Taking a closer look at the child poverty rate

LOS ANGELES – The connection between the child poverty rate, the performance of schools and the overall economy has garnered intense media attention. But despite the comprehensive coverage, the link is more nuanced than believed. Both Japan and the United States serve as examples.

Whenever poverty is reported, it is almost always in relative terms. For example, about 15 percent of children in Japan live in a household with a disposable income less than half of the median. That places Japan in the bottom third of the 34 countries in the OECD.

In the same way, children in the U.S. are classified as poor when their families earn less than half the median income of others in the country. With the median family income at about $52,000 per year, any family earning less than $26,000 is considered poor.

But these numbers can be misleading because both Japan and the U.S. exclude any income from governmental transfers, such as food stamps and other assistance, which constitute a major source of income. As a result, what is usually reported is more a measure of income inequality (a relative term) than of poverty (an absolute term).

This distinction is not merely a matter of semantics. It determines government policies.

Yet if government transfers are included, the U.S. would no longer rank dead last in the rate of childhood poverty among the industrialized nations of the world. According to the Cross-National Data Center headquartered in Luxembourg, the absolute poverty rate of the U.S. is lower than the United Kingdom’s, almost the same as Germany’s and a bit higher than Finland’s. The impact is no less important in Japan, where 54 percent of the 1.24 million single-mother households and the 223,000 headed by single fathers give the country the notorious distinction of being the highest in the developed world in this category.

Unlike the U.S., the amount of child support a single parent receives in Japan is based on the number of children and the parent’s income. As taxable income increases, the amount of the allowance decreases.

Recognizing the need to boost the nation’s birthrate to 1.8 from 1.42 in 2014, Katsunobu Kato, minister for dynamic social engagement, announced that the government is committed to help cover the costs related to pregnancy and childbirth.

In light of these factors, a far more accurate picture of overall poverty is the Gini index, which measures how concentrated income is in a country. In a society where every person receives the same income, the Gini would be 0.0 for perfect equality. In contrast, where income disparity is most pronounced, the Gini would be 1.0, for perfect inequality.

For obvious reasons, neither extreme metric has ever existed. But the scale does provide a relative picture of overall income. Yet what is often forgotten in the debate is that the Gini index in a developing country is likely to rise, while the absolute number of people in poverty decreases.

Poverty, of course, affects more than just student performance in school and on tests of international competition. It is a blight that impacts every aspect of life and ultimately the economy. But it’s important to distinguish between relative and absolute poverty when trying to explain what accounts for disappointing outcomes in education. Otherwise, the poverty-as-excuse argument will continue unabated.

That doesn’t mean downplaying poverty. Instead, it means taking a closer look at the nuances.

Walt Gardner writes the Reality Check blog for Education Week in the United States.