2018 World Population Data
CHANGING AGE STRUCTURES | POVERTY
The Child Poverty Rate in the United States Has Exceeded the Rate for Older Adults Since 1974
The poverty rate is one important indicator of economic well-being that varies widely across age groups. In the mid-1960s, 29 percent of U.S. adults ages 65 and older lived in poverty, compared with 18 percent of children under age 18. However, the trends in poverty rates for these two age groups have diverged markedly since 1974, with the rate among older adults decreasing, and the rate among children rising to new peaks in the mid-1980s, mid-1990s, and from 2010 to 2012 following the Great Recession. Entitlement programs such as Social Security and Medicare have been effective in reducing poverty among older adults, but their costs have been rising rapidly as the U.S. population ages. With limited resources, the United States will continue to face difficult trade-offs in improving the well-being of both children and older adults. Investing resources today to reduce poverty among children can increase their future productive capacity and help offset the costs of an aging population.
A DEEPER LOOK
How Is Poverty Determined?
Each year, the U.S. Census Bureau updates a series of poverty thresholds—specified dollar amounts required to meet the basic needs of family units of different sizes and composition. Families with incomes below 100 percent of the poverty threshold for family units of their size and type are determined to be in poverty. For example, in 2016, the poverty threshold for a family of four with two adults and two related children under 18 years of age was $24,339, compared with a poverty threshold of $14,507 for a two-person family without children headed by an adult age 65 or older. If a family’s total income is less than its poverty threshold, then that family and every individual in it would be considered to be living in poverty. The child poverty rate is the percentage of children under age 18 who live in families with incomes below 100 percent of the poverty threshold for their size and type.
It is important to note that the official poverty definition is based on money income before taxes and does not include noncash benefits such as Medicaid, the Supplemental Nutrition Assistance Program, or tax credits. Poverty status cannot be determined for children in foster care or for people living in institutional group quarters such as nursing homes or prisons. For more information, see “U.S. Poverty Thresholds and Poverty Guidelines: What’s the Difference?”
Why Did the Child Poverty Rate Reach New Peaks in 1983, 1993, and 2010?
Poverty rates for children have fluctuated with economic booms and busts since the mid-1960s. The three peak levels in the graph were reached in the years immediately following economic recessions in the early 1980s and 1990s, and more recently, the Great Recession of 2007 to 2009. While child poverty rates declined in the mid- to late 1980s and again in the mid- to late 1990s, they never dropped back to the low of 14 percent experienced in 1969. Research suggests that changes in income growth, economic inequality, and family structure have all contributed to the persistence of high child poverty rates in the United States. Among children, increasing racial and ethnic diversity, coupled with sizeable gaps in poverty rates between minority children and non-Hispanic whites, also contributed to high levels of child poverty since the early 1980s. In 2016, the poverty rate for black children (31 percent) was three times higher than the rate for non-Hispanic white children (10 percent), and the rate for Latino children was more than two times higher (26 percent).
While the poverty rate among adults ages 65 and older also rose in response to the recession in the early 1990s and the Great Recession in 2007 to 2009, the increases were much smaller—from 8.9 percent in 2009 to 10.2 percent in 2013. Older adults are more insulated from economic downturns because they are more likely to be retired and less likely to experience job loss. Many rely on income from Social Security, which is not impacted by recessions. However, those who also draw some income from retirement accounts may experience drops in income if these accounts lose significant value during a recession.
What Are the Consequences of Experiencing Poverty in Childhood?
Levels of child poverty are important to policymakers and child advocates because poverty not only affects health and well-being in childhood, but also has long-lasting consequences into adulthood. Growing up in poverty—particularly if it is deep or long-lasting—poses significant risks for children’s healthy development. Experiencing poverty in early childhood exposes children to more environmental, educational, health, and safety risks, increasing the likelihood that they will have cognitive, behavioral, and socioemotional difficulties and poorer health. Childhood poverty can also lead to negative outcomes among adolescents, including lower achievement, higher school dropout rates, more behavioral problems, and higher rates of risky health-related behaviors such as teenage childbearing. Finally, research has also documented the long-term impacts of child poverty in adulthood. A study by Greg Duncan and colleagues found that experiencing poverty before the age of 5 reduced the work hours and earnings of young adults in their 30s.
Investing resources today to reduce poverty among children can increase their future productive capacity and help to offset the costs of an aging population.SHARE ON TWITTER