The economy is nearing full employment. The stock market is at record highs. The expansion keeps continuing. Add to that one more very good piece of economic news: The child-poverty rate fell to a record low in 2016.
That finding comes from a new analysis of government and academic data by Isaac Shapiro and Danilo Trisi, both researchers at the Center on Budget and Policy Priorities, a nonpartisan, Washington-based think tank. The child-poverty rate declined to 15.6 percent in 2016, the researchers found, down from a post-recession high of 18.1 percent in 2012 and from 28.4 percent in 1967. That means that roughly 11.5 million kids were living in households below the poverty threshold last year. “The figures were actually a little surprising to us, and might be surprising to those who are following the poverty debate,” said Shapiro. “The argument, at least on the conservative side, is that we have poured a lot of money into safety-net programs and poverty hasn’t gone down. But it has.”
The most recent drop in the child-poverty rate is due to a tighter labor market, the researchers found. More parents are back at work, with competition among employers starting to drive wages up even for very low-income workers. That has helped to push the overall poverty rate down to 12.7 percent. That said, the near-halving of the child-poverty rate over the past half-century is not primarily due to improvements in the economy. In fact, stagnating wages, reduced bargaining power, automation, and offshoring have held down the earnings of families in the bottom of the income spectrum, and spiraling income inequality has meant that most of the gains of economic growth have gone to families at the top. Instead, it is the expansion of the safety net—in particular through the food-stamp program and provisions like the Earned Income Tax Credit and the Child Tax Credit—that has been most responsible for moving millions of kids above the poverty line over time, the researchers found.