homelessness. 

According to 2005 calculations by the Congressional Research Service (CRS), this 

outdated eligibility, which erodes every year, means ‘‘that in as many as 25 states, 

eligibility for the Title IV–E foster care program may only be established for children removed from families with incomes less than half the Federal poverty level 

(roughly $8,000/year for a family of three).’’ 16

Another significant and growing part of the child welfare system is the use of kinship care and kinship settings. By definition, kinship care is the full-time care, nurturing, and protection of children by relatives, members of their tribes, godparents, 

stepparents, or any adults who have a kinship bond with a child. This definition 

is designed to be inclusive and respectful of cultural values and ties of affection. Beyond its formal definition, what kinship care provides is an opportunity for a child 

to grow to adulthood in a familial environment. For many children, it is also a lifeline to a safe and productive future. It is, therefore, the type of care that we must 

nurture and promote in every way possible. 

Over six million children are living with a relative who serves as their caregiver, 

with approximately four-and-a-half million of these being grandparents. According 

to the last census, nearly two-and-a-half million grandparents report that they are 

primarily responsible for their grandchildren. The same census survey reveals that 

nearly 20% of these grandparents live in poverty.17

When Congress enacted the Adoption and Safe Families Act (ASFA) in 1997, it 

gave formal recognition to kinship placements as a permanency option even though 

that same act did not extend federal funding to these placements. The increased urgency that ASFA placed on the goal of permanency also influenced the increased 

use of kinship placements. These families are a vital support for millions of children 

and are a key to ensuring the safety and permanency, as well as the nurturing and 

well-being, of these children. 

Although we have seen a decrease in the poverty rates amongst these families 

from the end of the last decade and through 2002, the percentage of children in a 

kinship setting living in poverty is still too high. According to an Urban Institute 

analysis,18 the poverty rate for children living in public kinship care or kinship care 

provided through the child welfare system is 18%. That is the same as the overall 

child poverty rate for children under 18. For private kinship care—those kinship 

families not coming through the public child welfare system—the poverty rate is 

31%. When compared to non-kin foster parents, kinship families are much more 

likely to be low income (defined as 200% of the poverty level or lower), single, and 

older. In all instances, poverty certainly creates additional burdens and challenges 

for these families who have opened their homes and are providing a vital service 

to these children. If we continue to adhere to the goals of the Federal Adoption and 

Safe Families Act and we recognize kinship placements as a permanency option as 

we should, we must provide accompanying federal financial support. 

YOUTH AFTER FOSTER CARE 

For too many older children in foster care the exit from the system will come only 

when they reach the age of 18. More than 22,000 young people leave foster care annually because they age out of the system.19 Although data is sometimes sparse, we 

know of common challenges for these young people from several studies. In one national survey, 25% of foster youth reported having been homeless at least one night 

in the two-and-a-half to four years after exiting foster care.20 In a national survey, 

only 54% of former foster youth had completed high school,21 and in another study, 

3 in 10 of the Nation’s homeless adults reported a foster care history.22

FOSTER CARE AND EDUCATION 

Children and youth in foster care are also challenged when it comes to education 

outcomes. Placement in out-of-home care may create issues around mobility and stability in a child’s education arrangements. For example, a three-year study of youth 


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23 Courtney, M. E., Terao, S., & Bost, N. (2004). Midwest evaluation of the adult functioning 

of former foster youth: Conditions of youth preparing to leave state care. Chicago: Chapin Hall 

Center for Children at the University of Chicago. 24Smithgall, C., Gladden, R. M., Howard, E., Goerge, R., & Courtney, M. (2004). Educational 

experiences of children in out-of-home care. Chicago: Chapin Hall Center for Children at the University of Chicago. 25 Burley, M., & Halpern, M. (2001). Educational attainment of foster youth: Achievement and 

graduation outcomes for children in state care. Olympia, WA: Washington State Institute for 

Public Policy. 26 Courtney, M.E., Dworsky, A., Ruth, G., Keller, T., Havlicek, J., & Bost, N. (2005). Evaluation of the adult functioning of former foster youth: Outcomes at age 19. Chicago, IL: Chapin 

Hall Center for Children at the University of Chicago. 27Pecora, P., Kessler, R., Williams, J., O’Brien, K., Downs, C., English, D., White, J., Hiripi, 

E., White, C.R., Wiggins, T., & Holmes, K. (2005). Improving Family Foster Care: Findings from 

the Northwest Foster Care Alumni Study Alumni Study. Seattle, WA: Casey Family Programs. 28 National Child Welfare Resource Center for Family Centered Practice. (2003). Family centered child welfare. Washington, DC: Author. 29DeNavas-Walt, C., Proctor, B., and Hill Lee, C. (2006). Income, Poverty, and Health Insurance Coverage in the United States: 2005. Current Population Reports (pp. 60–231). Washington, 

DC: U.S. Government Printing Office. 30 United States General Accounting Office. (2003, April). Child welfare and juvenile justice: 

Federal agencies could play a stronger role in helping states reduce the number of children 

placed solely to obtain mental health services. Report to Congressional Requesters (14). Washington, DC: Author. 31 Vandivere, S., Gallagher, M., and Anderson Moore, K. (2004). Changes in children’s wellbeing and family environments. Snapshots of America’s Families III, No. 18. Washington, DC: 

Urban Institute. 

aging out of care by Chapin Hall indicated that over one-third of young adults reported five or more school changes.23 Another study of the Chicago school system 

(also by Chapin Hall) indicated that over two-thirds of children and youth included 

in the study had switched schools shortly after their initial placement.24 This kind 

of instability, along with the challenges of poverty, creates greater barriers to successful education outcomes. 

A 2001 Washington state study is typical of other research in its findings, which 

showed that youth in foster care attending public schools scored 16 to 20 percentile 

points below nonfoster youth in statewide standardized tests at grades three, six, 

and nine.25 Over one-third of young people in a Midwest Study had received neither 

a high school diploma nor a GED by age 19, compared to fewer than 10 percent of 

their same-age peers in a comparable national sample.26 In addition, other studies 

have demonstrated that such outcomes continue to have an impact as these youth 

attempt to succeed at the post-secondary education level. The Northwest Alumni 

Study found that of the foster care alumni studied, 42.7 percent completed some 

education beyond high school, 20.6 percent completed any degree or certificate beyond high school, 16 percent completed a vocational degree and 1.8 percent completed a bachelor’s degree. This completion rate for a bachelor’s degree compares to 

24 percent among the general population of the same age as those surveyed in the 

study.27 CWLA believes that these results offer strong evidence that efforts to improve the education outcomes for these children and youth in foster care must be 

a part of our national strategy to improve education and to reduce poverty. 

HEALTH STATUS OF CHILDREN AND PARENTS 

Children and parents living in poverty are less likely to have access to adequate 

health and mental health care. The lack of comprehensive health services for both 

children and parents increases entry into the child welfare system and makes it 

more difficult for children in the system to attain long-term health, stability, and 

permanency. 

The first three years of life are crucial to a child’s brain development and early 

mental health status.28 There are an astounding number of children living in poverty during this critical period. Moreover, the 2005 U.S. Census Survey reported 

11.2% of children as uninsured, despite widespread eligibility for Medicaid or 

SCHIP.29 Lack of health insurance or limited health insurance coverage contributes 

needlessly to an increasing number of children in the child welfare system with an 

unmet health need as well as placement of children in the child welfare system solely to obtain essential mental health services.30 The data demonstrates a greater 

need for outreach to meet the needs of these children by increasing enrollment in 

eligible health insurance programs and ensuring comprehensive access to health 

and mental health resources under them. Increased access to health and mental 

health care improves a child’s chance for permanency.31


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32DeBellis, M. D., Broussard, E. R., Herring, D. J., Wexler, S., Moritz, G., & Benitez, J. G. 

(2001). Psychiatric co-morbidity in caregivers and children involved in maltreatment: A pilot research study with policy implications. Child Abuse & Neglect 25(7): 923–44. Chicago: The International Society for Prevention of Child Abuse and Neglect. 33McCarthy, J. (2003). Creating effective systems for mental health care and services. Best 

Practice Next Practice. Washington, DC: National Child Welfare Resource Center for Family 

Centered Practice. 34Federal Interagency Forum on Child and Family Statistics. (2002). America’s children: Key 

national indicators of well-being, 2002. Washington, DC: U.S. Government Printing Office. 35 National Center for Children Living in Poverty. (2002). Child poverty fact sheet. New York: 

Columbia University. 36 Hofferth, S. L. (1998). The American family: Changes and challenges for the 21st century. 

In H. M. Wallace (Ed.), Health and welfare for families in the 21st century. Sudbury, MA: Jones 

and Bartlett. 

Poverty also correlates with increased rates of mental illness and substance abuse 

among parents,32 leaving them less ready to handle the stressors associated with 

raising children. The children of parents with substance abuse or mental health concerns are therefore more likely to be victims of abuse or neglect. Availability of comprehensive mental health care reduces caregiver stress and increases a child’s 

chance for healthy development and stable placement.33 Helping children to overcome the obstacles created by the presence of poverty in their early lives means increasing services to address the mental health and substance abuse treatment needs 

of these children and their parents. 

CWLA POLICY RECOMMENDATIONS ON PROPOSED LEGISLATION 

The booming economy in the 1990s resulted in increases in overall income levels 

and modest declines in poverty levels relative to economic gains. The percentage of 

U.S. children living in families with high incomes grew to 29.7% in 2000, while one 

in three children (34%) lived in families with medium incomes.34

The progress made at the end of the last decade, however, has either plateaued 

or reversed. Poverty remains prevalent and debilitating for millions of U.S. children, 

youth, and families. Children are almost twice as likely to live in poverty as Americans in any other age group.35 The extent of inequality in the distribution of earned 

income since the 1970s has dramatically increased. While workers with higher 

schooling levels and more experience have enjoyed increases in their inflation-adjusted earnings, the real earnings of younger and less-educated workers have fallen 

sharply.36

Although secure parental employment may provide access to health care and reduction of some stressors, poor working parents often face multiple pressures that 

negatively impact their ability to adequately care for their children. When they are 

exhausted from low-paying jobs and enervated by the sheer demands of coping with 

inadequate resources, parents find it harder to be consistent in discipline, to be responsive to children’s needs, and to provide a range of socially and educationally 

stimulating experiences. 

SOLUTIONS 

• Providing a broader and better financial situation for low-income families will 

give these families adequate resources that positively affect child development, 

especially for younger children. CWLA therefore supports federal strategies that 

seek to increase low family incomes and include income supports, such as increasing the Earned Income Tax Credit and raising the minimum wage. • CWLA supports enhancements in programs such as the Temporary Assistance 

to Needy Families. This enhancement, however, must assist parents in reaching 

more and better paying jobs and not just focus on arbitrary work rates and punitive measures for failure to work. • CWLA supports the enhancement of child care and preschool readiness programs, high school completion programs, and other educational supports to increase opportunities for the Nation’s poorest children and youth. • CWLA supports increased investments in prevention, intervention, and treatment services to reduce the negative impact of poverty on children and youth 

and on the larger culture. This includes the expansion of home visiting programs and full funding of prevention and intervention programs such as the 

Child Abuse Prevention Treatment Act and the Promoting Safe and Stable 

Families program. • Congress needs to reauthorize and strengthen the State Children’s Health Insurance Program, including the provision of funds necessary to avoid shortfalls 

and expand coverage to more uninsured children. • Congress must preserve the Federal guarantee of Medicaid as an entitlement 

program for low-income children, youth, and families and prevent any cuts that 


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1For informative background on the origin and evolution of the poverty rate, see Gordon M. 

Fisher, ‘‘The Development of the Orshansky Poverty Thresholds and Their Subsequent History 

as the Official U.S. Poverty Measure,’’ U.S. Census Bureau Poverty Measurement Working Papers (May 1992, partially revised September 1997). 2Douglas J. Besharov and Peter Germanis, ‘‘Reconsidering the Federal Poverty Measure: 

Project Description,’’ http://www.welfareacademy.org (June 14, 2004), 5. Poverty guidelines are 

based on poverty thresholds but differ from them in that they are more currently updated to 

reflect intervening changes in price levels and have a slightly more simplified schema for determining household eligibility levels, with fewer categories for family size and composition than 

are found in the Census Bureau’s poverty threshold tables. 

would result in reduced benefits and restricted eligibility for beneficiaries. Coverage for youth leaving foster care should be required to age 21. • In the reauthorization of the education act, the No Child Left Behind law, Congress must include initiatives that will assure and strengthen the access of foster children to public education and eliminate current barriers to stability and 

a foster child’s ability to continue in his or her current school setting. • CWLA believes we cannot succeed in reducing the number of children in care 

without greater federal support. We must fix the financing mechanisms for children who are in the child welfare system. This means extending Title IV–E 

funding to kinship placements and replacing the outdated eligibility requirements for foster care and adoption assistance currently tied to the now nonexistent AFDC program as it existed in July 1996. 

CONCLUSION 

CWLA appreciates the opportunity to offer our testimony to the committee in regard to the issue of poverty. The fact that the Ways and Means Committee, under 

the leadership of Chairman Rangel, has held this hearing as one of its first hearings 

demonstrates a commitment to child welfare by the chairman and the committee. 

