How to Break the Persistence of Poverty in America

Cara Baldari 0:00
Are dedicated to building political will towards ultimately ending child poverty in the US. And if you want to learn more, you should visit first focus.org, as well as end child poverty us.org. I’m really thrilled to be joined today by Zach peralin For today’s conversation. He’s an associate professor of social policy at Bocconi University in Milan, Italy, and a senior research fellow at Columbia University Center on Poverty and Social Policy. His research focuses on the measurement causes and consequences of poverty inequality and social mobility across the United States and European Union. He has a long CV of important research on the most effective ways to relieve hardship and promote mobility for children and families, including his 2023 book, poverty in the pandemic policy lessons from COVID 19.

Today, we’re going to hear from him regarding his recent research on the persistence of poverty, persistence of poverty in the United States, which is the focus of his January piece in The Atlantic entitled Why poor American kids are so likely to become poor adults. This conversation is really timely, because as Congress is debating cuts to anti poverty programs that would only serve to further the persistence of poverty in the US, so we hope you can use what you learned today and your advocacy to protect children and families before we get into our conversation, a few housekeeping notes. This conversation is being recorded and will be circulated to everyone who rsvped, as well as posted on both the first focus and child poverty us websites. We should have some time for Q and A at the end. So please feel free to submit your questions in the chat as you think of them. And if we don’t get to your question, you can always email them to me at Tara B at first focus.org So Zach, let’s get into the conversation. Thanks again for for being with us for this really timely conversation.

If you wouldn’t mind starting out by kind of summarizing your findings and maybe touching a bit upon why you and your co authors decided to do this research.

Zach Parolin 2:03
Yeah, first, let me say Thanks, Cara and the first focus team and everyone joining for the work that you do. It’s really wonderful. When doing this research, you know that it has an audience and a group of individuals who can carry this forward and make sure that it gets to the ears of people who are influential in the policy making process. So thanks for your interest. I’ll talk a little bit about the main findings of this work that we’ve done. In short, we’re focusing on a concept that we call the intergenerational persistence of poverty. Sometimes I’ll refer to it as intergenerational poverty. And essentially, what we’re capturing, with lots of unstated data is that link between how much of your childhood Do you spend in poverty, and how is that connected to essentially your likelihood of poverty in adulthood? So we’re using data that follows people across their lives and being able to measure directly Person X spends, you know, 50% of their childhood in poverty. We can see that between ages 25 and 35 they’re also in poverty y persistent at the time. We can do that for 1000s and 1000s of people, not only in the US, but in the United Kingdom, Denmark, Australia, and some other countries that I’ll talk about here. The one thing I want to emphasize is that this focus on the intergenerational persistence of poverty, or that link between child poverty and adult poverty, is different than just focusing on, let’s say, poverty rates. We know from a lot of passwords that the US has high poverty rates and child poverty rates, especially relative to other high income countries, but that link between child poverty and adult poverty we know less about, and that’s what our team is focused on. The main results are as follows, the US has incredibly strong persistence of poverty from childhood to adulthood. To quantify how this compares to other countries, I’ll give you some numbers, and then I’ll help it makes sense, and the intergenerational persistence of poverty in the US is point four. Two. What is point 42 mean? I’ll come back to that, but first, compare that to some other countries. In the UK, it’s point 16. In Denmark, it’s point 08, so I’ll summarize these numbers in two ways. One is to say that that link between childhood poverty and adult poverty is about four times stronger in the US than it is in even the United Kingdom or Australia, and even stronger, about five times as strong as the rate we see in Denmark or Germany. Another way to think of that point forward to what it’s saying is that if you find the child in the US and you see they spend all of their childhood in poverty, 100% of their childhood in poverty, they’re about 42 percentage points more likely to be poor in adulthood relative to a child in the US who experienced no poverty at all. That’s the top point findings. Let me give you a couple insights onto what explains why the US is such an outlier relative to these other high income countries, we use our data and some methodological tools to decompose we call it, basically break down this intergenerational persistence of poverty into different potential explanations. Maybe it’s something about family background, like being born to single parents, or having your parents with only a certain level of education. Maybe it’s something about access to education that might be harder if you come from a poor family in the US relative to a poor family in Denmark. Maybe it’s some unobservable futures I can talk about, or maybe it’s the role of the welfare state or the social safety net, as we often call it. And to briefly summarize, the main distinction in our data set between the US and these other high school countries is the weakness of the US tax and transfer system, or the US social safety net in promoting upward economic opportunity and reducing poverty for adults who come from more challenging backgrounds, we can quantify how important that is, and just to summarize here, it makes the largest difference between the US and the peer countries when we’re measuring this idea of the intergenerational persistence of poverty. So to summarize this all in one sentence, maybe two, a poor child in the US is much more likely to become a poor adult, relative to say, a child who grows up in poverty in the UK or Australia or Denmark or Germany. And if you care about fairness, if you care about equal opportunity, if you care about promoting upward mobility, that should be concerning, and certainly concerning to our authorship team and those of us who would like to see better outcomes in the US.

