Poverty, Children, and the Moral Economy of Israel After October 7
Standfirst
Wars leave visible scars, but they also create quieter emergencies that unfold far from the battlefield. One of the least discussed consequences of October 7 and the long months of war that followed has been the steady expansion of poverty – especially child poverty – across Israel. If resilience and renewal are to mean anything enduring, Israel must now confront this challenge with strategic clarity and moral seriousness.
I want to begin at a human pace.
When a nation is at war, attention quite naturally gravitates toward rockets, front lines, and diplomacy. Yet while Israel fought for its physical security, another struggle was taking shape inside kitchens, classrooms, and supermarket aisles. It did not announce itself with sirens. It arrived quietly – through skipped meals, deferred medical visits, and parents calculating which bill could wait another month.
October 7 did not create poverty in Israel. But it exposed and deepened it.
Thousands of reservists – men and women – were called up for prolonged periods. Many were primary breadwinners. Small businesses closed. Tourism and hospitality evaporated. Families near the Gaza and northern borders were displaced. In that environment, even households that had previously been stable slipped, slowly and painfully, below the poverty line.
This is why I welcomed the latest report from the National Insurance Institute not as a bureaucratic document, but as a clarion call.
The numbers are stark and sobering.
Nearly two million Israelis – around one in five – now live below the poverty line. Among them are roughly 880,000 children. That means one in four Israeli children is growing up in poverty, placing Israel near the bottom of the OECD on this most sensitive of measures.
Statistics can dull the senses, so it is worth pausing on what this means in practice. It means that 4.7% of Israelis give up a hot meal at least every two days. It means nearly one in ten forgo medical treatment due to cost. It means children who arrive at school tired, distracted, and anxious – not because they lack ability, but because their environment is unstable.
Poverty at this scale is not merely an economic issue. It is a strategic one.
Children who grow up in deprivation face long-term disadvantages in health, education, and employment. If left unaddressed, child poverty becomes intergenerational poverty – passed down not through fate, but through policy inaction.
One of the report’s most unsettling findings is that having a job is no longer sufficient protection against poverty. “Poverty among families with breadwinners has become an increasingly common phenomenon,” the Institute noted.
This reality has been intensified by the war.
Reservists did not choose absence; they answered a national call. But prolonged reserve duty often meant reduced income, stalled careers, or lost businesses. For families already living close to the margin, this was enough to tip them over.
Here, the social contract matters. A society that asks its citizens to defend it must also ensure that their families do not quietly slide into hardship while they serve.
Supporting reservists, therefore, cannot stop at uniforms, benefits, or ceremonies. It must extend to wage continuity, family support, childcare, and housing stability. Anything less risks hollowing out the very resilience Israel celebrates.
The poverty challenge is not evenly distributed.
Rates are highest in the ultra-Orthodox and Arab communities, which together make up roughly two-thirds of Israelis living below the poverty line. In some municipalities – Modi’in Illit, Jerusalem, Beit Shemesh – poverty affects more than a third of residents.
This reality is often discussed in cultural terms. But culture alone does not explain structural inequality.
Educational gaps, limited access to core curriculum subjects, weak labor-market integration, and concentrated local economies all play a role. Addressing child poverty therefore requires investment not only in income support, but in education, skills, and pathways to dignified work.
That is not ideological. It is practical.
If poverty is the condition, the cost of living has been its accelerant.
Food prices have surged dramatically since October 2023, even as global commodity prices eased and the shekel strengthened. A basic shopping basket has risen by roughly 20% in three years. Families are paying hundreds of shekels more each month just to eat.
What makes this especially corrosive is the perception – and evidence – that market concentration and weak competition are driving much of the increase. A handful of conglomerates dominate food production, imports, and retail. During wartime, public attention was understandably elsewhere. Prices rose quietly.
For families already stretched thin, this was devastating.
A nation cannot meaningfully reduce poverty while tolerating monopolistic structures that extract rents from essential goods. Structural reform in the food sector is not a technical matter; it is a moral one.
Israel has done this before. Telecommunications reform broke monopolies and slashed prices within months. The same strategic courage is needed now.
Compounding these pressures are recent tax hikes designed to fund wartime expenditures: higher VAT, frozen tax brackets, increased National Insurance contributions.
These measures may be fiscally defensible. But they are also regressive. VAT, in particular, weighs most heavily on low-income households, deepening inequality at precisely the moment when social cohesion is most fragile.
If Israel is serious about confronting poverty, budgetary discipline must be paired with targeted protection for working families and children. Otherwise, the burden of war will be unevenly – and unjustly – distributed.
Israel rightly prides itself on resilience. But resilience is not measured only in intercepted rockets or GDP forecasts.
True resilience is whether children can eat properly. Whether parents can afford medicine. Whether families believe that sacrifice will not be punished with neglect.
This is where renewal enters the conversation.
Renewal does not mean returning to pre-war norms that already left too many behind. It means rethinking the social foundations of growth: wages that lift families above poverty, education systems that equip children for the future, and markets that serve consumers rather than exploit them.
Israel speaks fluently about innovation in technology, defense, and medicine. It must now apply that same creativity to social policy.
Data-driven targeting of child benefits. Integrated education-to-employment pipelines. Smarter competition regulation. Wage supplements for working parents. These are not radical ideas. They are investments with measurable returns – in productivity, cohesion, and national confidence.
Addressing child poverty is not charity. It is nation-building.
I remain optimistic.
Not because the challenge is small, but because Israel has confronted harder ones before. The National Insurance Institute’s report does not condemn the country; it challenges it. It asks Israel to look honestly at itself, even amid recovery.
If resilience carried Israel through war, renewal must carry it through peace.
The measure of that renewal will not be found only in growth figures or export charts, but in whether fewer children go to bed hungry, fewer families skip medical care, and fewer working parents feel that the future is slipping away.
That is the Israel worth renewing. That is how Israel truly begins innovating its future.
- James Ogunleye, PhD, is the founder and editor of RenewingIsrael.org.
- A similar version of this essay appears in Resilience & Renewal: The Future of Israel, available on Amazon.