This gives CWLA hope that this country will once again seriously confront the challenge and the need to reduce poverty and improve the lives of children and families 

throughout the United States of America. 

f 

Statement of Nicholas Eberstadt, American Enterprise Institute 

For well over a century, with ever-expanding scale and scope, the United States 

government has been generating statistics that might illuminate the plight of society’s poorest and most vulnerable elements. From the beginning, the express objective of such efforts has always been to abet purposeful action to protect the weak, 

better the condition of the needy, and progressively enhance the general weal. First 

unveiled in early 1965, shortly after the launch of the Johnson administration’s 

‘‘War on Poverty,’’ the poverty rate is a measure identifying households with incomes falling below an official ‘‘poverty threshold’’ (levels based on that household’s 

size and composition, devised to be fixed and unchanging over time). Just months 

after its debut, the War on Poverty’s new Office of Economic Opportunity (OEO) 

designated the measure as its unofficial ‘‘working definition’’ of poverty. By August 

1969, the Bureau of the Budget had stipulated that the poverty thresholds used in 

calculating American poverty rates would constitute the Federal government’s official statistical definition for poverty. It has remained so ever since.1

U.S. government antipoverty spending has come to be calibrated against, and 

made contingent upon, this particular measure. Everywhere in America today, eligibility for means-tested public benefits depends on the relationship between a household’s income and the apposite poverty threshold. In Fiscal Year 2002, perhaps $300 

billion in public funds were allocated directly against the criterion of the ‘‘poverty 

guideline’’ (the Department of Health and Human Services’ version of poverty 

thresholds).2 Given its unparalleled importance—both as a touchstone for informed 

public discussion and as a direct instrument for public policy—the reliability of the 

official poverty rate (OPR) as an indicator of material deprivation is a critical question. How faithfully, in other words, does our Nation’s poverty rate describe trends 

and patterns in the condition that most Americans would think of as poverty? 

Although our official poverty rate is now by and large taken for granted, having 

become widely regarded with the passage of time as a ‘‘natural’’ method for calibrating the prevalence of material deprivation in American society, the measure 

itself was originally an ad hoc improvisation—and arguably a fairly idiosyncratic 

one—and in practical terms appears to be a problematic descriptor of poverty trends 

and levels in modern America. For one thing, its reported results do not track well 

with other indicators that would ordinarily be expected to bear directly on living 


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conditions across the Nation. In fact, over the past three decades, the relationship 

between the OPR and these other indicators has been perversely discordant. 

While the official poverty rate suggests that the proportion of the American population living below a fixed ‘‘poverty line’’ has stagnated—or increased—over the past 

three decades, data on U.S. expenditure patterns document a substantial and continuing increase in consumption levels for the entire country—including the strata 

with the lowest reported income levels. And while the poverty threshold was devised 

to be measuring a fixed and unchanging degree of material deprivation (i.e., an ‘‘absolute’’ level of poverty) over time, an abundance of data on the actual living conditions of low-income families and ‘‘poverty households’’ contradicts that key presumption—demonstrating instead that the material circumstances of persons officially defined as poor have improved broadly and appreciably over the past four decades. 

In short, America’s most relied-upon metric for charting a course in our national 

effort to reduce and eliminate poverty appears to offer unreliable, and indeed increasingly misleading, soundings on where we are today, where we have come, and 

where we seem to be headed. 

History of a Calculation 

The schema and framework for estimating official poverty rates in the United 

States today are basically the same as in 1965. Annual OPRs are still determined 

on the basis of poverty thresholds maintained and updated by the U.S. Census Bureau; official poverty status is still contingent upon whether a household’s measured 

annual pretax money income exceeds or falls below that stipulated threshold. While 

a number of minor revisions have been introduced, the original approach of computing poverty rates on the basis of poverty thresholds and annual household income levels remains entirely intact. The most significant change in the original poverty thresholds is their annual upward adjustment to compensate for changes in 

general price levels. In 1969, the Bureau of the Budget directed that the poverty 

line would thenceforth be pegged against the Consumer Price Index (CPI) and ruled 

that the CPI deflator would also be used to establish official ‘‘poverty thresholds’’ 

back to 1963, the base year for the original study. 

As of 2005, the U.S. official poverty rate is the single longest-standing official 

index for assessing deprivation and material need in any contemporary country. 

That fact alone makes it unique. But America’s OPR is unique in another sense, 

as well. For although a multitude of governments and international institutions 

have pursued quantitative efforts in poverty research over the past two decades, and 

have even fashioned particular national and international poverty indices, none has 

elected to replicate the United States’ approach to counting the poor. This curious 

fact is not often remarked upon by U.S. statistical authorities—but it is not only 

worth bearing in mind, it is also worth pondering as one evaluates the U.S. poverty 

rate and its long-term performance. 

Stark Numbers 

Estimates of the official poverty rate for the United States are available from the 

year 1959 onward. For the total population of the U.S., the OPR declined by nearly 

half over this period, from 22.4 percent in 1959 to 12.7 percent in 2004, and dropped 

by roughly similar proportions for America’s families, from 20.8 percent to 11.0 percent. Measured progress against poverty was more pronounced for older Americans 

(the OPR for persons 65 and older fell from 35.2 percent to 9.8 percent) but more 

limited for children under 18 (27.3 percent vs. 17.8 percent). For African Americans, 

the official poverty rate declined by almost three-fifths—by over 30 percentage 

points—between 1959 and 2004, but in 2004 remained over twice as high for whites. 

One may note that most of the reported reduction in overall U.S. poverty, according to this federal poverty measure, occurred at the very beginning of the series— 

that is to say, during the first decade for which numbers are available. Between 

1959 and 1968, the OPR for the total population of the United States fell from 22.4 

percent to 12.8 percent, or by more than a point per year. In 2004, by contrast, the 

U.S. poverty rate was only imperceptibly lower than it had been in 1968—and actually slightly higher than it had been back in 1969. 

Indeed, to judge by the official poverty rate, the United States has suffered a generation and more of stagnation—or even retrogression—in its quest to reduce poverty. Figure 1 illustrates the situation. For the entire U.S. population, the lowest 

OPR yet recorded was for the year 1973, when the index bottomed at 11.1 percent. 

Over the subsequent three decades, the OPR nationwide has remained steadily 

above 11.1 percent, often substantially; in 2004, the rate reported was 12.7 percent. 

Between 1973 and 2004, the official poverty rate did decline for older Americans 

as a whole (16.3 percent vs. 9.8 percent) and for persons living alone (25.6 percent 

vs. 20.5 percent); it also declined for African Americans overall (31.4 percent vs. 24.7 


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3Derived from Vee Burke, Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, fy2000–fy2002, Congressional Research Service 

Report rl32233 (November 25, 2003), Table 5, and Statistical Abstract of the United States 2004– 

2005, Table 2. 

percent). But for the rest of the country, the official poverty rate was in general 

higher at the start of the new century than it had been in the early 1970s. Measured poverty rates, for example, were higher in 2004 than they had been in 1973 

for children under 18 (14.4 percent in 1973 vs. 17.8 percent in 2004) and for people 

of working ages, i.e. 18 to 64 (8.3 percent vs. 11.3 percent). The nationwide OPR 

for U.S. families likewise rose over those years (from 9.7 percent to 11.0 percent). 

Outside of the South, where the OPR registered a slight decline (from 15.3 percent 

to 14.1 percent), poverty rates were higher in every region of America in 2004 than 

in 1973. Overall poverty rates for non-Hispanic whites—so-called Anglos—were also 

higher than they had been in 1973 (7.5 percent vs. 8.6 percent). No less striking, 

the overall poverty rate for Hispanic Americans was exactly the same in 2004 as 

in 1973—21.9 percent—implying that the circumstances of this diverse but often socially disadvantaged ethnic minority had not improved at all over the course of 

three full decades. 

Taken on their face, these stark numbers would seem to be a cause for dismay, 

if not outright alarm. To go by the official poverty rate, modern America has failed 

stunningly to lift the more vulnerable elements of society out of deprivation—out 

from below the income line, according to the author of the Federal poverty measure, 

where ‘‘everyday living implied choosing between an adequate diet of the most economical sort and some other necessity because there was not money enough to have 

both.’’ This statistical portrait of an apparent long-term rise in absolute poverty in 

the contemporary United States evokes the specter of profound economic, social, and 

political dysfunction in a highly affluent capitalist democracy. All the more troubling 

is the near-total failure of social policy implied by such numbers, for despite the 

War on Poverty and all subsequent governmental antipoverty initiatives, official 

poverty rates for the Nation have mainly moved in the wrong direction over the past 

three decades. 

Other Measures 

Although the official poverty rate is accorded a special official status as an index 

of poverty conditions in modern America, it is by no means the only available indicator that might provide insight on poverty conditions and material deprivation in 

the country. Many other indices bearing upon poverty are readily available, and 

their trends can be compared with the reported OPR. Curiously, the official poverty 

rate does not seem to exhibit the normal and customary relationship with any of 

these other poverty proxies. 

Table 1 illustrates the problem. It contrasts results for the years 1973 and 2001 

for the official poverty rate and several other indicators widely recognized as bearing directly upon the risk of poverty in any modern urbanized society. (The choice 

of these two specific end-years is admittedly and deliberately selective—but it is a 

selection that highlights the underlying contradictions discussed below.) 

In the period between 1973 and 2001, for example, per capita income in the 

United States rose very significantly in real (inflation-adjusted) terms: by roughly 

60 percent, according to estimates from the Census Bureau’s CPS series. By the 

same token, the measured rate of unemployment for persons 16 and older was somewhat lower in 2001 (4.7 percent) than it had been in 1973 (4.9 percent). As for educational attainment, America’s working-age adults clearly had completed more years 

of schooling in 2001 than in 1973. In 1973, nearly 40 percent of U.S. adults 25 or 

older had no high school degree; by 2001, the corresponding fraction was under 16 

percent. 

Then there are the trends in spending by government at the Federal, state, and 

local levels on means-tested benefit programs: that is to say, public antipoverty outlays. Between Fiscal Year 1973 and Fiscal Year 2001, real spending on such programs more than tripled, leaping from $153 billion to $484 billion (in constant 2002 

dollars). One can make arguments for excluding the health and medical care component from the measure of antipoverty program spending; doing the sums, nonhealth 

antipoverty spending would still rise in constant 2002 terms from $109 billion in 

1973 to $231 billion in 2001, or by 57 percent per capita.3 These data, one must 

emphasize, account for just the government’s share of anti-poverty programs: Private charitable donations provide additional resources for meeting the needs of 

America’s poor, and those resources are considerable. In the year 2001, total private 

philanthropic giving was estimated at $239 billion—in real terms, 156 percent more 

than in 1973; and in real per capita terms, an increase of over 90 percent. Although 


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4The concept of transitory income can be traced back at least as far as Milton Friedman and 

Simon S. Kuznets, Income from Independent Professional Practice (National Bureau of Economic 

Research, 1945), Chapter 7, where the term itself was perhaps coined. Consumer behavior theory would suggest that annual incomes would equate to annual expenditures in the lowest income strata only where those low income levels were in fact consonant with a household’s expectations of its long-term financial outlook—or where institutional barriers prevented the household from financing additional near-term consumption. 

we cannot know the exact proportion of these private funds earmarked for poverty 

alleviation, it seems safe to say that antipoverty spending by both the public and 

the private sectors increased very significantly on a real per capita basis between 

1973 and 2001. 

Per capita income, unemployment, educational attainment, and anti-poverty 

spending are factors that would each be expected to exert independent and important influence on the prevalence of poverty in a modern industrialized society—any 

modern industrialized society. When trends for all four of these measures move conjointly in the direction favoring poverty reduction, there would ordinarily be a 

strong expectation that the prevalence of measured poverty would decline as well 

(so long, of course, as poverty was being measured against an absolute rather than 

a relative benchmark). Yet curiously, the official poverty rate for the United States 

population was higher for 2001 (11.7 percent) than for 1973 (11.1 percent). 

Needless to say, this is a discordant and counterintuitive result that demands explanation. Further examination, unfortunately, reveals that the paradoxical relationship between the poverty rate and these other indicators of material deprivation 

in Table 1, while perverse, is not at all anomalous. To the contrary: For the period 

since 1973, the U.S. poverty rate has ceased to correspond with these other broad 

measures of poverty and progress in any common-sense fashion. Instead, the poverty rate seems to have become possessed of a strange but deeply structural capriciousness: For while it continues to maintain a predictable relationship with these 

other indicators, the relationship is by and large precisely the opposite of what one 

would normally expect for a poverty indicator. 

Clearly, something is badly amiss here. And unless someone can offer a plausible 

hypothesis for why U.S. data series on per capita incomes, unemployment rates, 

adult educational attainment, and anti-poverty spending should be collectively 

flawed and deeply biased for the post–1973 period, the simplest explanation for 

these jarring results would be that the officially measured poverty rate happens to 

offer a highly misleading, or even dysfunctional, measure of material deprivation 

and has, moreover, been doing so for some considerable period of time. 