Cara Baldari 6:46
One of the things that that your research showed was that racial discrimination did not impact the persistence of poverty, which I think was a, at least for Me, a surprising finding. Would you mind touching more upon that?

Zach Parolin 7:03
Yeah, it was a surprise to us, too. Let me. Let me first just be very clear and state thoughts that are obvious to everyone on on this call, that in our data set, we can, we have enough, let’s say, sample size, to focus on just white and black individuals. So we’re really narrowing in on two groups. We don’t have a large enough sample size for Latino individuals, for Asian individuals or others. So for now, I’m just going to focus on individuals in the data set who identify as white and black. We know in reality and in our data set, we can see quite clearly the black individuals in our data set are face much higher rates of poverty in childhood and much higher rates of poverty in adulthood. I think everyone on this call is probably familiar with the the systemic, systemic discrimination that’s occurred against black individuals for for centuries in this country that have helped to make that a reality. So what I’m saying when, when we talk about differences in the intergenerational persistence of poverty for black versus white individuals, what we’re saying is that conditional on having spent a certain amount of time in poverty, the likelihood of being poor in adulthood is relatively similar. It’s bad in all cases. If you spend, say, 50% of your childhood and poverty form the likelihood that you’re born adulthood at the same time, it’s absolutely true that that black children are again faces much higher poverty rates than than white children in the US and also in adulthood, we see that the black adults have much higher rates of poverty than white adults. So that’s what we mean when we’re saying that the intergenerational persistence of poverty is pretty similar across these groups. The takeaway being that, of course, racial discrimination and discrimination in other forms matters a lot in the US poverty story, in addition to a million other reasons, it’s not the reason why the US is so unique relative to higher other high income countries, there are reasons beyond that that the that in our analysis, let’s say, allow the US to be so much worse than, say, the UK, Australia, Germany or Denmark, with respect to that link between childhood poverty and adultpoverty.

Cara Baldari 9:22
Thank you for explaining that further so you, you know, talk or you touched upon right, that our lack of right tax and transfer, you know, system is, you know, a large reason, or sounds like, you know, the main reason for persistence of poverty. Can you talk more about that? You know what you mean by when you say tax and transfer and any kind of differences right as to as our system versus in other countries that you studied.

Zach Parolin 9:55
Absolutely so in general, when we’re talking about taxes and transfers here in our primary analysis, we’re focusing quite broadly on any type of redistribution, whether it is cash assistance from TANF, in the case of the US, whether it’s near cash benefits from snap or the Supplemental Nutrition Assistance Program, whether it’s unemployment benefits from employment Insurance program, whether it’s support from the earned income tax credit, the child tax credit, all of these programs combine their their effect in reducing poverty in the US is important that at the same time, the extent to which combine these policies reduce Poverty in the US generally doesn’t compare to the the extent to which the social safety net is reducing poverty in many other high income countries. And there’s a couple clear points differentiation that matter in the work that that we’ve done, both and understanding poverty rates in general across countries, but also this link between childhood poverty and adult poverty. And I’ll give one very direct example, with the exception of 2021 which happened to talk about the expansion of the child tax credit in that year, the US has not had a what in other countries might be called the child allowance, unconditional form of cash support for families with children, that’s not tied to earnings or employment as it is in the US, again, with the exception of 2021 and we can see directly in the data that when we look at children’s outcomes, not only in the short run, but also in the long run, that these types of investments into Children in early childhood, they matter in the case of 2021 in the US, many on this call are certainly familiar with the findings from the expansion of the Child Tax Credit, and I’ll just summarize a few findings from the work that that our team has produced, and again, probably obvious to everyone here But the 2021 child tax credit that implemented for the first time in recent history, and unconditional cash support for nearly all families with children in the US led to the lowest child poverty rate in US history, going back to at least 1967 it led to reductions in food hardship and some evidence of reductions in housing hardship as well. It we have consumption data. We can see how families are spending money on certain items. We can see across multiple studies now that increase families expenditures on child and family related services and goods, including child care, including children’s clothing, including a number of other goods and services to support the family, despite some concerns of one or two senators who we don’t find any evidence that this money went towards, let’s say alcohol or tobacco or other forms of let’s say similar goods. We simply don’t see that in the evidence. We don’t find any evidence that led to decreases in employment. Now that could be different, perhaps, if this program will make permanent, this is a one year expansion that we’re looking at. It also led to increases in parental mental health, we see in the study we released last year declines in the number of bad mental health days for parents who receive more of those benefits versus less. So across a number of outcomes, we see direct evidence that this kind of child allowance can work, and also is a big factor in why the US has higher intergenerational persistence of poverty, as we measure in this other study. So one very concrete example of a policy that exists in the UK, Australia, Germany, Denmark, not in the US. And the effects of not having something similar show up in many different ways across our work, but including in the study that that we’re talking about here.

