Politically-feasible policies to reduce poverty: the role of early childhood programs

A recent issue of The American Prospect has a special section focusing on poverty. This special section has numerous useful ideas for addressing poverty, such as expanding the Earned Income Tax Credit, increasing customized job training programs, and expanding career education. Yet in the end, I don’t think that this special section deals with the key issue: What types of anti-poverty policies are sufficiently cost-effective and politically sustainable that they could be run on a large enough scale to significantly reduce U.S. poverty? In this blog post, I focus on one such politically sustainable anti-poverty policy that deserves more detailed attention in poverty policy discussions: high quality early childhood programs.

To get a sense of a size of the U.S. poverty problem, consider the “poverty gap”: the annual dollars needed to bring each family and individual in poverty up to the poverty line. In the U.S., for 2010, this poverty gap was $162 billion. (Calculated using data on families and unrelated individuals from this Census Bureau table.) In practice, any income transfer program that sought to deal with U.S. poverty would also have to deal with the many families and individuals with income just above the poverty line. So any income transfer solution to the poverty program would have to transfer many hundreds of billions of dollars per year. Any earnings solution to the poverty problem would have to generate hundreds of billions of dollars per year. For example, if we imagine a skills training solution to the poverty problem with an annual rate of return of 10%, the required job training investment would be somewhere in the trillions  of dollars.

As Robert Greenstein of the Center on Budget and Policy Priorities points out in the special section, we have been able to run some anti-poverty policies on a large enough scale to significantly reduce poverty.  Such policies principally reduce poverty for the elderly, who are considered to be “deserving poor” who have earned their government benefits.  Yet it seems that this success is not easily extended to other anti-poverty programs. Given the economic challenges facing many working class and middle class Americans, there is much voter resistance to paying increased taxes to expand government assistance to the non-elderly poor.

The customized job training programs and career education programs advocated by Harry Holzer in the special section would be helpful. But it seems unlikely that such programs will be expanded to a sufficient size to really make a dent in the poverty problem.  As long as such programs are perceived as programs targeted at the poor, their scale and scope will be limited.

High-quality universal early childhood programs could make a significant contribution to helping solve the poverty program, but only in the long-run. A universal full-day pre-K program would in the long-run, based on some conservative estimates, add at least $75 billion in annual adult earnings to children from disadvantaged families.  (This calculation is based on estimates from studies of Tulsa that full-day pre-K on average boosts annual future adult earnings of children eligible for a free lunch by about $2,500 per year. Such children were 37% of the public school population in 2007 (Table 2-1), and the public school population is about 85% of all children of school age (Table 41). A universal program might enroll at least 70% of these children, based on Oklahoma’s experience.  Total U.S. workers are a little over 140 million. $2,500 times 37% times 85% times 70% times 140 million is $77 billion.) These long-run effects would be achieved after the entire workforce had the opportunity to participate in high-quality universal preschool.

The key political point is that such anti-poverty benefits could be achieved with a universal program that provides services for which all children are eligible. This universal eligibility makes the program much more politically potent.  Universal pre-K would not solve the poverty problem. But it would make a big dent in the problem, while delivering valuable services to children from all income classes for which voters from many income classes may be willing to pay higher taxes.

About timbartik

Tim Bartik is a senior economist at the Upjohn Institute for Employment Research, a non-profit and non-partisan research organization in Kalamazoo, Michigan. His research specializes in state and local economic development policies and local labor markets.
This entry was posted in Distribution of benefits, Early childhood programs. Bookmark the permalink.