A Major Discrepancy 

The implicit assumption that a poverty-level household’s annually reported money 

income will equate to the level of its annual expenditures represents an additional 

problem with the official poverty rate. The original methodology estimated ‘‘poverty 

thresholds’’ to designate consumption levels consonant with poverty status, and 

matched these against annually reported household incomes—but it made no effort 

to determine the actual consumption levels of those low-income households. Instead, 

it posited an identity between reported money income and expenditures for these 

families. To this date, the method by which the official poverty rate is calculated 

continues to presume an identity between measured annual money incomes and annual expenditure levels for low-income households. Yet this presumption is dubious 

in theory, and it is confuted empirically by virtually all available data on spending 

patterns for America’s poorer strata. 

Families and individuals base their household budgets not just on the fortunes 

(and uncertainties) of a single year, but instead against a longer life-course horizon—stabilizing their long-term living standards (and smoothing their consumption 

trajectory) against the vagaries of short-term income fluctuations. Such behavior 

naturally suggests that the marginal propensity to consume will tend to be disproportionately high for lower-income households—and for the perhaps considerable 

number of households where expected ‘‘permanent income’’ exceeds current income 

(i.e., ‘‘transitory income’’), current consumption will likewise exceed current income 

if financial arrangements permit.4

From the standpoint of empirics, U.S. survey data provides evidence of a major 

discrepancy between reported annual expenditure levels and reported annual income levels for poorer households in the United States—a disproportion that seems 

to have been widening steadily over the decades since the official poverty rate was 

first devised. These trends are evident from the Consumer Expenditure (CE) Survey, produced by the Bureau of Labor Statistics (BLS). In 2002, constant expenditures for the poorest fifth (lowest income quintile) of U.S. households were 77 percent higher than they had been for the poorest fourth (lowest quartile) in 1960–61; 


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5SCF appears to offer more a comprehensive inventory than SIPP of the various components 

of household wealth. For a detailed comparison and evaluation, see John L. Czaijka, Jonathan 

E. Jacobson, and Scott Cody, Survey Estimates of Wealth: A Comparative Analysis and Review 

of the Survey of Income and Program Participation (Mathematica Policy Research Inc., August 

22, 2003). 

between 1972–73 and 2002, real expenditures for the lowest quintile of households 

increased by 57 percent. 

It is striking that real levels of household expenditures for the poorest fifth of U.S. 

households have risen by over half during a period in which the official poverty rate 

should also have risen (from 11.5 percent of the population in 1972–73 to 12.1 percent in 2002)—and during which, according to the same CE survey data, real incomes for the poorest fifth of U.S. households reportedly fell. The contradiction is 

explained, in proximate terms, by a dramatic increase in the ratio of expenditures 

to income for poorer U.S. households. By 1972–73, the poorest fifth of households 

were spending nearly 40 percent more than their annual income—and by 2002 were 

spending well over double their reported annual income. 

Temporary Poverty 

The stark and increasing mismatch between reported annual incomes and reported annual expenditures for low-income households in contemporary America 

may go far in helping to explain why the official poverty rate—predicated as it is 

on reported annual money income—seems so very out of keeping with other data 

series bearing on the incidence of material deprivation in modern America. But how 

is this widening gap to be explained? 

One hypothesis for the growing discrepancy between income levels and expenditure levels for poorer Americans might be that low-income Americans are ‘‘overspending’’—i.e., going ever deeper into debt. By the reasoning of this surmise, the 

apparently widening gap between income and expenditures reported for poorer 

Americans, far from being an artifact, would represent an all-too-genuine phenomenon: an unsustainable binge that must eventually end, with ominous consequences for future living standards of the vulnerable and the disadvantaged. 

On its face, this hypothesis might seem plausible. In the event, however, it appears to be confuted by data on the net worth of poorer American households. If 

expenditures for lower-income households were being financed through a steady 

draw-down of assets or accumulation of debt, we would expect the net worth of poor 

Americans to decline steadily over time in absolute terms. No such trend is evident 

from the two government data sources that attempt to estimate the net worth of 

poorer Americans: the Census Bureau’s Survey of Income and Program Participation 

(SIPP) and the Federal Reserve Board’s Survey of Consumer Finance (SCF).5

If the growing statistical discrepancy between incomes and expenditures for poorer Americans cannot be explained by a growing indebtedness of lower-income households, how, then, can we account for it? Three partial explanations come immediately to mind. 

• Changes in CE survey methods and practices. The growing mismatch between 

reported income and reported expenditures for lower-income households could 

in part be an artifact of changes in the CE survey itself. 

• Income underreporting. A second potential problem, related to the first, might 

be a tendency over time toward increased misreporting of income. As already 

mentioned, the BLS staff responsible for the CE surveys carefully note that 

users should place more confidence in their expenditure estimates than their income estimates, especially for the lowest reported income deciles. 

• Increased year-to-year income variability. The third possible explanation for a 

secular rise in the expenditure-to-income ratio for households in the lowest annual income quintile would be a long-term increase in year-to-year variations 

in household income. If U.S. consumer behavior comports with the ‘‘permanent 

income’’ hypothesis, and if the stochastic year-to-year variability (i.e., transitory 

variance) in American income patterns were to increase, then we would expect, 

all other things being equal, that the ratio of reported annual expenditures to 

reported annual incomes would increase. 

The greater the proportion of ‘‘temporary poor’’ in the total poverty population, the 

greater the discrepancy between observed income levels and observed expenditures 

levels should be within the poverty population. If poverty is defined in terms of a 

particular income threshold, it should be readily apparent that poverty status is not 

a fixed, long-term condition for the overwhelming majority of Americans who are 

ever designated as poor. Quite the contrary: Since American society and the U.S. 

economy are characterized by tremendous and incessant mobility, long-term poverty 


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115 

status appears to be the lot of only a tiny minority of the people counted as poor 

by the official U.S. measure. 

The Census Bureau’s longitudinal Survey on Income and Program Participation 

(SIPP) documents this central fact. For the calendar year 1999, nearly 20 percent 

of the noninstitutionalized American population was estimated to have experienced 

two or more months in which their household income fell below the poverty threshold. And at some point during the four years 1996–1999, fully 34 percent of the surveyed population spent two months or more below the poverty line. On the other 

hand, just 2 percent of the population spent all 48 months of 1996–99 below the 

poverty line. The long-term poor (or ‘‘permanent poor’’), in other words, accounted 

for barely one-tenth of those who passed through officially designated poverty at 

some point in 1999, and less than 6 percent of those who were counted as poor at 

any point between the start of 1996 and the end of 1999. 

As might be expected, the incidence of chronic or long-term poverty varies according to ethnicity, age, household composition, and location. Whereas just 1 percent 

of the non-Hispanic white population is estimated to have spent all of 1996–99 

below the poverty line, the rate was over 5 percent for both African-Americans and 

Hispanic-Americans; long-term poverty rates of over 5 percent also typified femaleheaded households and persons living alone. Yet even for the groups with the highest measured rates of long-term poverty, these permanent poor accounted for a very 

small fraction of the ‘‘ever poor’’: Fewer than a sixth of the Hispanics counted as 

poor at any time during 1999, for example, had been below the poverty line throughout 1996–99. 

Given the high proportion of the temporarily poor within the overall population 

of those counted as poor, it should not be surprising that reported expenditures 

would exceed reported income among America’s lower-income strata, as they apparently do today. 

Clearly more research is warranted here. For now, however, we may note that the 

curious divergence between reported income and expenditure patterns that has been 

recorded in consumer expenditure surveys for the period since the early 1970s appears to be matched by a simultaneous reported rise in proportionate year-to-year 

variations for families on the borderline of the bottom income quintile. 

Incontestably Better Off 

By indexing annual changes in nominal poverty thresholds against the Consumer 

Price Index, the official poverty rate for the U.S. is, in principle, devised to track 

over time a set of fixed and constant household income standards for distinguishing 

the poor from the nonpoor. The OPR was intended to be an absolute measure—one 

that would identify people living in conditions determined by a specific and unchanging budget constraint. 

The notion that the official poverty rate tracks a fixed and unchanging material 

condition, however, is contradicted by a wide array of physical and biometric indicators. These data demonstrate steady and basically uninterrupted improvements in 

the material conditions and consumption levels of Americans in the lowest income 

strata over the past four decades. 

The poverty rate was intended to designate an income level below which ‘‘everyday living implied choosing between an adequate diet of the most economical sort 

and some other necessity because there was not money enough to have both.’’ In 

purely material terms, today’s American poverty population is incontestably better 

off than were the measurement’s original poor back in 1965. 

To track the changing material circumstances of America’s low-income population, 

we will follow trends in four areas: 1) food and nutrition; 2) housing; 3) transportation; and 4) health and medical care. From the early 1960s through the beginning 

of the twenty-first century, American consumers, poor and nonpoor alike, devoted 

the great majority of their personal expenditures to these four categories of goods 

and expenditures. Between 1960–61 and 2002, food, housing, transport, and health/ 

medical care together accounted for about 70 percent of mean U.S. household expenditures, and for about 80 percent of the expenditures of households in the lowest 

income quintile. And while the composition of these allocations by category shifted 

over these decades, their total claim within overall expenditures remained remarkably stable. Let us then examine in turn trends in food and nutrition, housing, 

transportation, and health/medical care. 

Food and nutrition. In the early 1960s—the years for which the poverty rate was 

first devised—undernourishment and hunger were unmistakably in evidence in the 

United States. Indeed, self-assessed food shortage was clear from the expenditure 

patterns of American consumers: In the 1960–61 consumer expenditure survey, for 

example, the marginal propensity of consumers to spend income on food rose between the lowest and the next lowest income groupings. This poorest grouping of 


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6 RECS 2001 (upon whose figures the calculation above was based) places the mean heated 

floor space per poverty household at 472 per person; the ahs 2001, for its part, indicates a median value of 739 square feet per person for poverty households, although this total appears to 

include both heated and unheated floor space and pertains only to the 55 percent of povertylevel households in single, detached and/or mobile/manufactured homes. (American Housing 

Survey 2001, Table 2–3.) 

Americans—accounting for about 1 percent of the households surveyed—defined a 

grouping for which foodstuffs were ‘‘luxury goods.’’ 

For purely biological reasons, a society’s most nutritionally vulnerable groups are 

typically infants and children. Anthropometric and biometric data suggest that nutritional risks to American children have declined almost continuously over the past 

three decades. Even for low-income children—i.e., those who qualified for meanstested public health benefits—those nutritional risks look to have been declining 

progressively. According to the National Pediatric Surveillance System of the CDC, 

for example, the percentage of low-income children under five years of age who were 

categorized as underweight (in terms of BMI for age) dropped from 8 in 1973 to 5 

in 2003. Similarly, the proportion of medically examined low-income children who 

presented height-for-age below the expected fifth percentile level on pediatric growth 

charts declined from 9 percent in 1975 to 6 percent in 2003. Blood work for these 

same children suggested a gradually declining risk of anemia, to judge by the drop 

in the proportion identified as having a low hemoglobin count. 

Housing and home appliances. Statistical information on U.S. housing conditions 

and home appurtenances are available today from three main sources: 1) the decennial census of population and housing; 2) the Census Bureau’s American Housing 

Survey (AHS), conducted in 1984 and every few years thereafter; and 3) the Department of Energy’s Residential Energy Consumption Survey (RECS), initially conducted in 1978 and currently re-collected every four years. Since 1970, the decennial 

census has cross-classified household housing conditions by official poverty status; 

AHS and RECS also track poverty status and its correlates in their surveys. 

In terms of simple floor-space, the homes of the officially poor were more spacious 

at the dawn of the new century than they had been three decades earlier. In 1970, 

almost 27 percent of poverty-level households were officially considered overcrowded 

(the criterion being an average of over one person per room). By 2001, according to 

the AHS, just 6 percent of poor households were ‘‘overcrowded’’—a lower proportion 

than for nonpoor households as recently as 1970. Between 1980 and 2001, moreover, 

per capita heated floor-space in the homes of the officially poor appears to have increased substantially—to go by official data, by as much as 27 percent or perhaps 

even more.6 By 2001, the fraction of poverty-level households lacking some plumbing facilities was reportedly down to 2.6 percent—a lower share than for nonpoor 

households in 1970. 

Trends in furnishings and appurtenances for American households similarly 

record the steady spread of desirable consumer appliances to poor and nonpoor 

households alike. From 1970 to the present, poorer households’ access to or possession of modern conveniences has been unmistakably increasing. For many of these 

items—including telephones, television sets, central air conditioning, and microwave 

ovens—prevalence in poverty-level households as of 2001 exceed availability in the 

typical U.S. household as of 1980, or in nonpoor households as of 1970. By the same 

token, the proportion of households lacking air-conditioning was lower among the 

officially poor in 2001 than among the general public in 1980. By 2001, over half 

of all poverty-level households had cable television and two or more television sets. 

Moreover, by 2001 one in four officially poor households had a personal computer, 

one in six had Internet access, and three out of four had at least one VCR or DVD— 

devices unavailable even to the affluent a generation earlier. 

These data cannot tell us much about the quality of either the housing spaces 

that poverty level households inhabit or the appurtenances furnished therein. They 

say nothing, furthermore, about nonphysical factors that bear directly on the quality 

of life in such housing units—most obvious among these being crime. These data, 

however, strongly support the proposition that physical housing conditions are 

gradually improving not only for the rest of America, but for the officially poor as 

well. In any given year, a gap in physical housing conditions separates the officially 

poor from the nonpoor—but the data for today’s poor appear similar to those for the 

nonpoor a few decades earlier. 

