How much would you pay to stop having to listen to rich people tell poor people how to run their families?
If my calculations are correct, we can end child poverty for $62 billion per year. Is that a lot? No, it’s not. It’s $578 per non-poor family — but (if Twitter analytics are to be believed) my typical reader will pay less because I’ll put it on a sliding scale for you. Details below.
Americans tend to think of poverty as a giant, intractable problem, combining intergenerational dynamics, complex policy tradeoffs, conflicting cultural values, and “personal responsibility” (not to mention genetics). For example, in her book Generation Unbound, Isabel Sawhill says, “If we could return marriage rates to their 1970 level, the child poverty rate would be about 20% lower.” She’s (wisely) not advocating that, because it’s impossible, but think of it — rolling back one of the major demographic trends of the last half century would be social reversal on an unprecedented scale. For a measly 20% reduction in poverty? Apple alone could eliminate 100% of U.S. poverty for two years with the money under its couch cushions. (One reason people think poverty is so hard to solve is they don’t understand the scale of the population and the economy. Because “millions and millions” of poor people sounds like an insurmountable problem, it’s very helpful to play around with real numbers to get a sense of the magnitudes we’re dealing with.)
In our system, the vast majority of poor people are those in hard-to-employ categories. As Matt Bruenig recently wrote, 83% percent of poor people are either children, old people, people with disabilities, students, people taking care of family members, or people who can’t find jobs. (Among the employed poor, most are sharing their income with family members who can’t work.) We are a “country that relies heavily on the market to distribute the national income,” Bruenig writes. But it’s actually the market via the family. If these vulnerable groups are people who need someone else’s labor to support them, at least temporarily, then the attitude written into our policies is that such support should come from their families. If your family can’t do it — or you don’t have a family — good luck. It doesn’t have to be this way.
Isabel Sawhill, incidentally, is behind a column the other day by Catherine Rampell, which makes the reasonable suggestion to increase access to contraception for poor women, for the unreasonable reason that such a policy would “fight poverty” and reduce spending on welfare. The poverty angle here is that poor parents have — wait for it — poor children:
Children brought into the world before their parents were financially or emotionally ready for them are … disadvantaged before they’re even born, no matter how loved they are.
That “financially or emotionally ready” line is from Sawhill, and its implication is clear, though its advocates are for some reason squeamish about saying it plainly: poor people should not have children. I hate this attitude.
Look: children usually (fortunately) don’t make money. Somehow income from someone else’s labor has to pay for their homes, schools, doctors, food and water. A lot of that money comes from the state (for rich and poor kids alike). But under our stingy welfare state, if their parents don’t have decent jobs they wind up poor. The mindset that sees our welfare system as a fixed entity looks at this and says, “These kids are poor because of their parents. They weren’t financially ready to have kids.” Wrong. They’re poor because we insist on it.
I would like to live in a society — in a neighborhood, a community — in which people without good jobs can still have children, while they’re young, and have happy families. And I’m willing to pay my share of the cost of that. Are you? It’s not as much as you think.
Here are the details
All I did was calculate how much below the poverty line all the poor families with children are. That is the amount we need to raise (each year) to end child poverty. Then I distributed that cost across the non-poor families, on a sliding scale. How hard would this program be? We already have all the infrastructure in place to move income around; it’s just a change in the tax code.
With the 2014 Current Population Survey data from IPUMS.org, I can calculate how much each poor family is below their poverty threshold. I’m focusing on families with children for now. There are 6.5 million poor families with a child under 18, and on average they are $9,450 below the poverty line based on their family size and composition. So, to eliminate child poverty we need $61.6 billion dollars per year.* (Note: I have repeated this with the 2015 CPS data, which reduces this number to $57 billion, but I haven’t updated the whole post.)
Where are we going to get that kind of money? From non-poor families.
There are 107 million non-poor families, so we’re going to need about $578 per family per year to pay this bill and end the scourge of child poverty. Of course, $578 is a lot of money for some people, but on average the non-poor families have incomes $40,874 more than their poverty threshold. To ease the pain, I created a simple, continuously-graded scale. I broke the non-poor families into 10 equal-size bins from rich to less rich, and slid the tax rate from 1.8% down to 0% (that way there’s no penalty for moving just over the poverty line). Here’s how it works (click to enlarge):
The tax is only applied on the surplus for each family — that is, the resources they have (after taxes, work expenses, health care and child care) over their poverty threshold. If we tax the surpluses of the richest 10% of non-poor families at the virtually painless rate of just 1.8% — and everyone below them at an even lower rate — we end child poverty in the U.S.
Here’s the chart that shows how much you have to pay, broken down by average income in each decile of non-poor people**:
Some people say the Pope should stick to religious matters, and not speak about politics. Some people also say a social scientist should stick to scientific analysis, and not make moral demands. You can ignore my moralizing, as long as you understand the fact that child poverty is a choice we make with our policies. Eliminating child poverty does not require restructuring American families, mass contraception campaigns, or a new ethos of shame. It just costs a little money.
* Technical note: To do the calculations, instead of the official poverty rate I used the Supplemental Poverty Measure. This measures resources versus needs for “resource units,” which are either families (including cohabitors, foster children, and other people that are normally considered “non-relatives”) or unrelated individuals. For every resource unit, the poverty threshold is based on the cost of food, clothing, shelter, and utilities, adjusted for geographic location, housing type, and family composition. In addition to money income, the resources for the calculation include non-cash assistance like food stamps, school lunch, housing and energy subsidies; and then they deduct from resources taxes, work expenses, child care expenses, medical expenses, and child support (it’s all described here). I call resource units “families,” although some of them are single people. The Stata code I used to analyze the data, which includes the variables you need from IPUMS, is here.
** Please consider making a contribution of at least twice this to help address the much larger problem of poverty in the poor countries of the world.