A new study released today by the Economic Policy Institute and the Institute for America’s Future proves that spending government money on early childhood programs isn’t just good for children—it’s good for taxpayers and society. What’s most hopeful about this study is that the policies it recommends are increasingly being embraced by experts across the political spectrum.
Roger Hickey is co-director of the Institute for America's Future.
Among wealthy industrialized nations, America ranks second to the bottom in the real disposable income of low-income families with children. And recent Census data shows that the number of poor children is on the rise. But that’s the bad news. The good news is that a growing consensus on how to reverse this trend is emerging among leaders across the political spectrum. And the solution—investing in children in their youngest years—not only addresses the poverty problem, it would also make the economy more productive and save money for taxpayers over time.
A new Economic Policy Institute study—released today by local groups in every state with the help of the Institute for America's Future—finds that our failure to invest in the healthy development of young children leads to enormous problems and enormous costs to society. Poor children overwhelmingly suffer from society’s neglect as they go through school, and then enter the workforce (or, too often, the criminal justice system) unprepared to be productive workers and citizens. And the costs to taxpayers and society are enormous because funds not spent on early childhood programs are spent later on remedial and special education, criminal justice programs and welfare benefits.
Reasons For Hope
But the report’s findings point to a hopeful future. Written by economist Robert G. Lynch, Exceptional Returns: Economic, Fiscal, and Social Benefits of Investment in Early Childhood Development finds that smart investments in comprehensive high-quality early childhood development programs would more than pay for themselves—generating more than $2 in returns to taxpayers for every $1 invested. (The total benefits to society from investments in early childhood development programs actually exceed 8 to 1.) The report also finds that investment in the health and education of children in their early years—3 and 4 years old—will eventually produce significant increases in economic productivity and growth. At the same time, this investment will reduce both the public costs and personal burdens of remedial education, welfare, crime and widespread poverty that result from our current failure to enrich the lives of many of America’s children.
The new report documents a growing consensus—among very conservative economists and business leaders as well as liberals—that early public intervention to improve young children’s health, brain development, family environment and readiness for school represents one of the best and most productive uses for public funds because of the proven return to the public treasury and to the long-term health of the economy that these kinds of investments produce over a reasonable length of time.
Support Across The Political Spectrum
Lynch—who is the chair of the Department of Economics at Washington College—quotes Nobel Prize-winning economist James Heckman of the University of Chicago:
Recent studies of early childhood investments have shown remarkable success... In the long run, significant improvements in the skill levels of American workers, especially workers not attending college, are unlikely without substantial improvements in the arrangements that foster early learning. We cannot afford to postpone investing in children until they reach school age—a time when it may be too late to intervene. Learning is a dynamic process and is most effective when it begins at a young age...and government interventions at an early age that mend the harm done by dysfunctional families have proven to be highly effective.
Likewise, Arthur Rolnick and Rob Grunewald of the respected Federal Reserve Bank of Minneapolis have come to similar conclusions:
...Recent studies suggest that one critical form of education, early childhood development, or ECD, is grossly underfunded. However, if properly funded and managed, investment in ECD yields an extraordinary return, far exceeding the return on most investments, private or public... In the future any proposed economic development list should have early childhood development at the top.
The Payoff Of Early Investment
The Lynch study for the Economic Policy Institute examines the costs and benefits of a nationwide program that would provide poor 3- and 4-year-old children with a high-quality comprehensive program of early childhood development that would initially cost about $19 billion a year. Based on the results of well-documented studies of smaller-scale programs, Lynch finds that such a nationwide program would ultimately reduce costs for remedial and special education, for criminal justice and welfare benefits. Moreover, such a program would increase income earned and taxes paid back to society.
In addition to the returns to taxpayers, Lynch finds that investing in poor young children is likely to have an enormous positive impact on our economy, raising the GDP, improving the skills of our workforce, reducing poverty and strengthening the global competitiveness of the U.S. economy. He finds that crime rates and the heavy costs of criminality to society are also likely to be substantially reduced.
What Lynch demonstrates is that the young children we invest in today will become more productive workers, make higher income and pay more taxes in the future. In turn, this will strengthen our public finances and raise contributions into the Social Security and Medicare system, enhancing the solvency of these programs just as our public retirement system is expected to need more revenues.
We Need Political Will
Clearly, the recent increase in child poverty is due largely to the growth in unemployment among family breadwinners during the recession that began in 2000. But the federal government’s response to the downturn has been both wasteful and ineffective, according to many experts. As recent studies indicate, the nation has squandered huge amounts of resources on poorly designed tax cuts that greatly increased budget deficits and further widened gaps between the very well-off and everyone else, and did so without much payoff in terms of jobs. Robert Greenstein of the Center on Budget and Policy Priorities said the policies are a poor use of resources. “These policies are burdening future generations with larger amounts of debt and starving the budget of resources that could be used to address such problems as child poverty and the growing health insurance crisis,” he said.
When President George W. Bush took office, the federal budget was still in surplus. At that time, The Institute for America's Future examined what could be done if $555 billion—the size of the first of President Bush’s many tax cuts—had instead been devoted to a 10-year investment plan to improve the lives of America's children. It found that making the expanded Child Tax Credit refundable could lift 2 million children out of poverty; expanding the Child Health Insurance Program by $67 billion could cover 5.1 uninsured children; fully funding the Child Care and Development Block Grant could serve 9.75 million more children; and investing $36 billion more in Head Start would have enrolled 80 percent of all eligible kids into this important and popular early childhood program.
Our nation has the resources to eliminate the dramatic disparity in wealth among its children. This groundbreaking report shows that basic things like nutrition, health care, pre-K education and programs to prepare and support parents are not only good for kids—they provide a real return to the taxpayers. If we fail to act on its findings, our whole country will suffer for it.