Transportation. At the time of the 1972–73 consumer expenditure survey, almost 

three-fifths of the households in the lowest income quintile had no car. Since the 

official poverty rate for families in those years was only about 10 percent, we may 

suppose that the proportion of poverty-level households without motor vehicles at 

that time was somewhat higher. By 2003, however, over three-fifths of U.S. povertyVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00120 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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level households had one car or more—and nearly three of four had some sort of 

motor vehicle. (The distinction is pertinent, owing to the popularity and proliferation 

of SUVs, light trucks, and other motor vehicles classified other than as cars from 

the late 1970s onward.) 

By 2003, quite a few poverty-level households had multiple motor vehicles: Fourteen percent had two or more cars, and 7 percent had two or more trucks. In 2003, 

to be sure, vehicle ownership was more limited among the officially poor than 

among the general public; for the country as a whole, fewer than 9 percent of households reported being without any motor transport whatever. The increase in motor 

vehicle ownership among officially poor households has followed the general rise for 

the American public—albeit with a very considerable lag. As of 2003, auto ownership rates for poverty-level households mirrored ownership rates for U.S. families 

in general in the early 1950s; for all forms of motor transport, U.S. poverty households’ ownership levels in 2003 matched overall U.S. families’ auto ownership levels 

from the early 1960s; and poverty households’ ownership levels for two or more 

motor vehicles paralleled that of the general U.S. public in the late 1950s or early 

1960s. 

Health and medical care. NCHS data can be used to illuminate two separate aspects of health status and medical care in modern America: outcomes and service 

utilization. The most critical datum for health status is arguably mortality: All other 

health indicators are subsidiary to survival. For babies and infants, the single most 

important measure of health status is surely the infant mortality rate. Between 

1970 and 2002, the infant mortality rate in the United States fell by nearly twothirds, from 20 per 1,000 live births to 7 per thousand. The infant mortality rate 

continued its almost uninterrupted annual declines after 1973, when officially measured poverty rates for U.S. children began to rise. The contradistinction is particularly striking for white babies. Between 1974 and 2001, their infant mortality rates 

fell by three-fifths, from 14.8 per 1,000 to 5.8 per 1,000; yet over those same years, 

the official poverty rate for white children rose from 11.2 percent to 13.4 percent. 

(See Figure 2.) 

These survival gains were achieved not only in the face of purportedly worsening 

poverty status, but also despite unfavorable trends in biological risk. In 2001, the 

proportion of white babies born at high-risk ‘‘low birth weight’’ (below 2,500 grams) 

was actually somewhat higher than in 1974. Yet despite these troubling trends in 

low-birth-weight disposition, infant mortality rates improved dramatically. Since the 

inherent biological disparities in mortality risk between low-birth-weight and nonlow-birth-weight newborns did not diminish over this period, the reasonable inference might be that medical and health care interventions—changes in the quality 

and availability of services—accounted for most of the difference. And since lowbirth-weight infants are disproportionately born to mothers from disadvantaged socioeconomic backgrounds, a further reasonable inference is that these improvements 

in quality and availability of medical care extended to America’s poorer strata, not 

just the well-to-do. 

Trends in utilization of health care for the poor are further illustrated by the circumstances of children under 18—more particularly by the proportion reporting no 

medical visits over the year preceding their health interview survey. While the percentage of children without an annual medical visit is always higher among the poor 

than among the nonpoor, steady declines are reported for both groups—and the declines were substantial. The proportion of children without a reported annual medical visit, in fact, was significantly lower for the poverty population in 2002 (12.1 

percent) than it had been for the nonpoverty population 20 years earlier (17.6 percent). This cannot address the question of preexisting health needs—it could be that 

pediatric medical problems were on the rise during this period. These data thus do 

not conclusively demonstrate that ‘‘access’’ or ‘‘availability’’ of health and medical 

care have been improving. But they are strongly suggestive of this possibility—all 

the more so in conjunction with the salutary trends in health status outcomes. 

To summarize the evidence from physical and biometric indicators: Low-income 

and poverty-level households today are better-fed and less threatened by undernourishment than they were a generation ago. Their homes are larger, better 

equipped with plumbing and kitchen facilities, and more capaciously furnished with 

modern conveniences. They are much more likely to own a car (or a light truck, or 

another type of motor vehicle) now than 30 years earlier. By most every indicator 

apart from obesity, their health care status is considerably more favorable today 

than at the start of the War on Poverty. Their utilization of health and medical 

services has steadily increased over recent decades. The official poverty rate is incapable of representing what it was devised to portray: namely, a constant level of 

absolute need in American society. The biases and flaws in the poverty rate are so 

severe that it has depicted a great period of general improvements in living standVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00121 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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1 Boushey & Gunderson, When Work Just Isn’t Enough, Economic Policy Institute Briefing 

Paper (Washington D.C.: Economic Policy Institute 2001), available at http://www.epinet.org/ 

briefingpapers/hardshipsbp.pdf. 2 Boushey et. al, Hardships in America, (Washington D.C.: Economic Policy Institute 2001), 

available at http://www.epinet.org/books/hardships.pdf. 3 Arloc Sherman, Poverty Matters: The Cost of Child Poverty in America, (Washington D.C.: 

Children’s Defense Fund 1997), available at http://www.childrensdefense.org/fairstartpovmat.htm. 4 Id. 

ards—three decades from 1973 onward—as a time of increasing prevalence of absolute poverty. 

To state this much is not to assert that material progress for America’s poverty 

population has been satisfactory, much less optimal. Nor is it to deny the importance of relative as opposed to absolute deprivation in the phenomenon of poverty 

as the poor themselves experience it. In some quarters, criticism of the various 

shortcomings of America’s official poverty rate will be taken as evidence of indifference to the plight of America’s disadvantaged and poor. Such an inference is illogical 

at best. Proponents of more effective antipoverty policies should be in the very front 

ranks of those advocating more accurate information on America’s poverty problem. 

Without such information, effective policy action will be impeded; under the influence of misleading information, policies will be needlessly costly—and ineffective. 

As we have seen, the U.S. federal poverty measure is premised on the assumption 

that official poverty thresholds provide an absolute poverty standard—a fixed intertemporal resource constraint. Such a standard should mean that general material 

conditions for the poverty population should remain more or less invariant over 

time. Yet quite clearly, the material condition of the poverty population in modern 

America has not been invariant over time—it has been steadily improving. The OPR 

thus fails—one is tempted to say that it fails spectacularly—to measure what it purports to be tracking over time. As an indicator of a condition originally defined in 

1965, the official poverty rate seems to have become an ever less faithful and reliable measure with each passing year. The task of devising a better statistical 

lodestar for our Nation’s antipoverty efforts is by now far overdue. Properly pursued, it is an initiative that would rightly tax both our formidable government statistical apparatus and our finest specialists in the relevant disciplines. But such exertions would also stand to benefit the common weal in as yet incalculable ways. 

f 

Statement of Legal Momentum, New York, New York 

We appreciate the opportunity to submit this statement on behalf of Legal Momentum, the Nation’s oldest women’s legal rights organization, for the Committee’s 

hearing on the important topic of the Economic and Societal Costs of Poverty. Poverty is one of the main causes of family hardship. A 2001 study by the Economic 

Policy Institute found that about 30% of those below the poverty line experienced 

critical hardship, defined as being evicted, having utilities disconnected, doubling up 

in others’ housing due to lack of funds, or not having enough food to eat; and that 

an additional 30% to 45% experienced other serious hardships.1 Compared with 

families whose income is above 200% of the Federal poverty level, families whose 

income is less than 200% of poverty are more than six times as likely to not have 

enough food to eat (12.6% vs. 1.6%); more than five times as likely to miss meals 

(17.5% vs. 3.4%); eleven times more likely to be evicted (1.1% vs. .1%); 50% more 

likely to skip necessary medical care (12.7% vs. 8.0%); seven times as likely to have 

their utilities disconnected (4.1% vs. 0.6%); and three times as likely to have their 

telephone disconnected (10.4% vs. 3%).2

The Children’s Defense Fund has estimated that child poverty will cost our society over $130 billion in future economic output as poor children grow up to be less productive and effective workers.3 Poverty damages children in ways that harm their 

own and the Nation’s future. Poor children experience increased risk of stunted 

growth and anemia, more often have to repeat years of schooling, have lower test 

scores and drop out more often. As adults, they earn less and are unemployed 

more.4

Women bear a disproportionate share of the cost of poverty. There has been a 

large gender poverty gap in every year since the official poverty standard was created in the 1960’s. In 2005 women were 45% more likely to be poor than men. As 

set out in the table we have compiled from the detailed poverty statistics on the 

Census Bureau Web site, the poverty gap persists even when factors such as age, 

work experience, education, or family structure are taken into account: aged women 


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5Pressman, Explaining the Gender Poverty Gap in Developed and Transitional Economies, 

Luxembourg Income Study Working Paper No. 243 (Sept. 2000), available at http:// 

www.lisproject.org/publications/liswps/243.pdf. This study defined poverty as an income less 

than 50% of the median income and was based on national income surveys conducted in the 

early 1990’s. 6Mia Hakovirta, The Income Sources Of Single Parents: A Comparative Analysis, Luxembourg 

Income Study Working Paper No. 282 (Nov. 2001), available at http://www.lisproject.org/ 

publications/liswps/282.pdf. 7Timothy Smeeding, Poor People in Rich Nations: The United States in Comparative Perspective, Luxembourg Income Study Working Paper No. 419 (Oct. 2005), available at http:// 

www.lisproject.org/publications/liswps/419.pdf. 8Timothy Smeeding, Public Policy and Economic Inequality: The United States in Comparative Perspective, Luxembourg Income Study Working Paper No. 367 (Feb. 2005), available at 

http://www.lisproject.org/publications/liswps/367.pdf. 9 Jane Waldfogel, ‘‘What Other Nations Do: International Policies Toward Parental Leave and 

Child Care,’’ The Future of Children 11(4): 99–111 (2001), available at http:// 

www.futureofchildren.org/information2826/informationlshow.htm?doclid=79378 10Legal Momentum, Working Women & Increasing Minimum Wage: A Down Payment on the 

Future of America’s Families, (2007), available at http://legalmomentum.org/legalmomentum/ 

2007/01/workinglwomenlincreasinglminiml1.php. 

are much more likely to be poor than aged men; women who work outside the home 

are much more likely to be poor than men who work outside the home; single mothers are much more likely to be poor than single fathers; at every educational level, 

women are much more likely to be poor than men with the equivalent education. 

Poverty Rates for Adult Women and Men in 2005 

Women Men 

Increased incidence of 

poverty among women 

compared to men 

All adults (18 or above) .... 12.9 8.9 45% 

Age 65 or above ................. 12.3 7.3 67% 

Single parents ................... 36.2 17.6 106% 

Worked ............................... 7.0 5.1 39% 

High School only ............... 14.3 9.4 52% 

College less than 4 yrs ..... 10.2 7.0 44% 

College 4 yr degree ........... 4.5 3.6 24% 

Poverty rates and the gender poverty gap are much higher in the United States 

than in other rich countries. One study found that the United States had the highest poverty rate for female-headed households among the 22 countries studied, 

30.9% compared to the 10.5% average for the group.5 The exceptionally high poverty 

rate for single mothers in the United States is not the result of below average work 

effort. In a study of single mothers’ employment rates (full or part time) in eight 

rich countries in the mid-1990’s, the 69% rate in the United States was the highest 

rate and was twenty percentage points higher than the 49% average in the other 

seven countries (United Kingdom, Australia, Netherlands, Germany, Norway, Finland, Denmark).6 In a study reporting on average annual hours worked by poor single parents around 2000, the 1,087 average hours of work for poor single parents 

in the United States was the highest total, and almost twice the 582 average in the 

other six countries (Canada, Netherlands, Austria, Germany, Belgium, Ireland).7

One reason for the exceptionally high poverty rates in the United States is that 

we invest less in social welfare programs: in 2000 the United States spent less than 

3% of Gross Domestic Product on social assistance to the non-elderly, and this was 

less than half the spending by Canada and Great Britain; less than a third of the 

spending by Germany, the Netherlands, and Belgium; and less than a fourth of the 

spending by Finland and Sweden.8 We have much less generous parental leave than 

other rich countries and far less public support for child care,9 and we have allowed 

our minimum wage to decline to such a low level that even year round full time 

work does not guarantee an above poverty income.10

Our Nation needs to take steps to reduce poverty and the gender poverty gap. We 

must find fiscally responsible ways to broaden the scope of our social welfare programs, including expanding parental leave and enacting paid leave legislation, increasing governmental and public support for child care, raising the minimum wage 


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1We appreciate the opportunity to provide this information to the Committee. For further 

information, see the attached full report: ‘‘The Economics of Poverty: Benefits to All 

Americans from Investments to Eliminate Poverty’’ or go to our Web site: 

www.DemocracyAndRegulation.com. We can also be reached by telephone: 1–978–283–0897 (office), or 1–978–335–6748 (mobile). 2 Blane, Brunner and Wilkinson, Health and Social Organization, pp. 60–61, Routledge, London and New York (1996). 

and indexing it for inflation, and of course continuing to combat sex and race discrimination. 

f 

Statement of Theo MacGregor and Jerrold Oppenheim 

Investing in the eradication of poverty in America could increase the resources of 

American households by an average of more than $18,000 a year, equivalent to a 

wage increase of more than 30 percent. Investments in the eradication of poverty 

would: 

• substantially reduce losses due to crime, a large fraction of which is caused by 

poverty; 

• increase incomes to people now unemployed or underemployed, which would result in new expenditures (including income and sales taxes) circulating through 

the economy and becoming income to others; 

• reduce the cost of health care, including the cost we all share of taking care 

of people who cannot afford health insurance or medicines; 

• virtually eliminate the need for societal supports to ameliorate the most extreme manifestations of poverty. 

