The Effect of Parental Employment on Child Poverty

Abstract

In 1992, the United States poverty rate of 14.5% exceeded that of any year since the 1983 economic recession, and the number of poor people (37 million) is now greater than any time since the early 1960s (U.S. Bureau of the Census, 1993). The problem especially acute among America's children (Bane & Ellwood, 1989; Galston, 1993; Garbarini, 1992). More than 1 in 5 children today are poor, constituting roughly 40% of America's poverty population (U.S. Bureau of the Census, 1993). Children today are nearly twice as likely as the elderly to be poor, child poverty rates have increased by about one-third over the past 15 years, and children in other industrialized nations (e.g., Canada and Sweden) experience much lower poverty rates, especially among those living in female-headed families (Corbett, 1993; Danziger & Danziger, 1993). Debates about the rise in child poverty in the 1980s center on changing patterns of employment (especially among single mothers), on the transformation from married-couple to female-headed families, and on real declines in cash assistance to poor families with children (Easterlin, 1988; Eggebeen & Lichter, 1991; Hernandez, 1993; Wojtkiewicz, 1992). A central objective of this paper is to evaluate the extent to which parental employment--or lack of it--contributes to the high poverty rates among American children. Are children poor because their parents are not working or are only marginally attached to the labor force (i.e., working only part-time)? Policy debates increasingly focus on the role of employment as a poverty-reduction strategy (Corbett, 1993; Mead, 1992). Indeed, the Job Opportunities and Basic Skills (JOBS) provision of the 1988 Family Support Act was designed in part to move poor single mothers into the paid labor force and reduce their dependency on welfare income. Economic self-sufficiency presumably contributes to both short-and long-term reductions in family and child poverty. In the short term, earnings from work reduce the likelihood of family poverty. In 1991, the poverty rate was 27.1% among single mothers who were employed, a figure substantially lower than the rate of 70.9% among nonworking single mothers (U.S. Bureau of the Census, 1992). In the long run, work reduces reliance on welfare income and weakens the intergenerational cycle of dependency that often links poverty between parental and filial generations. Our aim is to evaluate the relationship between parental employment and poverty among America's children by addressing three specific objectives. First, we present poverty rates for children living in married-couple and mother-headed families in which parents have different patterns of current and past employment. Second, we provide various simulations that illustrate the potential salutary effects of hypothetical increases in parental employment. What would the child poverty rate be, for example, if employment rates were increased to 50% among nonemployed parents? Among nonemployed poor single mothers? Third, we evaluate the role of parent work in accounting for the currently striking racial differences in child poverty. Do racial differences in child poverty result from racial differences in economic self-sufficiency, as measured by different patterns of current and past-year employment in the labor market? LINKAGES BETWEEN WORK AND POVERTY The nonworking poor have always been a target in policy debates about the causes and consequences of the rise in welfare dependency in the United States (Mead, 1992). Antipoverty legislation, such as Aid to Families with Dependent Children (AFDC), was built in part on the notion that nonworking mothers are deserving of public assistance, while able-bodied nonworking men are counted among the undeserving poor. The continuing increase in women's labor force participation, especially among mothers of young children, has affected public support of welfare benefits targeted at poor single mothers. …