December 23, 1999

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Although the number of poor children in America has declined by 3.6 million since hitting a recent peak in 1993, a study the Center on Budget and Policy Priorities issued today finds that progress in reducing child poverty has slowed markedly since 1995 and that children who remain poor have become poorer since 1995.

The study, "Changes Since 1995 in the Safety Net's Impact on Child Poverty," finds that the average amount by which poor children fall below the poverty line increased between 1995 and 1998, reaching the highest level recorded since data on this matter first were collected in 1979. The study is based on Census data and measures poverty after both cash and non-cash government benefits as well as taxes are taken into account. This is the approach most researchers recommend.

The study finds two principal trends at work since 1995. On the one hand, increases in employment and wages — along with expansion of the Earned Income Tax Credit (a tax credit for low-income working families) — have reduced child poverty. On the other hand, several major safety net programs have contracted substantially and now reduce child poverty less than in the past.

According to the study, the principal programs that have contracted and now reduce child poverty substantially less are the food stamp program and cash assistance for poor families with children. The numbers of children whom these programs serve have decreased sharply since 1995. The study found that to be the principal reason that poor children grew somewhat poorer during this period.

Between 1995 and 1998, the number of children who were poor declined 10 percent. But the number of children receiving food stamps fell 27 percent during this period, exceeding the decline in need, while the number receiving cash assistance dropped 36 percent.

At the same time, the study found, the Earned Income Tax Credit expanded between 1995 and 1998 and reduced child poverty to a much greater degree in 1998 than it had three years earlier.

"Amidst the good news of economic growth and decreases in the total number of poor children, it is troubling that those children who remain poor have slipped somewhat deeper into poverty," said Kathryn Porter, co-author of the report. "While the robust economy is helping many families, others are being affected adversely by the contraction in some parts of the safety net."

Other study findings include:

But after government benefits and taxes are taken into account, the decrease in the child poverty gap between 1995 and 1998 nearly vanishes, shrinking to only $400 million, a mere two percent improvement over the 1995-1998 period. The decrease in the safety net's effectiveness in reducing the child poverty gap largely canceled out the beneficial effect of the increase in employment and wages.

Similarly, in 1995, some 57 children received cash assistance for every 100 such poor children. In 1998, some 41 children did, the lowest proportion since 1970. Together, food stamps and cash assistance programs for low-income families reduced the child poverty gap by 37 percent in 1995 but by 27 percent in 1998.

The Center on Budget and Policy Priorities is a nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.

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