Preventing Permanent Harm to the Recession Generation

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By Deborah Weinstein  We would all like to think of the current recession as a temporary downturn with no lasting consequences.  But we do so at our peril – particularly when it comes to the reality facing our nation’s children and young adults.

That is the conclusion of The Recession Generation: Preventing Long-term Damage from Child Poverty and Young Adult Joblessness, a new report by my organization, the Coalition on Human Needs. The report finds that lost jobs, damaged educational opportunities, reduced family resources and a decrease in family economic stability are drastically limiting the opportunities available to those growing up and coming of age during this recession.

With the decline in employment far greater than in past recessions, and joblessness disproportionately higher among low-income and minority young adults, the problems facing young people can no longer be pushed to the back burner in public policy debates.  If these young workers earn less and consume less, our economy will grow less.  A greater proportion of their children will be poor, and their children’s poverty will stunt the next generation’s economic prospects.

Even before the recession, the costs to the United States associated with childhood poverty were calculated to total $500 billion per year – the equivalent of nearly 4 percent of Gross Domestic Product. These costs include lower earnings as adults, which in turn reflect lower workforce productivity, increased criminal activity and poor health later in life.

Research from previous economic downturns confirms that recession conditions far milder than today’s significantly harm the earnings of young people for years, even lifetimes. A study tracking white male college graduates from the early 1980s found that an increase of one percentage point in the unemployment rate resulted in average wages that were 4 percent lower each year after college graduation during a 17-year period, compared with young graduates who entered the workforce in more prosperous times.

Young workers currently face an unprecedented crisis in employment across the nation. Youth and young adults ages 16 to 24 account for nearly one-third of those who are currently unemployed, with the youth unemployment rate steadily rising from 12.7 percent in January 2000 to 16.9 percent in December 2007, and reaching 25.7 percent by June 2010.

The Recession Generation paints a disturbing portrait of the damage inflicted by child poverty and youth joblessness. Citing studies that track people over decades, it shows that when child poverty persists, children are less likely to finish high school and are more likely to be poor in adulthood. The report looks at 20 counties in10 states with very high levels of child poverty, and finds that those counties are far more likely to have high levels of adults in fair or poor health and to have fewer adults who have finished high school or beyond. For the most part, these counties’ babies are more likely to have low birth weights, a predictor of future health problems.

Our country faces a very important choice. There is compelling evidence of the harm to young workers facing recession conditions. There is similarly powerful evidence of the harm caused by child poverty.

Right now, Congress seems poised to ignore that evidence. But there are far more responsible alternatives.

We know that federal investments in effective programs and policies can make an enormous difference. Specifically, Congress should pass legislation to save and create jobs and to lessen hardships faced by children and families, such as extending the successful anti-poverty investments made in the American Recovery and Reinvestment Act.

Many of those investments will expire soon without Congressional action. They include job creation and training programs like the TANF (Temporary Assistance for Needy Families) Emergency Fund; expanded funding levels for child care assistance and Head Start; and expanded tax credits that give low-income families the extra financial boost they need, including the Earned Income Tax Credit and the Child Tax Credit. Congress should also maintain the expanded food stamp benefit levels enacted under the Recovery Act and make further improvements in child nutrition programs.

It was deeply disturbing to see Congress fail to provide funding for summer and year-round jobs for youth despite the high levels of youth unemployment. The Obama Administration and Congress should include adequate funding for these programs in the fiscal 2012 budget.

Concerns about the deficit are causing some in Congress to ignore the compelling evidence of the harm confronting the Recession Generation. They fail to see that helping these children helps our economy, and that providing jobs and training to young workers is essential to creating a skilled and productive future labor force. With the recovery slowing, taking such action is vital to spurring economic growth and ensuring a better future for all our nation’s children and youth.

 

Deborah Weinstein is executive director of the Coalition on Human Needs, a Washington, D.C.-based alliance of national organizations working to promote public policies that address the needs of low-income and other vulnerable populations.