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A city thrives when its residents thrive. Yet many families, even though they are employed fulltime, continue to struggle to meet their families' basic needs. Local elected officials across the country have discovered a way to strengthen working families while bringing more federal dollars into the local economy: by connecting eligible workers to the Earned Income Tax Credit (EITC).
Almost 22 percent of children are poor. In 2012, over 16 million children in the U.S. were living in poverty according to the official measure, defined as living in families with income under $19,090 for a family of three. This is almost identical to figures for 2011, but an increase of nearly three million and 4 percent over 2007 (the last year before the Great Recession). Children are more likely than adults to be poor.
Our key substantive finding is that early improvements in child health, academic achievement, and behavior as well as improved parenting can yield sizable economic benefits for adult earnings. This is all the more striking when we recall that our estimates, for the most part, capture only a portion of the effects that early interventions are likely to have. Given data constraints for early achievement, attention, and the home environment we have focused on effects that work through improvements in school achievement in adolescence and that result in gains in one adult outcome, earnings. We have ignored effects that work through other intermediate outcomes, such as behavior and health, including peer effects, as well as effects on other adult outcomes, such as physical health. Moreover, our estimates do not take into account any synergies that might arise from concurrent improvements across more than one domain. If we could measure the full range of effects, the economic payoffs would surely be much larger than those estimated here.
The situation of high unemployment for black men is not new. It has persisted for decades, and scholars, sociologists, economists, policy makers, and advocates have brought attention to various aspects of this challenge and put forth solutions. Yet, it is seemingly an intractable situation. In 2012, three years after the end of the recession, the black male unemployment rate was in the double digits for every age category up to age 65. This was not the case for any other racial group. In 2010, half of working black men were employed in the two occupational clusters with the lowest average earnings. The situation was the same in 2000, and in 1990. In addition to being disproportionately represented in low-wage occupations, black men are much more likely than white men to be working part-time and to experience longer durations of unemployment.
Philadelphia has the worst poverty rate of the ten largest U.S. cities. Twenty-eight percent (28%) of Philadelphians - between 430,000 and 440,000 people - live below the federal poverty level. This includes 39% (135,000) of our children, 27% (265,000) of our working age adults and 17% (32,000) of our seniors. Some 1,500 families become homeless every year, including over 3,000 children. Many Philadelphians live above the federal poverty line but still face difficult choices, like whether to pay a utility bill or put food on their table. Poverty is a social problem. The City suffers from lost tax revenue, an increased tax burden, and a deterrent to the location of new businesses, jobs and income earners. All Philadelphians have a vested economic interest, if not a moral imperative, to fight poverty. Poverty diminishes the quality of life for everyone and tarnishes our city's reputation as a vibrant, thriving place to live, work, and play.