A study conducted by the authors for Entergy Corporation found that, in the 

wealthiest country on Earth, more than 30 million households try to live on $26,640 

or less (60% of current median income), while the rest live on incomes averaging 

more than $60,000. In order to make it to that $26,640 income level, a family would 

need two adults working full time at 11⁄2 times the minimum wage. The average 

service job pays only twice the minimum wage, so there are many who earn less 

than that. Those folks, although working, are unable to afford the basics of food, 

shelter and medicine. And the buying power of the minimum wage is at its lowest 

in 50 years. For the poor, there is not enough income to heat and/or cool their 

homes, feed their children, and afford medical care. This discrepancy in incomes, as 

well as poverty itself, leads to real and growing costs. 

What makes poverty expensive to the rest of us is not social supports but rather 

its large but indirect costs, especially in health care, crime, and lost productivity. 

Indeed—middle-income supports—such as Medicare, social security, and income tax 

breaks—cost the average family about four times as much as do low-income supports such as homeless shelters and food. Eliminating the indirect costs of poverty 

in the simplest way—directly raising incomes to a low but decent level (60% of current median income)—would cost $12,047 per low-income household, or $397.2 billion per year, but would return almost four times the investment. In other words, 

the annual cost of eliminating poverty would be no more than about a quarter of 

the annual savings for the average non-low-income family. These calculations are 

conservative and leave out many benefits of eradicating poverty, such as the savings 

of increased preventive health care and the productivity lost due to underemployment (employment below skill level). 

How do people cope with skyrocketing prices and incomes that are not keeping 

pace? American low-income households are the best money-managers there are. But 

that is not enough. A study by the National Bureau of Economic Research shows 

that, in extreme weather, low-income families actually eat less—about ten percent 

less. Other studies show that another strategy is to skip needed medicines or forego 

medical care.1

We do not, however, propose simply raising incomes because, as we will explain, 

we think more targeted investments will have even larger payoffs. 

Health Care. For example, increasing health care coverage. Studies show that 

the health of individuals in society is strongly and inversely correlated with inequality of income. The U.S. is the wealthiest nation on earth—ever—but people live 

longer in Sweden and Norway, where incomes are more equal. Japan, which has the 

longest life expectancy in the world, also has among the narrowest of income distributions.2 People lower down the income scale in rich, developed countries have 

death rates two to four times higher than those nearer the top of the scale; and the 


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3 Richard G. Wilkinson, Unhealthy Societies: The Afflictions of Inequality, p. 54–56, 76, 

Routledge, London and New York (1996). 4Whitney W. Addington, ‘‘No Health Insurance? It’s Enough to Make You Sick—Scientific Research Linking the Lack of Health Coverage to Poor Health,’’ ACP Online, http:// 

www.acponline.org/uninsured/lack-fore.htm. 5 Joan Gralla, ‘‘U.S. Uninsured Health Care Cost Put at $125 Billion,’’ Common Dreams News 

Center, (Reuters, May 11, 2004). 6 Himmelstein, et al., ‘‘MarketWatch: Illness and Injury As Contributors to Bankruptcy,’’ 

Health Affairs (Feb. 2, 2005). 7Michelle Chen, ‘‘Poor ‘Share’ More Costs Under Medicaid ‘Cost Sharing’ Initiatives,’’ The New 

Standard, (June 3, 2005). 8 ‘‘Working without a Net: The Health Care Safety Net Still Leaves Millions of Low-Income 

Workers Uninsured,’’ (Families USA, April 2004). Other public health services include the State 

Children’s Health Assistance Program and local health clinics. 9 ‘‘Future Medicaid Growth is not Due to Flaws in the Program’s Design, but to Demographic 

Trends and General Increases in Health Care Costs,’’ (Center on Budget and Policy Priorities, 

Feb. 4, 2005). 10 ‘‘PHC4 FYI—Uninsured Stats Continue to Climb,’’ citing Kathleen Stoll, Director of Health 

Policy Analysis for Families USA, (Pennsylvania Health care Cost Containment Council, April 

2005), http:/www.phc4.org/reports/fyi29.htm 11 ‘‘PHC4 FYI—Uninsured Stats Continue to Climb,’’ (Pennsylvania Health care Cost Containment Council, April 2005), http:/www.phc4.org/reports/fyi29.htm; May 2004 report projecting 

2005. 12 Joan Gralla, ‘‘U.S. Uninsured Health Care Cost Put at $125 Billion,’’ Common Dreams 

News Center, (Reuters, May 11, 2004). 13S. Levitan et al., Programs in aid of the Poor, p. 274 (Johns Hopkins Press, 8th ed., 2003). 14Kevin Carey, ‘‘Education Funding and Low-Income Children: A Review of Current Research,’’ Center on Budget and Policy Priorities (Nov. 5, 2002). 15 Joan E. Ohl, ‘‘Head Start: Building on the Pillars of our Success’’ presented at the National 

Head Start Association Conference, May 28, 2003. 

greater the extremes between wealth and poverty, the greater the health differences.3 Economic equality is thus more important to health than wealth is. 

Poverty carries with it a much higher risk of illness. The Census Bureau recently 

reported that 47 million Americans have no health insurance at all, and as our 

study shows, the number with only partial insurance is about double that. Even the 

Census Bureau figure is almost 16 percent—a fraction that has been steady or rising steadily in every year but two of the last 18. Poor uninsured individuals often 

defer seeking out care when they are ill. As a result, their illness progresses and 

can become needlessly severe. They then require more expensive care, often through 

the emergency room or hospitalization.4 An estimate from the National Academy of 

Sciences puts the number who die each year because they lack health insurance at 

18,000.5 More than half of the bankruptcies in the U.S. are now due to medical expenses, even though a large majority (75.7 percent) had insurance at the onset of 

the illness that contributed to the bankruptcy.6

Medicaid served 38 million people in 2005,7 yet ‘‘more than eight in ten low-income, uninsured adults do not qualify for Medicaid or other public health coverage 

because their incomes are too high . . . .In 42 states, unless they are severely disabled, they are ineligible for Medicaid regardless of their income.’’ 8 In addition, 

most of the care provided through the Medicaid program goes to low-income elderly 

or seriously disabled people who are also covered under Medicare. Only 30 percent 

of Medicaid costs go to cover low-income children and pregnant women.9

In addition to all of the uninsured Americans, many more are ‘‘underinsured.’’ 

Nearly two million people under 65 spent more than 10 percent of their pre-tax income on health care.10 A Kaiser Commission study found that uninsured hospital 

services alone would cost $41 billion.11 The same study estimated total costs to be 

spent on health care for the uninsured came to $125 billion.12 Investing in adequate 

health care coverage for all Americans would eliminate these costs to society. 

Education. ‘‘Poverty prevention is more dependent on education than on any 

other factor, as is escape from poverty.’’ 13 Education is the primary means by which 

people can lift themselves out of poverty, yet the amount spent on education targeting low-income children falls far short of the need. Educating all of our people 

so that people can take jobs at higher skill levels would increase the money circulating throughout our economy. ‘‘The achievement gap between poor and non-poor 

children is well-documented. Low-income children consistently fall behind their 

peers in test scores, graduation rates, college enrollment, and other measures of academic success.’’ 14 Head Start has enrolled over 20,000,000 low-income children since 

its inception as a summer program in 1965.15 Long-term follow-up studies on a 


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16Oden, et al., ‘‘Into Adulthood: A Study of the Effects of Head Start’’ (High/Scope Educational 

Research Foundation, 2005). 17 J. Oppenheim and T. MacGregor, ‘‘The Economics of Education: Public Benefits of HighQuality Preschool Education for Low-Income Children’’ (Entergy Corp., n.d. [2002]). 18Minimum wage is $5.15 per hour. Average hours worked for a service worker is 32.4 hours a week or 1684.8 hours per year. Bureau of Labor Statistics. The total income would be $26,030. 19 $26,640 in 2004. U.S. Census. 20David Mericle, ‘‘Profiting from Poverty: The U.S. Prison-Industrial Complex,’’ Http:// 

www.impactpress.com/aticles/febmar01/prisonind020301/html. 21http://www.ncpa.org/pi/crime/pd041100e.html, citing David A. Anderson, ‘‘The Aggregate 

Burden of Crime,’’ Journal of Law and Economics (October 1999). 22http://www.ncvc.org/ncvc/main.aspx?dbName=DocumentViewer&DocumentID=38710, citing 

Miller et al. (1996). Victim Costs and Consequences: A New Look. Washington, DC: National 

Institute of Justice, U.S. Department of Justice. Online: http://www.ncjrs.org/pdffiles/victcost.pdf. 23http://www.ncvc.org/ncvc/main.aspx?dbName=DocumentViewer&DocumentID=38710. 24www.ojp.usdoj.gov/bjs/glance/tables/exptyptab.htm. 

number of these children have shown that Head Start participants achieve greater 

school success and avoid crime as they grow.16

In an earlier study for Entergy, Oppenheim and MacGregor found that educating 

low-income children when they are very young returns about $9 for every dollar 

spent. Benefits include children staying in school through high school, developing 

a work ethic, and getting and keeping better jobs, with the commensurate rise in 

pay and associated income taxes, along with the multiplier effect of putting more 

money in the economy.17

Employment. Unemployment is devastating for the family depending on a breadwinner to pay the rent and put food on the table. Underemployment is also difficult 

for families in today’s economy, where two full-time salaries at one-and-a-half times 

the minimum wage18 just make it to the poverty cut-off of 60 percent of median income.19 Almost half of the prisoners in the U.S. are unemployed when they’re arrested, and 70% are functionally illiterate. After release from prison, they face a 

wage penalty of as much as 12% for longer than 8 years. So the cycle continues: 

low wages, low self-esteem, more crime. The cost of our judicial, correctional, and 

security systems could be substantially reduced by removing the desperation of unemployment that causes a substantial fraction of crime. 

Unemployment and underemployment push families into poverty. Families falling 

into poverty are costly to the Nation because of the increased costs they cause of 

crime, health care, and social services. Thus, as difficult as unemployment and 

underemployment are for the families that experience them, unemployment and 

underemployment are costly drags on the economy that affect everyone. Some of the 

costs that could be avoided by reducing unemployment and underemployment are 

taxpayer-financed social supports such as unemployment compensation, job training, 

and retraining. In addition, unemployed and underemployed persons pay less in 

taxes than if they were fully employed. They also spend less on job-producing goods 

and services—the so-called multiplier effect. 

Crime. In societies where inequality of income prevails, violence is more prevalent than in more equal societies, and the poor are more likely to commit crimes 

than the wealthy. During the past 25 years, the population of people convicted of 

criminal activity in the U.S. rose from 1.8 million to 6.3 million—with over two million in prison and another four million on probation, the highest per capita incarceration rate in the world.20 With more money from full employment at decent wages, 

people are less likely to commit crimes, saving society costs of the judicial system, 

police, corrections facilities, and security systems. Added to these costs are the enormous costs to victims, both persons and businesses. 

The total net burden of crime in the United States is estimated to be $1 trillion 

annually, or $4,118 for every U.S. resident.21 According to The National Center for 

Victims of Crime, in 2002, crime was estimated to create $105 billion in medical expenses, lost earnings, and costs for victim services. Including intangible costs, such 

as pain and suffering and a reduced quality of life, brought the estimated cost of 

crime to victims to $450 billion annually.22 The costs to society of incarcerating 

criminals are almost as staggering. Recent estimates put the cost at $38 billion annually.23 The costs of police and the judicial system at the Federal, state and local 

levels add another $110 billion.24 The vast majority of prisoners are poor, but even 

attributing only 50 percent of crime to poverty and its effects results in a cost to 

society from crime committed by poor people of nearly $661 billion a year. Saving 

one child from a life of crime can save society around $2 million. Providing full employment at a living wage, with health and other benefits, can reduce crime and 

save society an estimated $661 annually. 


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25 ‘‘Overview of Homelessness In America’’ National Student Campaign Against Hunger and 

Homelessness, http://www.studentsagainsthunger.org/hunger. 26 Jay Shaft, ‘‘U.S. Homelessness and Poverty Rates Skyrocket,’’ (Information Clearing House, 

July 7, 2003), http://www.informationclearinghouse.info/article4305.htm. 27 ‘‘The State of the Nation’s Housing’’ (Harvard University Joint Center for Housing, June 

13, 2005) http://www.jchs.harvard.edu/media/son2005lfactlsheet.pdf. 28 ‘‘A Plan, Not a Dream: How to End Homelessness in Ten Years,’’ citing research by Dr. 

