07/05/2012 10:44 am ET Updated Sep 04, 2012

Parents and Poverty: This Recession Can Hurt for a Generation

There is an old saying: "It's hard to see the forest for the trees."

Especially when the woods are on fire.

In the flailing efforts to forestall economic collapse, and the long fight to right an economy that still can't find its way, there is long-term danger lurking in the forest -- particularly how the worst downturn since the Depression is shaping a generation of children and young adults.

A 2010 Federal Reserve survey -- done every three years -- found a staggering 40 percent drop in household net worth. With the economy continuing to struggle in the areas that hit people hardest -- home and jobs -- the next survey is unlikely to show an appreciable drop in pain, possibly not for years to come.

The Foundation's Child and Youth Well-Being Index Project at Duke University reports that virtually all the progress made in family economic well-being since 1975 has wiped out by 2010.

Compounding the pain is Clinton administration reforms -- pledging to "end welfare as we know it." It was a pledge that could not have factored in the financial devastation that would follow a little more than a decade later. A system that was hailed as a milestone for public policy when times were good turned into a millstone around the neck of families -- particularly single mothers -- when times turned bad.

As families struggle financially, they often change.

Anxiety and depression take seats at the dinner table. Children -- with their receptors to parental mood always running wide open -- will sense the change in household tone. They will pick up on even the subtle shifts in the rhythms of daily routines.

Worse, they may see the loss of homes, changes in schools and friends, even verbal and physical abuse as the family fault lines crack under the unrelenting stress of getting through the month.

It will be years before we'll know how fear and uncertainty are shaping the futures of children caught in the crossfire of changed lives and anxious parents. A Brookings Institution report, "Families of Recession -- Unemployed Parents & Their Children" sees cause for concern. Children pushed into poverty by a recession, the report says, are three times more likely to be poor themselves than those who managed to stay more affluent. "In short, "say the authors, "the conditions of today will give rise to the next generation of poor Americans.

A big part of that is the impact of poverty on education -- children of families that are driven into poverty by the recession are 15 percent less likely to finish high school and 20 percent less likely to finish college than the non-poor.

The recession has also had its way with the trust and expectations of young adults -- particularly the younger end of the Millennials.

Quoted in a USA Today article on the changing expectations of young adults, author Morley Winograd, who writes extensively about the Millennials, said their economic situation is "completely analogous" to the depression-era generation. "They were raised in relative affluence, and just as they are about to start in that affluent world, it all comes crashing down."

They are forced to assume that "everything that came before them was a mirage -- that it was built on unsafe foundations."

This prolonged downturn will end. They always do. People will find their way back to confidence. But especially for those growing up under the weight of its fearsome uncertainties, it will be with us for generations to come.