KEY TAKEAWAYS 

Child poverty is costly to the US, just as it is to affected individuals, and costs the US between $500 billion and $1.03 trillion annually.
 

The federal government invests in programs aimed at reducing childhood poverty across health, child care and early education, income, nutrition, and housing domains.
 

Investments in children act through multiple, interconnected pathways, combatting the negative effects of growing up in poverty.
 

Public spending on children pays off in both the short and long term by helping children grow to their full potential.
 

Long-term payoffs to society are especially high for investments in children’s health and education programs, programs reducing childhood poverty, and programs directed at supporting very young children.
 

Each year, the federal government invests over $500 billion in children through direct cash payments, including tax credits, and in-kind goods such as child care, education, food subsidies, and health care coverage. Research shows these investments can have significant short- and long-term payoffs for the children receiving the benefits as well as for society at large.

Investments in children are often used to combat the negative effects of growing up in poverty. These supports are a necessity to help children thrive and reach their full potential. The payoff of any one investment can be difficult to assess because children benefit from a constellation of connected programs and one investment can affect outcomes in many different domains. For example, investments in nutrition programs can reduce food insecurity, which in turn boosts health outcomes and leads to improved school performance. Doing better in school can lead to higher educational attainment, which is associated with better adult health because adults with higher education levels are more likely to have jobs with health benefits.

This summary introduces federal investments across the domains of health, education, child care, income, nutrition, and housing and explores how investing in one domain can positively impact others in the short and long term.

Health

Key health programs for children include Medicaid and the Children’s Health Insurance Program (CHIP). Children enrolled in Medicaid experience better health outcomes during childhood and well into adulthood, have improved academic performance, decreased high school dropout rates, increased college completion rates, and higher rates of employment in adulthood. Multiple factors influence good health, and investments in non-health-specific programs can also positively impact children’s health over time.

Short-Term Health Outcomes

Investments in housing programs, cash assistance/income support, and nutrition programs can improve child and parent health.

• Housing programs are linked with children having better mental health outcomes than those on the waiting list for housing assistance.
• Cash assistance/income supports can lead to reduced incidence of low birth weight, which is associated with negative health outcomes; reduced household crowding, which is associated with negative physical and mental health outcomes; and reduced mental health problems and stress among parents, which might reduce the incidence of child maltreatment.
• Cash assistance/income support and nutrition programs reduce food insecurity, which is associated with worse general health, forgone medical care, less access to preventative health services, and higher health care costs.
• Children receiving nutrition benefits such as from the Supplemental Nutrition Assistance Program (SNAP) are less likely to utilize emergency room services. Participating in Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) during pregnancy is associated with lower risk of preterm birth, lower risk of low-birth weight infants, and lower infant mortality.

Long-Term Health Outcomes

Investments in housing, nutrition, and education for children can promote better health in adulthood.

• Housing programs allow families and children to access neighborhoods with lower poverty and more accessible health options, which can positively impact children later in life.
• Nutrition programs reduce food insecurity, and children with childhood access to SNAP have better life expectancy outcomes and are more likely to be food secure in adulthood.
• Children participating in child care and early education programs experience lower rates of poor health and families experience lower health care costs in adulthood.
• K–12 education programs can lead to higher levels of education, which are associated with better adult health because those with higher levels of educational attainment are more likely to have access to health benefits at their jobs and are more likely to work in safer workspaces.

Education and Child Care Programs

Early investments in children’s education and care are associated with positive child development outcomes in the short and long term, as well as greater economic stability for families. Generally, education investments make it more likely that children will do well in school and graduate from high school and postsecondary school. This, in turn, makes them more likely to be employed and achieve higher earnings as adults.

Child care and early education programs include Head Start, free and reduced-price public preschool and prekindergarten, and the Child Care Development Fund (CCDF). Key funding for K–12 education programs include revenues from state taxes and from local property taxes, Title I funding, and funding from the Individuals with Disabilities Education Act (IDEA).

Short-Term Education Outcomes

Investments in the earliest years of a child’s life can deliver substantial benefits that improve children’s short-term development, setting the stage for long-term well-being, while also supporting parental employment. Beyond K–12-specific programs, investments in nutrition, housing, and health programs can all lead to positive education outcomes in the short term.

• Nutrition programs like SNAP and WIC are linked with a child’s decreased likelihood of repeating a grade, and universal free meals have been found to increase English language arts and math standardized test scores.
• Housing vouchers have been found to improve a child’s educational outcomes such as significant academic gains in math and language arts after a family receives a housing voucher.
• Medicaid eligibility at birth is associated with increased academic performance in reading at ages 9 and 14, and access to child care and early education programs is connected to a decreased likelihood of placement in special education and grade retention.

Long-Term Education Outcomes

Investments in K–12 education can lead to higher standardized test scores and graduation rates, improved adult health outcomes—as highly educated people are more likely to access health benefits at their jobs—and increased income in adulthood—as the more education a person has, the more their job will likely pay.

Access to cash assistance/income supports, health, and housing programs increase high school and college graduation rates and educational attainment.

• Receiving cash assistance/income supports, such as the earned income tax credit (EITC), is linked to higher test scores for children and increased likelihood of completing high school and enrolling in college.
• Health programs and increases in childhood Medicaid eligibility decrease high school dropout rates and increase college completion rates.
• Housing programs can help improve children’s educational outcomes. A study of student academic performance among families who received housing vouchers in New York City found significant academic gains in math and language arts after voucher receipt. Housing programs can also allow families and children to access neighborhoods with better schools, which can positively impact children later in life.