Yvonne Rafferty of Pace University (National Alliance to End Homelessness, 2000), http:// 

www.endhomelessness.org/pub/tenyear/cost.htm. 29 ‘‘Hunger, Poverty and Nutrition Policy: Childhood Hunger, Childhood Obesity’’ (Tufts University 1995–2005), http://nutrition.tufts.edu/consumer/hunger/hungerlandlobesity.html. 30 ‘‘Overview of Hunger In America’’ National Student Campaign Against Hunger and Homelessness, http://www.studentsagainsthunger.org/hunger. 31 Id. 32 Industry Solutions, The CBE Group, http://www.cbegroup.com/industry/utilities.aspx. 33 ‘‘Utility Collections Best Practice: Theory Into Practice’’ (Peace Software White Paper, May 

2005). http://www.peace.com/industry-watch/whitepapers/Peace-Collections-Best-Practice.pdf 

This paper also states that total utility bad debt written off in the U.S. each year is as high 

as $1.7 billion. This study used the more conservative $1 billion. 

Housing. Homelessness exploded in the 1980s. Yet current federal spending on 

housing assistance programs targeted at low-income populations is less than 50 percent of 1976 spending levels.25 More than 3.5 million Americans are affected by 

homelessness for at least part of the year each year. On any given day, at least 

840,000 people in the United States are homeless—nearly 40 percent of them children. Over 40 percent of homeless persons are eligible for disability benefits, but 

only 11 percent actually receive them. Most are eligible for food stamps, but only 

37 percent receive them. Most homeless families are eligible for welfare benefits, but 

only 52 percent receive them.26

More than one in eight households pay more than 50 percent of their income for 

housing, and another 2.5 million live in over-crowded or severely inadequate housing.27 These factors contribute to interrupted educations, lack of adequate health 

care, persistent hunger, and higher crime rates. Children living with families that 

are homeless attend school less frequently, score lower on standardized tests, are 

less likely to graduate from high school and become productive members of society.28

Homelessness can both cause and result from serious health care issues. Homelessness can exacerbate drug and alcohol addictions. Other major causes of homelessness are unemployment or underemployment; high housing costs, including rising utility bills; domestic abuse; mental illness and substance abuse, with lack of 

treatment services; cuts in public assistance; and the general state of the economy. 

The study calculates the costs of homeless shelters, public housing, and public subsidies to private housing (including tax expenditures) at $69.1 billion. 

Hunger. In addition to being homeless, too many Americans are hungry. An estimated 14 million American children live in homes where there is not enough food.29

Bread for the World reported that 35 percent of Americans had to choose between 

food and rent, while 28 percent had to choose between medical care and food, in the 

first half of 2004.30 Other studies show that money devoted to food by families is 

typically the first to be sacrificed. Families will often pay their fixed payments first, 

such as rent and utilities, rather than pay for food.31 The direct cost to other Americans to provide food for hungry people includes: food grants from non-governmental 

food pantries ($2.3 billion); the Federal Women, Infants and Children (WIC) program ($5.2 billion); Food Stamps ($27.2 billion in 2004); school and other child nutrition programs ($11.9 billion); and other food assistance ($300 million), for a conservative $46.9 billion. 

Energy. Poor people cannot afford the full cost of heating and lighting their 

homes. Utilities, governments, and social service agencies have long assisted lowincome ratepayers in paying their bills through such programs as the Low-Income 

Home Energy Assistance Program (LIHEAP), charitable fuel funds, levelized billing, 

discounts, home weatherization, energy efficiency, energy usage education, and arrearage forgiveness/debt management. Nevertheless, utility bad debt costs around 

$1 billion annually.32 American utilities, through their ratepayers, paid an average 

of $3 per customer to collect bad debt and, in some cases, the cost was as high as 

$10.33 If all Americans lived in weatherized and energy efficient homes, and had 

the income to pay their full share of utility bills, all other ratepayers would save 

nearly $6 billion in poverty costs, including fuel assistance, lifeline and other rate 


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34LIHEAP Clearinghouse, National Energy Assistance Directors’ Association (NEADA), National Center for Appropriate Technology (NCAT), National Community Action Foundation 

(NCAF). 35Legal Services Corp. fy2005 appropriation; ‘‘Documenting the Justice Gap in America’’ Legal 

Services. Corp, Sept. 2005; Tax Policy Center—Urban Institute and Brookings Inst. Joint venture from OMB; http://www.whitehouse.gov/omb/budget/fy2006/treasury.html; U.S. Dept. of 

Health and Human Services—Office of Family Assistance; Center on Budget and Policy Priorities; http://www.ssa.gov/policy/docs/statcomps/ssilmonthly/2005–11/table01.html; National Center for Appropriate Technology (NCAT). 36S. Levitan et al., Programs in aid of the Poor at pp. 43, 262 et seq. (Johns Hopkins Press, 

8th ed., 2003). 37See generally http://www.sixstrategies.org/includes/productlistinclude.cfm?strProductType= 

resource&searchType=type&strType=self-sufficiency%20standard. 38 E.g., D.Pearce and J. Brooks, ‘‘The Self-Sufficiency Standard for Georgia’’ (Women’s Policy 

Group, 2002). 39Self-sufficiency income required for a single parent with two children in Boston is $51,284. 

D.Pearce and J. Brooks, ‘‘The Self-Sufficiency Standard for Massachusetts’’ (Women’s Educational and Industrial Union, 2003). Massachusetts state median income in 1999 was $50,502. 

http://quickfacts.census.gov/qfd/states/25000.html. 40Self-sufficiency income required for a single parent with two children in Atlanta is $37,982. 

D.Pearce and J. Brooks, ‘‘The Self-Sufficiency Standard for Massachusetts’’ (Women’s Educational and Industrial Union, 2003). Georgia median income in 1999 was $42,433. http:// 

quickfacts.census.gov/qfd/states/13000.html. 

assistance; weatherization and efficiency costs; and the costs of late and unmade 

payments, such as service disconnections.34

Other Social Services. Some additional anti-poverty programs and initiatives 

for which the average non-low-income household contributes, and which are not detailed above but are included in the total estimate of the cost of poverty, include 

the following: 

• Legal Services and other civil legal aid—$573 million; • Transitional Aid to Needy Families (TANF)—$27.5 billion, federal and states 

combined; • Supplemental Security Income (SSI)—$42.6 billion; • Earned Income Tax Credit (EITC)—$36.7 billion; • Services to low-income seniors—$1.830 billion; • Other social services—$2.673 billion; • Community Services Block Grants—$636.8 million; and • Community Development Block Grants—$4.116 billion.35

INVESTMENT NEEDED TO ELIMINATE POVERTY 

The maximum investment needed to eradicate poverty in the United States is an 

amount that would raise the income of every low-income household to the minimum 

income required to be a non-low-income household. As explained above, there are 

investments that are more effective, as well as more cost-effective, than cash transfers to eradicate poverty—such as education, job training, nutrition, housing, and 

health care.36 But even paying people directly to eradicate poverty is considerably 

less than the annual benefit that it would achieve by reducing the costs of crime, 

health care, unemployment and underemployment, and transfers and other current 

investments in low-income families. 

Such investment would not even come close to raising incomes to the self-sufficiency income standard.37 These are very detailed calculations, usually done on a 

county-by-county, state-by-state basis that take into account actual expenditures 

necessary to live a basic life in various family configurations. Bare bones budgets 

for a working family are calculated to include housing, child care, food, transportation, health care, clothing, household items, and taxes—no recreation, entertainment, or savings.38 In particularly costly locales, such as along the two ocean coasts, 

self-sufficiency incomes can be as high as a state’s median income, as, for example, 

in Boston.39 However, even in Atlanta, the self-sufficiency requirement for such a 

family is 90 percent of the state’s median income.40

Avoidable annual costs of poverty are described in the full report and fall into four 

broad categories. These are costs to the society at large that are caused by the existence of poverty and do not include the substantial costs to low-income households 

themselves. 

Costs of criminal activity, including property losses, costs of the judicial and correctional system, and security costs; 

Costs of health care, including costs that are preventable by improving health 

care and costs of low-income health care that are spread through the society; 

Costs of unemployment and underemployment, including unemployment compensation, job training, and the multiplier effect of lost economic activity; 


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41 At a multiplier of 2, the impact of an increase in income is doubled through the economy. 

This is accounted for in the report only with regard to unemployment. 42 J. Oppenheim and T. MacGregor, ‘‘The Economics Of Low-Income Electricity Efficiency Investment’’ (Entergy, 2001, rev. 2002). 43 J. Oppenheim and T. MacGregor, ‘‘The Economics of Education: Public benefits of HighQuality Preschool Education for Low-Income Children’’ (Entergy, n.d. [2002]). 44 E.g., J. Abramson, M.D., Overdosed America at pp. 49, 166 (Harper Perrennial 2005). 45 E.g., ‘‘Millions of eligible children do not receive free or reduced price lunches.’’ S. Levitan 

et al., Programs in aid of the Poor at p. 122 (Johns Hopkins Press, 8th ed., 2003). ‘‘Whereas 

[the job training program phased out in 2000] ended with sufficient funds to enroll approximately 1 percent of those who were eligible for its services, [its replacement program] adult ratio 

approaches the infinitesimal.’’ Id. at p. 234. Housing programs are inadequately funded and do 

not pay enough in many markets to keep housing costs below 40 percent of income. ‘‘They simply need more resources to meet the needs of those eligible by cutting interminable waiting 

lists.’’ Id. at p. 272. 46 E.g., J. Fraser Mustard, ‘‘Health and social capital’’ in D. Blane et al., Health and Social 

Organization, at p. 306 (Routledge, 1996). 47 E.g., M. Wadsworth, ‘‘Family and education as determinants of health,’’ in D. Blane 

et al., Health and Social Organization, at pp. 154–156 (Routledge, 1996); J. Fraser Mustard, 

‘‘Health and social capital’’ in id. at pp. 304–306; V. Lazariu-Bauer et al., ‘‘A Comparative 

Analysis of Effects of Early Versus Late Prenatal WIC Participation on Birth Weight: 

NYS, 1995,’’ 8 Maternal and Child Health Journal 77 (2004), www.springerlink.com/ 

(baf1qf55lma12mnqiwgv13qi) / app / home / contribution.asp?referrer=parent&backto=issue,5,8; 

journal,9,38;linkingpublicationresults,1:105600,1; USDA, Economic Research Service, Effects of 

Continued 

Costs of current anti-poverty investments, including costs for social services, elderly services, income supports, affordable housing, food, education, energy and utility supports, and block grants for community services and community development. 

As substantial as these avoidable costs are, they are significantly understated. For 

example, this study conservatively did not include: 

• many state expenditures; • most non-governmental expenditures; • increased risks of damage from fire caused by inadequate housing; • increased pressure on energy prices caused by energy waste in leaky homes; • increased property tax receipts caused by needed property improvements; • increased borrowing costs caused by bad debt and slow payments of low-income 

consumers; and 

• increased vulnerability to disasters such as hurricanes, causing additional requirements for disaster relief. 

An additional benefit of eradicating poverty not fully quantified is the increased 

economic activity caused by the multiplier effect of increased income.41

These costs are shared by all non-low-income households, the number and median 

income of which are derived from the U.S. Census. From these data, it is possible 

to compute the annual per-household burden of poverty: 

It is also possible to compute a benefit:cost ratio on the assumption that investments are made to close the income gap in order to eradicate poverty and thus 

eliminate the avoidable costs of poverty described above. 

Conclusion. Investments in low-income Americans are among the most cost-effective investments we can make. Simple cash payments to low-income families may 

be among the least cost-effective investments against poverty in the long-run. Yet, 

as we show above, even simple cash payments sufficient to lift all Americans out 

of poverty would immediately be returned almost fourfold. Yet, as we have shown 

elsewhere, there are investment strategies on behalf of low-income families with 

even greater potential payoffs. For example, investing in weatherization and installing efficient appliances in low-income homes returns at least seven times the investment.42 Investing in the education of three-and-four-year-olds returns nine times 

the investment.43 Others have shown that investments in preventive health care 

earns a positive return.44 Additional study should confirm the economic wisdom of 

other investments in low-income families. Indeed, in many cases, the science is established and the political decision has been made to create a program. All that remains to do in those cases is to adequately fund the existing programs.45

Weatherization, Head Start, and preventive health care are examples of underfunded cost-effective investment opportunities that have already been mentioned. 