Cara Baldari 13:59
No, appreciate you going into all of right, the impacts that we saw the child tax credit. I so, you know, we’re having this conversation right at a time that Congress is debating it cuts to some of the programs right that you touched upon, as well as negotiating tax policy, right? And looking at the child tax credit in particular, so you know as much as you can, what would you say to lawmakers, right? If you know, in taking your research and saying, You know what the impact could be, right, if some of these actions on the persistence of poverty and implications for for kids, if, and, you know, and for our country, right of some of these actions.

Zach Parolin 14:47
Yeah, I mean, relevant to to current political debates, there are a, according to some of the reporting, a few programs that are being given some attention at the moment, and not always for the most favorable set of reasons. SNAP being one of them, Medicaid being another. And as part of the tax negotiations around the tax cuts and jobs acts and extension of that, the child tax credit as well, I suppose my reading of the evidence, if we’re interested in reducing poverty in the short run, but also the one room. If we’re interested in promoting something closer to equal opportunities for children, regardless of their background, then expanding the Child Tax Credit, similar to what we saw in 2021 would have to be a priority. I’m fully aware that that’s very unlikely and the current congressional negotiations, but nonetheless, ignoring the current political constraints, I would say that if that’s what we care about, then bringing back a fully refundable child tax credit that’s not conditional on earnings, as exists these other countries we’re talking about ought to be essential priority. It’s very unlikely that we’ll see that in the current negotiations. In the meantime, protecting some of the increases in the CTC that were implemented in the TCGA is perhaps a goal, but also preserving the benefit increases from snap relative to a few years ago, and protecting programs like Medicaid, for many cut backs again, if we look at the long term benefits of some of these, these income support programs, yes, they cost money in the short run, but the gains in the long run are are often quite large when we’re reducing Child Poverty in the short run, on average, we’re increasing employment and tax revenues. In the future, we’re reducing the likelihood that these children grow up and face certain types of health challenges. Are dealing with the country’s incarceration process. There’s a number of long term savings towards investing and improving the lives of children. Today, the research bears that out, and again, it’s one of the reasons, I think, to focus on some of these long term outcomes beyond just some of the short term costs associated with reducing poverty.

Cara Baldari 17:17
Thank you for that. No, I appreciate you hitting home right that these cuts are really short sighted, right, and have repercussions for not only children right, but for our country as a whole, right. We know child poverty in the US costs our nation upwards of $1 trillion a year, and so it matters for all of us, right? And so I think with the time, we have get to a few questions, and then at the end, I think I’ll just wrap up with talking about some of the work that first focus is doing and ways that folks can take action. So we had a few questions from the audience, kind of about how your findings compare with some other existing research on intergenerational poverty that is out there. I know recently, the National Academy of Sciences, right had a big study on intergenerational poverty as well as Raj Chetty and his findings. So do you mind kind of touching upon that as much as you can?

