Genesis
Response
Penultimate
Finale
April 1st, 2021
The United States is one of the few developed countries in the world without a child allowance — an unconditional, periodic payment to households with children.
In fact, the U.S. dedicates only 0.7 percent of GDP to family social expenditures, of which the share devoted to cash benefits, 0.1 percent, is the lowest of any OECD country. We would need to increase cash transfers to families by approximately $200 billion per year simply to match the cash portion of the OECD average.
Other nations use child allowances to help parents shoulder the expense of raising the next generation, but also in recognition that parents themselves are usually best-positioned to know how to spend the money wisely. With few or no conditions on how the money can be used, parents end up making surprisingly effective choices. In addition to increased spending on direct inputs, like education or pediatric health care, research has found per-child cash benefits increase spending on so-called “household stability items.” Covering these less obvious expenses, including routine bills, dramatically reduces parental stress and creates an overall healthier household. Greater financial instability, conversely, is both a leading cause of divorce, and a risk factor for child abuse and neglect.
Universal child allowances, in particular, reinforce a form of bourgeois equality or equal dignity across families. Supporting all children, rich or poor, through a common program eliminates the poverty trap associated with means-test welfare, and gives poorer families a symbolic bridge into the middle-class.
The status quo ante in United States, in contrast, is one where middle class parents receive a simple Child Tax Credit, while low income parents are shunted into byzantine welfare bureaucracies modeled after the Puritan poorhouses of yore. There are no doubt many parents in deep poverty that require comprehensive social services to get back on their feet. More often, however, new parents find themselves turning to such programs not because they're "poor" in the richer, sociological sense of the term, but rather because they've simply become overwhelmed by the income loss and mammoth expenses that accompany a newborn.
The most common objection to a child allowance is that it will discourage work, particularly among single mothers. Yet the international evidence suggests otherwise. When Canada enacted a universal child allowance in 2006, for instance, maternal employment actually increased. Similar effects were observed from prior expansions to the Child Tax Credit, too, by helping parents afford family- and home-based child care.
In a typical year, 27 million children are excluded from the full Child Tax Credit because their parents reported too little income to qualify. Should all these families be sent to caseworkers? I don't think so, in part because incomes aren't static. 54% of Americans will spend at least one year below the poverty line due to job loss or normal income volatility. Clawing back a tax credit as income declines merely adds insult to injury, amplifying income shocks in a way that turns the very idea of social insurance on its head.
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