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Report Calls for New Look at Child Poverty

Supplemental Poverty Measure highlights the impact of public policies on families’ economic well-being

RALEIGH–As the North Carolina General Assembly meets to debate key issues, a new report shows public policy investments have a measurable impact on the economic well-being of children and their families.

Measuring Access to Opportunity in the United Statesreleased by the Annie E. Casey Foundation’s KIDS COUNT® project, argues the Supplemental Poverty Measure (SPM) provides a more complete picture of how families fare than the current poverty measure by assessing the impact of programs and policies intended to boost household resources. The SPM shows without government interventions North Carolina’s supplemental child poverty rate would more than double from 17 to 35 percent, and an additional 436,000 children would live in poverty. Nationally, the supplemental poverty rate would increase from 18 to 33 percent.

“Children flourish when they live in financially secure families, and we know that poverty has a profoundly negative impact on health and development during the earliest years,” said Michelle Hughes, executive director of NC Child, a nonpartisan organization that advances public policy solutions that improve the lives of North Carolina children. “These data show public policy makes a real difference, and is a powerful tool to help strengthen families, promote positive child outcomes, and avoid the preventable long-term costs associated with child poverty.”

Studies estimate child poverty costs the United States $500 billion a year in lost productivity and earnings as well as health and crime-related costs.

In recent years, North Carolina’s public investments in critical child and family supports have declined. For instance, recent changes to the state’s child care subsidy program limit access for low-income families, further stretching taut household budgets. The compounding effects of legislative changes over time has left families who live on the brink of financial hardship without a safety net.

“Instead of making it easier for families to climb out of poverty, North Carolina has made it more difficult by cutting investments in policies the data show yield the best anti-poverty returns—policies like refundable tax credits such as the EITC,” said Hughes.

Like the official poverty measure, the SPM finds persistent gaps in poverty rates by race, ethnicity, and geography. U.S. poverty rates among Latino (29 percent) and African American (29 percent) children are approximately three times higher than that of their white peers (10 percent), and high child poverty rates are geographically clustered in the southeast.

“While these data capture effective policy solutions, they also highlight the need for more intentional strategies to close gaps between communities,” said Hughes.

The official poverty measure is based on a basket of goods and services adequate for a family in the 1960s, updated only for inflation. It does not take into account rapidly increasing costs like health care or “new” household expenses like child care. Evidence shows on average families need an income of roughly twice the poverty level to cover their basic living expenses.

The SPM substantially improves our understanding of the financial well-being of children and their families, as well as the policies and programs designed to support them. The SPM takes into account what it actually costs to live–expenses like child care, medical copayments, housing, and food and utilities–and how those costs affect a family’s disposable income. The SPM also considers income provided by programs that help offset family expenses, like the Supplemental Nutrition Assistance Program (SNAP), the Earned Income Tax Credit (EITC), and Social Security, and regional variations in cost of living.

Although not designed to replace the official poverty measure, advocates support continued investments in the development of the SPM to facilitate annual assessment of state-level progress in fighting poverty.

“Data is used daily to inform decisions in boardrooms and C-suites,” said Laila A. Bell, director of research and data at NC Child. “Just as business leaders mine data to glean intelligence and accelerate growth, our policymakers must have the best available measures to swiftly respond to changing trends and evaluate the impact of public policy investments.”

Measuring Access to Opportunity in the United Statessupplements the Casey Foundation’s 2014 report, Creating Opportunities for Families: A Two-Generation Approach, which offered several recommendations to help end the cycle of poverty:

  • Expand access to high-quality early education;
  • Change tax credit policies to help families keep more of what they earn;
  • Strengthen and streamline food and housing subsidies; and
  • Implement strategies that link supports for children and their parents.

Measuring Access to Opportunity in the United States will be available at 12:01 EST on February 25 at www.aecf.org.

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NC Child advances public policy solutions that improve the lives of North Carolina’s children. To learn more, visit www.ncchild.org. The Annie E. Casey Foundation creates a brighter future for the nation’s children by developing solutions to strengthen families, build paths to economic opportunity and transform struggling communities into safer and healthier places to live, work and grow. For more information, visit www.aecf.org. KIDS COUNT® is a registered trademark of the Annie E. Casey Foundation.

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