Zach Parolin 18:18
Certainly, I’ll make two points, and I’ll try to be delicate about how I do this. I think the National Academy of Sciences report on intergenerational poverty. It’s a really terrific team. It’s a I’m very happy to see this to the focus of an NAS report. I do think our research, not just the paper and the work I’m talking about today, but some other ongoing work focused on the Earned Income Tax Credit slightly contradict with the conclusions of the report in one perhaps important way. We have some work going on focused on the Earned Income Tax Credit, which is, I’m sure everyone in this call knows, is, is a tax based refundable tax credit that’s conditional on earnings, it goes to parents with children, primarily who are working a certain amount. The committee calls suggests that the evidence supports the idea that the agency reduces the intergenerational persistence of poverty. We find some different evidence. We think it’s an excellent program has many short and long run benefits. Strictly speaking, it probably does not reduce the intergenerational persistence of poverty precisely because it misses out on those lowest income families and children whose parents aren’t working enough. So that’s the takeaway from one of our other papers that slightly contradicts to to get to the question the findings from from their report respect to the chatting in all theme, you know, again, fascinating and fantastic work using very large data sets from administrative records, it’s really hard to to compare or compete with the work from the opportunity insights team. We don’t do a lot of direct comparison of our findings to their work on social connections as the question asked, we do a little bit of comparison relative to their findings about geographic disparities in the US and how upward mobility varies by county or census tract in the US. Just one brief takeaway related to that in our paper that we put out the one that’s featured in the Atlantic. We do bring in the opportunity insights data on intergenerational mobility by county in the US, and we split up all counties into three groups, essentially high mobility, media mobility and low mobility according to the opportunity insights data within re estimate the intergenerational persistence of poverty for these three groups in the quick takeaways that even in the highest mobility counties in the US, the intergenerational persistence of poverty, according to our estimates, is still notably higher than the UK or Australia. So yes, intro, within us, disparities and opportunity by place matter a lot, but they don’t. The size of these intra country disparities don’t really align. They’re smaller than the between country disparities that we’re finding, suggesting there’s something more structural, more fixed across the US at large that is shaping the US is Outlier performance with respect to these other high income countries.

Cara Baldari 18:18
Thank you. That’s really helpful. You know, one question we had was, you know that we’ve had SNAP, we’ve had the child tax credit that have kind of existed for a while in the US, but we still have a persistence of poverty, right? So we have had some of these programs, but we still have a high persistence of poverty. You know, I think you did touch upon a bit how we could improve, for example, the child tax credit, right? That could be doing more to cut the persistence of poverty. But do you mind kind of just elaborating a little bit, right? Folks, you might be like, you know, we seem to have a lot of programs, right, and yet we’re still seeing this high persistence of poverty. And, you know, you touch upon a child allowance, right? But are there other things that we should be doing or should be rethinking, you know, the way that we think about, you know, poverty reduction in the US?

Zach Parolin 18:18
Certainly, I can understand the defensive skepticism by saying, well, we’ve expanded the safety net many times, and yet poverty is still high. Snap, benefits are more generous than in the past. The EITC has become more generous, yet poverty is still high by many standards. But I want to be very direct that if we look at trends in poverty in the US, just using the supplemental poverty measure, many would agree to be the most complete measure of poverty that exists in the US today, going back to, let’s say, 1970 we have seen notable declines in poverty and child poverty. They are directly attributable to expansions of the safety net during that time, the role of taxes and transfers and reducing poverty has grown over that time. So I do want to be very direct that the data suggests that we have made progress as a direct result of some of the expansions that we’re talking about the sea growing over time, even if that program has imperfections and that it misses the lowest income families. The increase in SNAP benefits have been important. The expansion of the child tax credit in 2021 contributed to the lowest child poverty rate in US history, the child poverty rate in 2021 when we use a measure of poverty that’s internationally comparable to our peers, the US was, for the first time, posted Germany with respect to its child poverty rate. Normally, it’s twice as high as Germany. The tax and transfer system in 2021 was working at the rate of Belgium and Norway and reducing child poverty. That was only for one year. 2022 chopped right back up. But I do want to be be very clear that we have really strong evidence that these programs are working and reducing poverty. There was there was one question too I noticed about the difference between monthly cash payments and annual cash payments, particularly around the child tax credit here in terms of their ability to reduce poverty, it really depends on how you measure poverty. Often we focus on annual income, so technically, from a very measurement centric perspective, they’re pretty equal. But we have a lot of really good data that suggests that those monthly payments were quite important for a lot of families, and the spent families spent the monthly payments from the 2021 CTC expansion differently than they spend the lump sum payment that they get at tax time. The lump sum payment, larger payment that comes when you get your tax refunds, more often, goes to debt and variables, essentially paying off debt that has been accrued in part due to a lack of resources in the prior year and big ticket items. Whereas we’ve seen more evidence that those monthly payments are more effective at reducing food hardship and helping families meet their day to day expenditures. There’s some complications in the tax system as to whether we can do that with EITC, or the CTC over fundability helps make that easier, but I do think the evidence would suggest that the monthly payments are quite impactful and helping families more readily meet their needs throughout the year, than just getting that one big check per year.

