May 11, 2009
Rising Unemployment Increases Poverty, Especially Among Children
by Ted Boettner
The national recession that officially began more than a year ago (Dec. 2007) is finally taking its toll on West Virginia. As shown below, the unemployment rate in the state has grown dramatically over the last three months, from 4.5 percent to 6.9 percent. This is the state’s highest rate of unemployment in more than a decade and is one of the most severe upticks that the state has ever experienced.
Based on past experience, we can expect this increase in joblessness to trigger an increase in poverty, especially among children. The graph below illustrates a strong correlation between unemployment and poverty rates in West Virginia. As poverty increases along with unemployment, it will also create a heightened demand for public services and programs like Medicaid.
Although West Virginia’s unemployment rate may remain below the national average, thousands of West Virginia will still be pushed into poverty as a result of the economic recession. Children are particularly at risk because their poverty rates are higher than those of adults and because the consequences of poverty can be more severe. Studies link child poverty to poor academic performance, social and emotional problems, more health problems, and lower wages as adults.1
West Virginia policymakers can cushion the impact of the recession on children and families in several important ways:
- Modernize the state’s unemployment insurance program to cover more jobless workers. Currently, only 36 percent of jobless West Virginians receive unemployment benefits. (Read Unemployment Insurance Modernization: $33 Million at Stake for WV Workers.)
- Expand eligibility for child care assistance for working families. Funds to do this are available now through the federal Recovery Act. (Read Boosting West Virginia’s Potential: Greater Investments Needed in Early Childhood.)
- Enact a State Earned Income Tax Credit for working families, modeled after the federal credit. (Read Making Work Pay: A State Earned Income Tax Credit for West Virginia.)
- Increase outreach for public programs for low-income children and families, such as food stamps, WIC, Medicaid, and CHIP.
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1. For more details, see “Child
Poverty: Trends, Consequences, and Policy Options,”
published by Child Trends, April 2009.