Another example is childhood nutrition. It is well established that a nutritious 

breakfast and lunch determines a child’s ability to learn, with significant implications for later success in life,46 just as it is well established that nutrition during 

the first two years of life, as well as of pregnant mothers, has an enormous impact 

on later health and intellect.47 That is why there is a successful program to provide 


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Food Assistance and Nutrition Programs on Nutrition and Health, Volumes 1–4, and Nutrition 

and Health Characteristics of Low-Income Populations, volumes 1–4, www.ers.usda.gov/ 

Publications/fanrr19–1/. 48www.fns.usda.gov/wic/ 49 E.g., The ‘‘School Breakfast Program provides nutritious breakfasts to promote learning 

readiness and healthy eating behaviors.’’ www.fns.usda.gov/cnd/Default.htm. 50 ‘‘Some form of postsecondary career preparation has become essential to earning a familysustaining income. . . . *** . . . skill training can be accomplished through apprenticeship or employment with an employer committed to substantial incumbent training . . . few will escape poverty or near-poverty in the future without setting foot on a substantial career ladder and following it upward.’’ S. Levitan et al., Programs in aid of the Poor at pp. 208–209 (Johns Hopkins 

Press, 8th ed., 2003). See generally chapters 5–6. ‘‘Poverty prevention is more dependent on education than on any other factor, as is escape from poverty.’’ Id. at p. 274. 51 ‘‘Marriage is unlikely to occur or last without [affordable housing].’’ S. Levitan et al., Programs in aid of the Poor at p. 271 (Johns Hopkins Press, 8th ed., 2003). 

adequate nutrition to infants and pregnant mothers.48 Similarly, this is the basis 

for the free and reduced price school meal program.49

Later in life, effective vocational training and re-training can turn a marginal 

worker into an economic success.50 Investing in decent housing provides the first 

prerequisite for a homeless family to even participate in the economy.51 All are costeffective investments in low-income families that could pay huge dividends if expanded. 

It is time for America to invest in eradicating poverty for the benefit of all Ameri- cans. 

f 

Wisconsin Community Action Program Association 

Madison, Wisconsin 53714 

January 24, 2007 

Chairman Rangel: 

The Wisconsin Community Action Program Association (WISCAP) is the statewide 

voluntary association of Wisconsin’s 16 Community Action Agencies (CAAs) and 

three special purpose agencies with statewide anti-poverty missions. On behalf of 

our membership, we thank you for calling this very important hearing on the economic and social costs of poverty. 

For over forty years, Community Action has been a catalyst for change and a vital 

part of the effort to eliminate poverty in Wisconsin and throughout the United 

States. CAAs are independent, nonprofit organizations that are community-based 

and locally controlled by boards composed of one-third people experiencing poverty, 

one-third local elected officials, and one-third community and business leaders. All 

members of WISCAP are nonprofit organizations committed to creating economic opportunities and community-based solutions to poverty. 

In 2005 over 428,000 individuals living in Wisconsin built assets, developed 

knowledge and skills, increased economic self-sufficiency, or met basic needs 

through the resources offered by Community Action. Our funding comes from an 

array of public and private sources, but critical core support is provided by the Community Services Block Grant (CSBG). We strongly support reauthorization and full 

funding of CSBG, without which Community Action would lose significant capacity 

to assist low-income people and their communities. 

We are appreciative of this opportunity to discuss the costs and consequences of 

poverty and believe that our organizations have the successful track record, involvement of the poor, and credibility in our communities to participate in this discussion 

and play an even larger role in eliminating poverty in our Nation. Poverty is the 

cause of unnecessary and preventable suffering among millions of Americans of all 

ages, and the economic and social costs are enormous. 

We believe that all Americans are vulnerable to poverty and that the costs and 

consequences of poverty have significant effects on everyone, whether poor or not. 

Over the period 2003–2004, Wisconsin had the highest growth rate of people living in poverty in the United States. About 600,000 people live in poverty in our 

state. Please refer to our Web site, www.wiscap.org for our report ‘‘Poverty Matters: 

Facing Poverty in Wisconsin’’ and more about the work of Community Action. We 

believe that poverty matters and that we can do something about it. 

Consequences to Children 

The costs of child poverty to society in terms of lost potential, unnecessary suffering, reduced achievement, and other social ills are staggering. Children from lowincome families are more likely to: 


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• suffer from hunger or inadequate nutrition, 

• develop learning disabilities, 

• have untreated vision or dental problems, 

• become the victim of child abuse or neglect, 

• be expelled from school or repeat a grade, 

• attend inferior schools with fewer resources and less-skilled teachers, and 

• grow up with less hope and lower expectations. 

These concrete hardships can contribute to: 

• lower verbal and math performance, 

• higher risk of dropping out of school, 

• reduced likelihood of going to college, 

• more involvement in juvenile crime, and 

• lower skills upon entering the workforce. 

Economic Costs and Consequences 

• Our economy suffers when businesses have difficulty finding enough skilled 

workers to compete globally. Poverty greatly affects people preparing for and 

entering the workforce. Children who grow up with a poor education, poor nutrition, and poor health care are much less likely to escape poverty. Combined 

with unstable families or neighborhoods and faced by a chronic lack of opportunities, these children of poverty are much less likely to join the workforce with 

skills that make our economy stronger. We all pay the price. It is imperative 

that tomorrow’s workers be well educated and well trained. 

• A growing number of seniors are supported by fewer workers earning less 

money. Wisconsin’s population is growing older, and the proportion of younger 

workers is shrinking. Social Security and other programs that assist seniors will 

have to be funded by a diminishing proportion of workers. But based on demographic and economic trends, a growing percentage of those future workers will 

be low-income. Addressing poverty today in earnest will create a future in 

which workers are prepared to pay taxes and contribute their skills. 

Health Consequences and Costs 

Health costs are soaring, and that affects all of us. Some of the costs stem from 

the direct and indirect effects of poverty on the health of low-income people. Due 

to inadequate nutrition, stressful or dangerous environments, lack of health care, 

and other factors poverty is associated with higher rates of: 

• heart disease, asthma, diabetes, hypertension, and cancer, 

• injury through violent crime, 

• premature and underweight births, and infant mortality, 

• lead poisoning, and dental problems. 

These health problems contribute to the soaring cost of health insurance and medical care. Insurance premiums rise when hospitals must pass along costs associated 

with increased use of emergency rooms by those who have no insurance. Out of necessity, people in poverty often put off going to a doctor or dentist until a condition 

worsens and becomes an emergency. It is more cost-effective to invest upfront by 

offering good, affordable, preventive care rather than paying after the problems 

move to a crisis stage. 

One study found that Wisconsin families who have their insurance through their 

private employers pay, on average, $739 more annually in premiums due to the cost 

of health care for the uninsured. (Families USA 2005: ‘‘Paying a Premium: The 

Added Cost of Care for the Uninsured,’’ Washington, D.C., p. 4) 

Women in poverty are much more likely to receive poor prenatal care and inadequate nutrition and to deliver underweight or premature babies, which require intensive medical care and incur long-term costs. These costs, borne by insurance providers and passed along to those who pay for health insurance, have been estimated 

at $500,000 for each such birth. 

Other Social and Economic Consequences and Costs 

• Loss of potential and participation. One of the greatest tragedies of poverty is 

the loss of human potential. Growing up in poverty causes many individuals to 

fall short of attaining their full potential, depriving them and their communities 

of their gifts, talents, and contributions. People in poverty often feel isolated 

and marginalized. They are less likely to vote or participate in civic or cultural 

activities. We must recognize the strengths and gifts of the poor and find ways 

to help them have hope for a better future. 


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• Crime and the costs of prisons and police. Crime and incarceration rates correlate with poverty. Although the vast majority of low-income people are lawabiding, children and youths who grow up in poverty are statistically more likely to become involved in crime. This is a powerful argument for upfront investment in education from early childhood throughout the school years, for community building and economic development in low-income neighborhoods, and for 

mentoring, supportive youth activities, and other measures that counteract the 

degrading effects of poverty. 

• Racial discrimination and structural/institutional racism. People of color suffer 

from much higher rates of poverty and many of its consequences. Gaps in educational achievement, incarceration rates, ownership of assets, and many other 

inequities exacerbate racial divisions in our communities and present real barriers to self-sufficiency for many people of color. 

• Family instability. Families in poverty often experience high levels of stress as 

parents juggle one or more low-paying jobs, child-care, getting around without 

reliable transportation, and other responsibilities—while struggling to pay the 

bills. A problem that would be minor for others, such as a sick child or the 

breakdown of a car, can be a major crisis for a parent in poverty. 

WISCAP’s Principles 

All people of Wisconsin and the United States should have these basic necessities 

of life: 

• Economic opportunity—All should have access to the opportunities and skills 

they need to obtain employment that offers health benefits and wages sufficient 

to lift them and their families out of poverty. All should have access to the tools 

they need to build savings and assets for a secure future. 

• Affordable housing and energy—All should have decent, safe, sanitary, affordable, and energy-efficient housing. Those with accessibility needs should have 

those needs met. 

• Food security—All should be able to afford enough nutritious food. 

• Health and safety—All should have access to dependable, affordable health 

care—physical, mental, and dental—and all should live free from violence. 

• A voice in the community—All should have the opportunity to contribute to a 

better neighborhood and nation through civic participation and community involvement. 

• Education—All should have access to quality, affordable education throughout 

their lives so they have opportunities to develop skills and their personal potential. 

• Human dignity—All deserve respect as human beings and should have equal 

opportunity in the basic aspects of life, regardless of income, wealth, race, ethnicity, gender, disability, age, religion, or sexual orientation. 

There was a great deal of lip service given to the issue of poverty when Americans 

saw the images of the poor after the tragedy of Hurricane Katrina. But little has 

changed for the poor throughout our country since that time. We in Community Action have struggled alongside the poor for over 40 years, and we are ready to work 

with our national, state and local leaders to increase the focus on eliminating poverty for all Americans. As one step, we strongly support the reauthorization and full 

funding of the Community Services Block Grant, which provides critical core funding for the Nation’s Community Action Agencies. 

We must not accept the existence of poverty as something normal or routine. We 

believe it is possible, with all of our combined talents and resources, to eliminate 

poverty and increase the opportunities available to all of the people of Wisconsin 

and the United States. We believe that there are cost-effective solutions to poverty. 

Through efforts that create jobs that pay living wages with benefits, along with programs that emphasize strategies like prevention, skill development, access to health 

care, affordable housing, and community economic development, we can transform 

our common future to eliminate poverty. It is morally imperative and in our personal, social, and economic interests to do so. 

Respectfully Submitted, 

Richard Schlimm 

Executive Director 


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Members of the Wisconsin Community Action Program Association 

ADVOCAP, Inc. 

Fond du Lac, WI 

CAP Services, Inc. 

Stevens Point, WI 

Central Wisconsin Community Action Council, Inc. 

Wisconsin Dells, WI 

Community Action Coalition for South Central Wisconsin, Inc. 

Madison, WI 

Community Action, Inc. 

Janesville, WI 

Couleecap, Inc. 

Westby, WI 

Indianhead Community Action Agency, Inc. 

Ladysmith, WI 

Lakeshore CAP, Inc. 

Manitowoc, WI 

NEWCAP, Inc. 

Oconto, WI 

North Central Community Action Program, Inc. 

Wisconsin Rapids, WI 

Northwest Wisconsin Community Services Agency, Inc. 

Superior, WI 

Racine/Kenosha Community Action Agency, Inc. 

Racine, WI 

Social Development Commission, Inc. 

Milwaukee, WI 

Southwest Wisconsin Community Action Program, Inc. 

Dodgeville, WI 

West CAP, Inc. 

Glenwood City, WI 

Western Dairyland Economic Opportunity Council, Inc. 

Independence, WI 

Coalition of Wisconsin Aging Groups, Inc. 

Madison, WI 

Foundation for Rural Housing, Inc. 

Madison, WI 

United Migrant Opportunity Services, Inc. 

Milwaukee, WI 

f 

Statement of Zero To Three Policy Center 

Chairman Rangel and Members of the Committee: 

I am pleased to submit the following written testimony on behalf of ZERO TO 

THREE. My name is Matthew Melmed. For the last 12 years I have been the Executive Director of ZERO TO THREE, a national non-profit organization that has 

worked to advance the healthy development of America’s babies and toddlers for 

close to 30 years. I would like to start by thanking the Committee for its interest 

in examining the economic and societal costs of poverty and for providing me the 

opportunity to discuss the interaction between poverty and the healthy development 

of our Nation’s infants and toddlers and how federal policy can help address the 

issues raised. 

Some may wonder why babies matter in public policy. Surely they are the province of their parents or caregivers. Yet, public policies often affect very young children, policies that are sometimes created with little thought as to their consequences for this age group. In addition, many policies focus on the effects of ignorVerDate Nov 24 2008 09:12 Dec 09, 2010 Jkt 034734 PO 00000 Frm 00133 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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iShonkoff, Jack and Phillips, Deborah. 2000. From neurons to neighborhoods: The science of 

early childhood development. Washington, DC: National Academy Press. ii Ibid. 

iii Ibid. iv Ibid. vDouglas-Hall, Ayona; Chau, Michelle; and Koball, Heather. 2006. Basic facts about low-income children: Birth to age 3. September 2006. http://www.nccp.org/media/ecp06bltext.pdf 

(accessed February 5, 2007). vi Ibid. vii Ibid. viii Ibid. ix Ibid. x National Center for Children in Poverty. 1999. Poverty and Brain Development in Early 

Childhood. http://www.nccp.org/media/pbd99-text.pdf (accessed February 6, 2007). 

ing the needs of infants and toddlers, for example, by having to address the cognitive gaps between low-income preschoolers and their more affluent peers or providing intensive special education services for problems that may have begun as 

much milder developmental delays left untreated in a young baby. Mr. Chairman, 

my message to you is that babies can’t wait—we know that early intervention and 

prevention works best and we know what works to promote healthy development 

in young children. 