Cara Baldari 25:28
Thanks for that. We had a few questions, kind of touching upon asking how early childhood education might have an impact on persistence of poverty, right? Unfortunately, we, you know, have a lack of affordable child care, right, and a lack of access to affordable early childhood education in the United States, which kind of leaves a big gap, right? And so if you could, you know, as much as your research was able to look into this right, or any of your other research about kind of how that might impact the persistence of poverty?

Zach Parolin 26:00
It’s a really good question. This is one of those areas where we know it matters. We have lots of great evidence that it matters. Can’t measure it quite as precisely as we would like in some of the data sets for using for certain reasons, but I can speak broadly to what our evidence and others have shown is that when we think about the experiences of individuals in poverty in the US versus other countries when we talk about child care, education, the health care system, just to name a few, individuals in poverty in the US are getting very different types of services relative to individuals in poverty in other countries. Let’s start with health care, and then we’ll get to education and child care. If you are, let’s say, poor in the UK, if you want, you still have access to the NHS, just like anyone else does. If you are poor in Denmark or Germany, you still have access to the public health care systems, where, depending on a particular procedure and a few other things, you might not be paying anything out of pocket at all. We know about unequal access to Medicaid in the US and to affordable health insurance in general, that, let’s say, increases the penalty of being in poverty in the US relative to high income countries with respect to the type of health care coverage one can receive education, similar story given away that local property taxes often fund local education systems, and the types of segregation that creates by income, not to mention race, ethnicity and other dimensions, the differences in education or rich versus poor kids in the US is larger than the gap you would find In a place like the UK, Germany, Denmark or Australia, child care is yet another example. I can say this now, as the father of a one and a half year old living in Milan, this is the country with many imperfections, but one nice thing is heavily publicly subsidized child care to where, you know, families are generally paying maybe 500 a month, as opposed to lived in New York, say, 3000 a month for child care makes a difference, turns out, and this shows up in the evidence as well. It’s no surprise that access to affordable child care and publicly subsidized child care matters for a number of reasons, for the children’s well being and socialization and health, also for the parents who want to get back to work being able to create that opportunity for them without essentially paying all of their paycheck just to send their child into daycare across all of these domains, being in poverty in the US looks very different than being in poverty in some of these Other countries, and that shows up in the data.

Cara Baldari 28:42
Thanks for elaborating on that. So just with the minute we have left, you know, I just again, want to touch upon that. You know, we know that a lot of the programs that are, you know, helping the children film is right now are under threat. We also know there’s incredible upheaval right in federal agencies as so funding for some of the programs and services we talked about remains frozen, right? And this federal workers who oversee these critical programs right, that are being indiscriminately are at threat of being indiscriminately fired. And so, you know, just to hit home and elaborate on what that said, right? These actions are really short sighted, and they’re not only harmful for the well being of our nation’s children, but for our country’s future success. So we know there’s another way, right? When a family hits hard times, maybe due to natural disaster, illness or job loss, or any number of things, you know, we can prevent that family from cycling into poverty. We you know her today, right? In other places, poverty does not it doesn’t have to persist. So first focus is working to not only defend against the cuts that you know we’re currently facing against many of these programs, but also fighting to improve policy such as the child tax credit that break the persistence of poverty. We have several resources we put out recently detailing the threat to kids of the current cuts that that Congress is debating, Medicaid to Medicaid, SNAP, TANF and more, as well as implications, the harmful implications of work requirements for kids that are also being discussed for for programs and that work requirements are not only harmful for the adults and households, but but for the children and only, unfortunately, serve to increase poverty, right, rather than decrease it. So those are all up on our website, and we will circulate them afterwards as well, along with this recording. So I just wanted to Zach, thank you again for taking the time to discuss your research further. And I encourage everyone to use what you heard today, you know, in your advocacy during this this really critical time for children and families. So So Thanks again, Zach and I hope everyone has a good the rest of their day.

Zach Parolin 31:04
Thanks everyone, and thanks for tuning in. Thanks for your work.

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