New Report: Recession Increased Child Poverty, Decreased Child Well-Being in North Carolina

July 2011

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Effects of the recession on children likely to linger

(Raleigh, NC) – Children in North Carolina were hurt by increased housing foreclosures, rising unemployment, and increased child poverty during the recession, according to a report released today by Action for Children North Carolina. Due to the sluggish recovery and reductions in state-funded supports, the children of North Carolina will feel the impact of the recession for years to come. The report comes out on the heels of a national Pew Research Center report detailing the effect of the recession on wealth gaps among African Americans, whites and Latinos.Children in the Great Recession, released today by Action for Children North Carolina, a leading statewide nonpartisan, nonprofit child research and advocacy group, found that child poverty, a major predictor of lifetime health and earnings potential, increased significantly from 2007 to 2009. The number of children living in extreme poverty (less than $11,000 annually for a family of four) increased 25 percent during the recession. Among very young children (under age 5), a sobering one in every four now lives in poverty in North Carolina – a 17 percent increase. African American and Latino children and youth were disproportionately affected.”Children depend on a network of critical supports to help them successfully transition into adulthood,” said Laila Bell, Director of Research and Data at Action for Children North Carolina and the primary author of the report. “This recession has stymied children’s progress by causing family economic hardship, reducing children’s access to stable housing and limiting the quality of their educational opportunities.”

Key findings from the report include:

More families face economic insecurity in the wake of the recession. More than one in five children in North Carolina now lives in poverty. As unemployment rose across the state, the number of children living in families where no parent had full-time, regular employment increased 19 percent to 753,000 from 2007 to 2009.

Increased foreclosures and housing instability threaten children’s social and educational support networks.¬†Between 2007 and 2009, as many as 119,000 children were impacted by foreclosure in North Carolina. Foreclosures and housing instability create disruptions in children’s lives that can diminish their health and educational outcomes.

Although investments in children’s health insurance held, key work supports and early education declined amid budget shortfalls.

While American Recovery and Reinvestment Act (ARRA) funds helped bolster some state investments during the economic downturn, critical work supports and educational programs have diminished greatly due to state budget gaps. Funding for subsidies that help secure quality child care for working families, individuals looking for employment and those enrolled in school or a job training program declined 40 percent between the 2007 and 2010 state fiscal years.

The recession has erected educational and employment obstacles that endanger young people’s ability to achieve financial independence and assume adult roles as workers, spouses, parents and citizens.

Youth ages 16-24 have the hardest time finding work in the current labor market, and have the highest unemployment among North Carolina workers in the aftermath of the recession — 20.5 percent. Persistent, high unemployment delays youths’ entry into the labor force and impedes their transition to adulthood.

The report also provides county-level data for unemployment rates, percent of children in poverty, and children affected by foreclosures over the years of the recession (2007 through 2009).

“Our state’s current and future prosperity depends on how well we nurture, educate and support the positive development of our children,” said Paul Stock, Executive Vice President & Counsel of the NC Bankers Association and an Action for Children Board Member. “If left unchecked, the recession will create structural damages that will impair the prospects of North Carolina’s children, young adults and economy for future generations.”