Debt-Poor Kids

Child poverty in the United States has averaged around 20% since the late 1970s. During this time period, it has been consistently and considerably higher than poverty rates for other age groups. The case is often made that poverty in the United States is greatly underestimated. The many problems involved in measuring aggregate poverty rate also plague measures of child poverty. This article focuses on how interest payments on prior consumer debt affect government calculations of child poverty. After summarizing the negative consequences of child poverty, we use the Federal Reserve's Survey of Consumer Finances to estimate child poverty rates by subtracting interest payments on consumer debt from household income. The article concludes with some policy proposals for reducing child poverty and the number of households (especially those with children) who are "debt poor."