Income

Cash payments to families with children allow families to purchase goods and services without restrictions on the funds’ use. Key cash assistance and income support programs include federal tax credits such as the child tax credit (CTC) and earned income tax credit (EITC) and income supports such as Social Security, veteran benefits, Temporary Assistance for Needy Families (TANF), and supplemental security income. Cash assistance improves mental health, reduces food insecurity, improves a child’s test scores, reduces family financial hardship, increases employment, and reduces income volatility. Beyond cash assistance programs, access to health, nutrition, and education programs can positively impact a family’s income.

Short-Term Income Supports Outcomes

Access to health and nutrition programs can reduce family financial hardship, burden, and income volatility. In the short term, cash payments are associated with reductions in material hardship, reductions in adverse childhood experiences, and improved parenting habits—all of which can benefit children.

• Health and nutrition programs reduce families’ financial burdens related to health services, lower financial strain, decrease the probability of having medical debt, and reduce the risk of medical bankruptcy for families with low incomes and high health needs.
• Nutrition programs like SNAP reduce financial hardship among participants and are associated with increases in the ability to pay for nonfood essential expenses. Programs like SNAP also reduce medical financial hardship relative to those likely to experience financial hardship who did not receive SNAP benefits.
• Early childhood education programs such as public preschool offer benefits to parents, serving as child care that allows parents to work more and improve their economic security.

Long-Term Income Outcomes

Research suggests that these investments pay off in both the short and long term by reducing material hardship, which in turn can improve health and educational attainment as well as a child’s home environment. Both types of investments can set children up for better long-term education and employment outcomes.

Programs supporting children’s health, education, nutrition, and housing can all positively impact a child’s income and earnings well into adulthood.

• Childhood participation in health programs such as Medicaid is associated with higher rates of employment later in life and lower rates of disability program utilization.
• Early childhood education programs such as Head Start result in children being more likely to have higher rates of employment and achieve higher earnings later in life.
• K–12 education programs are linked to higher wages and increased wage growth over time, as well as higher earnings in adulthood.
• Children who received nutrition benefits such as SNAP benefits in childhood have increased human capital, increased financial security, and better life expectancy outcomes in adulthood. SNAP enrollment contributes to long-term food security by improving financial security.
• Housing programs are linked with improvement in long-term earnings among children who moved to high-opportunity neighborhoods when they were relatively young.

Nutrition

Key nutrition programs include Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Nutrition benefits reduce food insecurity, improve health outcomes such as decreasing the incidence of low-birth weight and heart disease, increase English language arts and math standardized test scores, reduce financial hardship, and lead to better financial self-sufficiency in adulthood for children who received benefits. Beyond nutrition programs, cash assistance/income support programs support nutrition in children.

Short-Term Nutrition Outcomes

• Cash assistance/income support in the form of tax credits reduces food insecurity, which is associated with depressed physical, cognitive, and social–emotional development in children. Temporary Assistance for Needy Families (TANF) and Supplemental Security Income (SSI), two income support programs, are correlated with reduced food insecurity and with better parenting habits, including displaying higher sensitivity to a child’s needs and providing more stimulation to support a child’s cognitive development.

Housing

Housing programs include housing tax credits, vouchers, zoning programs, public housing, and grants designed to help families access quality, adequate, and affordable housing. Housing benefits lead to better mental health outcomes, improve educational attainment outcomes, reduce housing crowding and homelessness, and improve long-run earnings among children who moved when they were relatively young.

This section describes how cash assistance/income supports help families access housing, as well as the demonstrated short- and long-term benefits of housing programs on a child’s development.

Short-Term Housing Outcomes

• Cash assistance and income supports can reduce household crowding for mothers and their children, which is associated with adverse health outcomes because it increases stress, which leads to mental health problems, and increases the risk of spreading infectious diseases.
• Housing vouchers are associated with reduced household crowding, decreased prevalence of living with relatives or friends, fewer subsequent housing moves, and less homelessness—all of which benefit children’s mental health and well-being.

Long-Term Housing Outcomes

• Housing programs can allow families and children access to better neighborhoods—those with lower poverty, better schools, and more accessible health options, all of which can positively impact children later in life.

Long-Run Benefits to Society

Public programs that invest in children generally have a positive return on investment for society, and some also eventually pay for their cost—and more—to government through increased tax revenues and decreased spending on criminal justice and public assistance programs for adults. The largest long-term payoffs, according to some studies, come from early investments in children through education, child care, nutrition, and health care; though, investments in older children can have substantial returns as well.

• Improvements in education and the associated increases in earnings boost tax revenue and save money for the government by lowering spending on the criminal justice system and social service programs for adults.
• For each dollar invested in children’s health, the government receives a $1.78 return, which includes savings from reduced hospitalizations and emergency visits and future increases in tax revenue.

• Nutrition programs reduce the need for public expenditures on social service programs in adulthood and boost the economythrough increased spending on food production, transportation, and marketing.

   

ACKNOWLEDGMENTS

This summary was funded by the Peter G. Peterson Foundation. We are grateful to them and to all our funders, who make it possible for Urban to advance its mission. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at urban.org/fundingprinciples. Copyright © September 2024. Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute.