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Child Poverty Hurts Economy, C.D.F. Report Concludes

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The national failure to eliminate child poverty is not only shortsighted social policy, it also hurts the economy, a new Children's Defense Fund study argues.

Each year child poverty continues, it costs the nation as much as $177 billion, according to the 154-page report published by the child-advocacy group last week.

"Poverty creates enormous costs to children's health and their ability to participate in society, and those human costs have an economic component," said Arloc Sherman, a senior program associate at the C.D.F. and the author of the study.

About 15 million children in the United States--one out of five--are poor, the highest number since 1964, says the report, "Wasting America's Future." Children in the United States are also twice as likely as adults to live below the poverty line.

While the human cost of child poverty has been well chronicled by social scientists, this is the first study to fix the price tag in the billions of dollars.

Led by the Nobel Prize-winning economist Robert M. Solow, a team of researchers arrived at their figures by estimating the effect child poverty had on the value of paid work later in life.

Analyzing existing government data as well as new research, the authors found that pervasive child poverty reduces the nation's productivity and employment while inflating its overall educational and health costs.

Harm to Education

Money buys good food, decent shelter, health care, transportation, and economic opportunity, the report notes, while a lack of these resources can result in nutritional and educational deficits.

Poor children are two to three times more likely than their better-off peers to become high school dropouts, often because they are compelled to begin work before they finish school. They are also more likely than wealthier students to be homeless and to have their school year interrupted.

Since less educated young people often lack the skills necessary for employment, the researchers estimate that inadequate schooling alone accounts for $36 billion of the drain on the economy each year.

Poverty also harms a child's academic achievement, the study says. Lower-income children often suffer from poor nutrition, which can impair learning. The cost to the economy of students' falling behind and repeating grades runs into the hundreds of millions of dollars annually, according to the study.

On top of the $177 billion estimate, health-care expenditures for poor children add "tens of billions of dollars" to the total child-poverty bill, it estimates. Poor children often lack medical insurance and use expensive hospital emergency rooms for their primary health-care needs.

The study recommends several long-term strategies to address the problem. "Child poverty is not a necessary part of the American landscape," Mr. Sherman said.

Good Investment

Among the recommendations are better job creation, tax credits for low-wage workers, and an increase in the minimum wage. Spurring employment in the short term could forestall welfare dependency in the long term, the report argues.

The report also calls for more efficient enforcement of parents' child-support duties as well as an expanded network of affordable child-care services. Education can also bolster the prospects of poor youths, the study says.

"Many poor children do succeed precisely because the adults in their lives have not given up on them," said Mr. Sherman.

Copies are available for $18 each, plus $2 for postage, from C.D.F. Publications, 25 E St., N.W., Washington, D.C. 20001, or by calling (202) 662-3652.

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