The Youngest Victims of the Recession

Children do better where they receive more government supports, yet pressure to make cuts is rising both in the United States (where the baseline level is low) and in Europe (where it is higher).

Anxiety is rising in the United States as the recovery from the recession continues to remain sluggish in many places, and virtually nonexistent in others. Even as the demand for social assistance is growing, many states and localities are running out of funds to keep basic services such as schools and police functional (let alone expand the safety net). One important fact that is often overlooked is that when government cuts back the biggest victims are often children, particularly children in low-income families. Children fare poorly in recessions for two reasons – first, children disproportionately depend on the programs (such as welfare) that are most at risk for being cut during a tight economy, and second, children (particularly young children) are more likely to live in poverty and more likely to experience homelessness, even when the economy is good. As I reported last week, child poverty grew significantly in 2009.

Child poverty is more pronounced in the United States than in other rich countries. Using a different definition than the Census bureau, more than one in five children in the United States lived in poverty in 2005, compared to fewer than one in twenty in Denmark, Sweden, Finland, and Norway. Perhaps not surprisingly, children in the United States score near the bottom in virtually all cross-national rankings of child wellbeing. In a 2007 report, UNICEF ranked the wellbeing of children living in 20 wealthy countries along the following six dimensions: material wellbeing, health and safety, educational wellbeing, family and peer relationships, behaviors and risks, and subjective wellbeing. The figure above shows the mean rank of the six dimensions. At the very top are Netherlands (4.2), Sweden (5), and Finland (7.3). At the very bottom are the United States (18) and the United Kingdom (18.5).

Spending on Children in U.S. Trails Europe, and is Highly Unequal Across States

There is no single explanation for why children in the United States fare so poorly, but one important factor is public spending. Taking into account all forms of public spending on children as well as tax benefits, Julia Isaacs of the Brookings Institute calculates that in 2005 the United States spent slightly over 1 percent of GDP on children, more than three times less than France. Adding in public education moves the United States closer to the middle of the pack. Education in the United States is grossly unequal, however, meaning that it tends to be lowest where children are poorest. This gets to the crux of the problem – since states and localities determine a much larger component of spending on children than other age groups (such as the elderly) there is much more inequality across the United States. The wealthiest states in the Northeast spend much more than the poorest states in the South.

In 2009, federal spending on children reached its highest point in the United States since 1960. Much of the increase in spending was due to the stimulus bill, which included increased funding for Medicaid and tax credits for low-income working families. Another factor was increased demand on counter-cyclical programs such as food stamps. One problem is that much of this spending increase is time limited, and is unlikely to be extended beyond the next couple of years as the federal deficit grows. The second problem is that even as federal spending has increased, states contracted their spending on children. Last year, 33 states cut funding on primary and secondary education. In Colorado, for example, the education budget was slashed by $260 million ($400 per pupil). The burden on families increases when schools cut their budgets, and students lose valuable supportive services. When families are in distress – with housing problems and lost jobs – schools should be there to support children.

The Safety Net for Children Matters Most in a Recession

The effects of the Great Recession on children in the U.S. are largely unknown (there are no nationally representative data available on children’s mental health before 2008). We know from previous research that children (especially black children) that live in households with parents that experience job loss are at greater risk for dropping out of school and experiencing emotional distress. There is little historical analogue for an economic crisis of the current proportion for us to draw upon. Glen Elder’s research on children of the Great Depression documents the scarring impact of growing up in hard times on later life satisfaction and risk behaviors such as drinking. Whether we repeat the 1930s experience will depend in large part on the availability of resources to buffer the impact of the recession on families. The most obvious support is unemployment insurance, but mental health services, food assistance, child care, and after-school programs are an important piece of the package. Moving these priorities to the front of the line is a hard sell – poor children, unlike corporations, labor unions, and the elderly, have few advocates and little political voice. In the United States, the stimulus was an important way to keep some children’s programs afloat but it is not enough. Europeans, looking to cut back their own welfare states, should take a closer look at child poverty in the United States. What gets cut today will not be healed tomorrow.

About Brendan Saloner

I am a postdoctoral fellow at the University of Pennsylvania in the Robert Wood Johnson Health and Society Scholars Program. I completed a PhD in health policy at Harvard in 2012. My current research focuses on children's health, public programs, racial/ethnic disparities, and mental health. I am also interested in justice and health care.
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2 Responses to The Youngest Victims of the Recession

  1. Pingback: Highlights so far… | Inequalities

  2. Pingback: Four Tidbits About the U.S. Economic Recovery | Inequalities

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