The early years create an important foundation for later school and life success. 

We know from the science of early childhood development that infancy and 

toddlerhood are times of intense intellectual engagement.i During this time—a remarkable 36 months—the brain undergoes its most dramatic development, and children acquire the ability to think, speak, learn, and reason. All babies and toddlers 

need positive early learning experiences to foster their intellectual, social, and emotional development and to lay the foundation for later school success. These years 

may be even more critical for young children living in poverty. 

One of the most consistent associations in developmental science is between economic hardship and compromised child development.ii The malleability of young 

children’s development and the overwhelming importance of the family (rather than 

school or peer) context suggest that economic conditions in early childhood may be 

far more important for shaping children’s ability, behavior, and achievement than 

conditions later in childhood.iii Lower-income infants and toddlers are at greater risk 

than middle to high-income infants and toddlers for a variety of poorer outcomes 

and vulnerabilities such as later school failure, learning disabilities, behavior problems, mental retardation, developmental delay, and health impairments.iv Babies 

and toddlers living in high-risk environments need additional supports to promote 

their healthy growth and development. 

Congress must consider the unique needs of very young children and their families who are living in poverty. Policies should help attack the intergenerational cycle 

of poverty by laying the foundations for early learning and improving prospects of 

later school success on the part of the children. We know that intervening early in 

the life of a child at-risk for poor development can help minimize the impacts of 

these risks. We must ensure that infants, especially those living in poverty, have 

time at home with their parents in the first months of life. We must also ensure 

that infants and toddlers living in poverty have access to quality, developmentally 

appropriate early learning programs such as Early Head Start or quality child care 

to help ensure that they are ready for school. 

Portrait of Infants and Toddlers Living in Poverty 

There are more than 12 million infants and toddlers living in the United States. 

Twenty-one percent—2.6 million—live in poor families.v After a decade of decline, 

the percentage of children under the age of 3 living in low-income families is on the 

rise again.vi Between 2000 and 2005, the number of children of all ages who were 

poor increased by 11 percent.vii During the same period, the number of infants and 

toddlers who were poor increased by 15 percent.viii It is important to note that young 

children are disproportionately impacted by economic stress. Forty-three percent of 

children under the age of 3—5.2 million—live in low-income families (defined as 

below 200 percent of poverty).ix

The environmental stresses to which these children are more likely to be exposed, 

such as inadequate nutrition, substance abuse, maternal depression, exposure to environmental toxins, and trauma/abuse can all negatively influence their development.x For example, the existence of maternal depression and other adult mental 

health disorders can negatively affect children if parents are not capable of providing consistent sensitive care, emotional nurturance, protection and the stimulaVerDate Nov 24 2008 10:02 Dec 10, 2010 Jkt 034734 PO 00000 Frm 00134 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\34734.XXX GPO1 PsN: 34734

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xi Cohen, Julie., Onunaku, Ngozi., Clothier, Steffanie., and Poppe, Julie. 2005. Helping young 

children succeed: Strategies to promote early childhood social and emotional development. Washington, DC: National Conference of State Legislatures and ZERO TO THREE. xiiM. O’Hara, Postpartum Depression: Causes and Consequences (New York, NY: SpringerVerlag Inc., 1994). xiii Early Head Start Evaluation and Research Project, Research to Practice: Depression in the 

Lives of Early Head Start Families (Washington, DC: U.S. Department of Health and Human 

Services, Administration for Children and Families, January 2003). xivShonkoff, Jack and Phillips, Deborah. 2000. From neurons to neighborhoods: The science of 

early childhood development. Washington, DC: National Academy Press. xv Ibid. xvi Ibid. xvii Ibid. 

tion that young children need.xi Maternal depression, anxiety disorders, and other 

forms of chronic depression affect approximately 10 percent of mothers with young 

childrenxii—this number is even higher for families in poverty. In fact, findings at 

enrollment from the Early Head Start Research and Evaluation Project indicate 

that nearly half (48 percent) of mothers reported enough depressive symptoms to 

be considered clinically depressed.xiii Early and sustained exposure to the aforementioned risks can influence the physical architecture of the developing brain, preventing babies and toddlers from fully developing the neural pathways and connections that facilitate later learning. 

The Importance of Unhurried Time 

Welfare to work policy is an area where the importance of infant and toddler development may not be so obvious, but is a factor that should be given great weight. 

The need for infants, especially, to spend time with their parents should be balanced 

against society’s goal of moving adults quickly into the workforce. Often, when this 

need is considered, it is only in the context of the expense of providing child care 

for this group. 

According to a groundbreaking report released by the National Academies of 

Science, From Neurons to Neighborhoods: The Science of Early Childhood Development, parents structure the experience and shape the environment within which a 

young child’s early development unfolds.xiv Infants and toddlers need unhurried 

time with their parents to form the critical relationships with them that will serve 

as the foundation for social, emotional, and cognitive development. The better parents know their children, the more readily they will recognize even the most subtle 

cues that indicate what the children need to promote their healthy growth and development. For example, early on infants are learning to regulate their eating and 

sleeping patterns and their emotions. If parents can recognize and respond to their 

baby’s cues, they will be able to soothe the baby, respond to his cues, and make the 

baby feel safe and secure in his new world. Trust and emotional security enable a 

baby to explore with confidence and communicate with others—critical characteristics that impact early learning and later school readiness. 

At-risk infants and toddlers in particular need time with their parents because 

their early attachments can help serve as a buffer against the impact of the multiple risk factors they may face. Early attachments are critical for infants and toddlers because a positive early relationship, especially with a parent, reduces a young 

child’s fear in novel or challenging situations thereby enabling her to explore with 

confidence and to manage stress and also strengthens a young child’s sense of competence and efficacy.xv In addition, early attachments set the stage for other relationships, foster the exploratory behavior that is so critical to early learning, and 

play an important role in shaping a young child’s ability to react to stressful situations.xvi

The need for time with infants has direct relevance to welfare to work policies, 

and Congress should consider the developmental needs of infants and toddlers in 

shaping these policies. Excessive mandatory work requirements for low-income parents who are receiving Temporary Assistance to Needy Families (TANF) make unhurried time difficult. While states have the option of exempting parents with infants from work requirements, many do not take advantage or exempt these parents 

for only a few months. 

There is evidence to suggest that long hours of maternal employment in the 

child’s first year, can be a negative factor for infant development.xvii It is particularly difficult for mothers with young children living in poverty because of the kinds 

of jobs they tend to have (i.e. service jobs), the nontraditional hours they are often 

required to work, and the poor quality child care that is available. Young children 

living in poverty are much more likely to have a mother who works nontraditional 


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xviii Ibid. xix Ibid. xx U.S. Department of Health and Human Services, Administration for Children and Families. 

2002. Making a difference in the lives of infants and toddlers and their families. The impacts 

of Early Head Start. xxiShonkoff, Jack and Phillips, Deborah. 2000. From neurons to neighborhoods: The science of 

early childhood development. Washington, DC: National Academy Press. xxiiSchumacher, Rachel, Hamm, Katie, Goldstein, Anne, and Lombardi, Joan 2006. Starting 

off right: Promoting child development from birth in state early care and education initiatives. 

Washington, DC: Center for Law and Social Policy and ZERO TO THREE. 

hours compared with young children living above the poverty line.xviii Service jobs, 

which often entail very low wages, few benefits and nontraditional work hours, are 

disproportionately filled by less-educated women who now comprise a large group 

of mothers who are entering the labor force as a result of welfare reform and federal 

work requirements.xix

Finally, we know almost nothing about how the TANF program with its work requirements has affected infants and toddlers, for good or ill. Some studies have 

looked at the impact of TANF on older children, but ignore the impacts on the 

youngest. I urge Congress to require research into the impacts this program has on 

the well-being of infants and toddlers. 

Early Head Start: A Beacon of Hope for Babies Living in Poverty 

Comprehensive high quality early learning programs for infants and toddlers, 

such as Early Head Start, can help to protect against the multiple adverse influences that may hinder their development across all domains. Very young children 

living in poverty are more at-risk for a variety of poor outcomes than low-income 

families. Programs like Early Head Start not only set the stage for later school readiness and success, but also for the parent’s road to self-sufficiency. 

Research from the Early Head Start Research and Evaluation Project, and its 

companion follow-up results, concluded that the program is making a positive difference in areas associated with children’s success in school, family self-sufficiency, 

and parental support of child development. For example, Early Head Start produced 

statistically significant, positive impacts on standardized measures of children’s cognitive and language development. A smaller percentage of Early Head Start children scored in the ‘‘at-risk’’ range of developmental functioning. Early Head Start 

children had more positive interactions with their parents than control group children. In addition, Early Head Start significantly facilitated parents’ progress toward 

self-sufficiency. Although there were not significant increases in income, there was 

increased parental participation in education and job-training activities. The study 

also found that Early Head Start parents were more involved and provided more 

support for learning. Early Head Start parents were observed to be more emotionally supportive and less detached than control-group parents. They also provided 

significantly more support for language and learning than control-group parents.xx

The experience of Early Head Start suggests that exempting parents of young 

children from work requirements need not mean an unproductive period. They can 

be engaged in activities that are good for their own development as well as that of 

their children—if resources are available. In fact, a few states have channeled 

TANF funds into expanding Early Head Start services. 

Although the benefits of Early Head Start are clear, the program is only reaching 

a small proportion of at-risk children and families. Currently, only 10 percent of the 

overall Head Start budget is used to serve 61,243 low-income families with infants 

and toddlers in the Early Head Start program—less than three percent of those eligible. In order to ensure that the program can serve more eligible babies, Congress 

must increase the Early Head Start set-aside to at least 25 percent over five years 

and expand funding for Head Start to make those increases a reality. We can’t wait 

until these at-risk children are already behind at age four to intervene. 

Quality Child Care for At-Risk Infants and Toddlers 

Second only to the immediate family, child care is the context in which early 

childhood development most frequently unfolds, starting in infancy.xxi According to 

2005 data, 42 percent of one-year-olds and 53 percent of one-to-two-year-olds have 

at least one regular non-parental care arrangement.xxii The increase in the number 

of working parents with babies and toddlers comes at a time when science has demonstrated the critical importance of supporting the development and learning of children ages birth to three, and makes the need for quality child care even more significant. 


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xxiiiShonkoff, Jack and Phillips, Deborah. 2000. From neurons to neighborhoods: The science 

of early childhood development. Washington, DC: National Academy Press. xxiv Cost, Quality and Child Outcomes Study Team. Cost, Quality and Child Outcomes in Child 

Care Centers, Public Report, 2nd edition. (Denver Economics Department, University of Colorado 

at Denver, 1995). xxvShonkoff, Jack and Phillips, Deborah. 2000. From neurons to neighborhoods: The science 

of early childhood development. Washington, DC: National Academy Press. xxvi Ibid. xxvii Ibid. 

The evidence associating the quality of infant and toddler care with early cognitive and language outcomes ‘‘is striking in consistency.’’ xxiii High quality child care 

is associated with outcomes that all parents want to see in their children, ranging 

from cooperation with adults to the ability to initiate and sustain positive exchanges 

with peers, to early competence in math and reading—all of which are key ingredients to later school success. However, more than 40 percent of infants and toddlers 

are in child care rooms of poor quality.xxiv

Research indicates that the strongest effects of quality child care are found with 

at-risk children—children from families with the fewest resources and under the 

greatest stress.xxv Yet, at-risk infants and toddlers who may benefit the most from 

high-quality child care are unlikely to receive it—they receive some of the poorest 

quality care that exists in communities across the United States.xxvi Poor quality 

child care for at-risk children may diminish inborn potential and lead to poorer developmental outcomes.xxvii

Congress should ensure that all babies and toddlers, particularly those living in 

poverty, have access to quality child care. An increase in federal funding for child 

care would lead to increased investments in quality and would help to ensure that 

more low-income infants and toddlers have access to quality child care settings. 

More funding needs to be directed specifically at improving the quality of care for 

infants and toddlers, and providing professional development opportunities with infant-toddler content for early childhood staff who work with this age group. 

Conclusion 

During the first three years of life, children rapidly develop foundational capabilities—cognitive, social and emotional—on which subsequent development builds. 

These years are even more important for infants and toddlers living in poverty. All 

young children should be given the opportunity to succeed in school and in life. We 

know that all babies, especially those at-risk, need unhurried time in the first 

months of life with their parents. We also know that access to comprehensive, highquality, developmentally appropriate programs and services—whether Early Head 

Start or child care—can serve as a protective factor for at-risk infants and toddlers. 

Too often, the effect of our overall policy emphasis is to wait until at-risk children 

are already behind developmentally before significant investments are made to address their needs. I urge the Committee to change this pattern and invest in atrisk infants and toddlers early on, when that investment can have the biggest payoff—preventing problems or delays that become more costly to address as the children grow older. We do not need to accept that vulnerable children will inevitably 

have already fallen behind at age four and then provide special education and intensive prekindergarten services to help them play catch up. We know what at-risk babies need to help them grow up healthy and ready to learn. I urge the Committee 

to consider the very unique needs of babies living in poverty as you address the economic and societal costs of poverty. 

Thank you for your time and for your commitment to our Nation’s at-risk infants, 

toddlers and families. 

Æ 


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