Key Points
- Child allowances are an increasingly discussed policy to reduce child poverty, and support for them has become a litmus test of whether someone cares about child poverty.
- But child allowances run the risk of increasing the number of single-parent families in which no one is employed. That would potentially worsen entrenched poverty in the long run, reversing gains the nation has made since the welfare reforms of the 1990s.
- Those risks might be worth bearing if current antipoverty policy were failing or if there were few alternatives to reducing poverty further. But the US has made great progress reducing child poverty, and many alternatives are available that would build on the lessons of welfare reform.
Executive Summary
Child poverty in the United States is too high. How can we reduce the share of children with low incomes, both today and in the future? One possible approach—a child allowance—has suddenly risen to the forefront of policy debate, with proposals from the Joe Biden administration, House Democrats, and Sen. Mitt Romney (R-UT). A child allowance would send unconditional cash benefits to nearly all families on a per-child basis.
These proposals have strengths and weaknesses, like all proposals. Yet support for child allowances has become a litmus test of whether someone cares about child poverty. Child allowances have won support from many camps in the conservative coalition. Pro-natalist, populist, and reform conservatives—groups that overlap considerably—favor the goals of supporting parenthood and one-worker families, but with distance from the welfare reform debates of the 1990s, fewer conservatives than in the past worry about the risk of encouraging single parenthood and no-worker families.
But there is wisdom in the traditional disposition of antipoverty conservatives—a disposition that was once somewhat bipartisan and that deserves credit for some of the unappreciated success the nation has had reducing child poverty over the past 40 years. Child allowances run a very real risk of encouraging more single parenthood and more no-worker families, both of which could worsen entrenched poverty in the long run—an overreliance on government transfers, poverty over longer stretches of childhood, intergenerational poverty, and geographically concentrated poverty. And the concern is about not only material poverty but also the social poverty that comes from growing up in non-intact families or communities with limited social capital and a dearth of meaningful roles for members to fill.
This report assesses the risk that child allowances would reduce work among single-parent families and encourage the growth of single-parent families. There is significant ambiguity in the relevant research literatures—much more than child allowance advocates have conveyed. Different people with different priors can point to this or that study if they are intent on asserting a claim about the impacts of a novel program like child allowances, but strong statements are not justifiable based on a comprehensive assessment of the literatures. Nonetheless, there is plenty of evidence to bolster the concerns of conservative critics of child allowances.
Given this ambiguity, it is important to appreciate the great progress the nation has made reducing child poverty over the past 40 years. Poverty among the children of single parents fell from 50 percent in the early 1980s to 15 percent today, with an especially sharp decline during the 1990s. This was a period in which policy reforms encouraged work, by imposing time limits and work requirements on receipt of cash welfare and expanding benefits to low-income workers. It was also a period that featured strong labor demand. But the employment gains of the 1990s were not reversed thereafter, and poverty among single mothers has fallen even before taking account of the expanded safety net. Nor does the nation’s child poverty rate look especially high relative to our peer Anglosphere nations, especially given our higher rates of single parenthood.
Policymakers should reject child allowances in favor of other policies to reduce child poverty that would build on the lessons of welfare reform, run lower risks of unintended consequences, address stubbornly low rates of intergenerational mobility, and attempt to reverse pervasive declines in family and associational life. They must resist the allure of a family policy that—only apparently—has no downsides.
Introduction
If you’re under age 40, you don’t remember the last days of disco. You weren’t there in 1979 for the Village People’s “Y.M.C.A.” You also won’t remember how dysfunctional the American safety net was back then. In March of that year, when the Bee Gees’ “Tragedy” was at the top of the Billboard charts, over seven million children were in families receiving welfare benefits from Aid to Families with Dependent Children (AFDC)—roughly one in nine children in the United States.1 Only 13 percent of AFDC families included an adult working on the books even part-time in 1979 (though some were working off the books). Nearly half had been receiving benefits for two-and-a-half years, and 27 percent were in a stint that was already longer than five years. Fully 85 percent of the children receiving AFDC were living without a father present.2
If you’re under age 30, you don’t remember Democratic presidential candidate Bill Clinton traveling the country in 1992 pledging to “end welfare as we know it.” In that year, 14 percent of children—over nine million, or one in seven—were in AFDC families in a typical month. Just 7 percent of those families had earnings, and just 11 percent had a father present. One-fifth had been receiving benefits for over five years. Not much had changed since Clinton’s campaign theme song, Fleetwood Mac’s “Don’t Stop,” reached the top 10 in 1977.
You also won’t remember the state and federal welfare reforms of the 1990s, which caused AFDC caseloads to fall dramatically and increased work among single mothers. In March 1979, 58 percent of single mothers were employed, and about half received AFDC at some point during the year.3 In 1992, the employment rate was still 58 percent, and half of single mothers still received AFDC. However, by 2000, after the 1996 welfare reforms took effect, 71 percent of single mothers were employed, and less than one-quarter received benefits under AFDC’s successor program, Temporary Assistance for Needy Families (TANF). Only 4.5 million children were in families receiving TANF in a typical month.4
By 2019, just 2.2 million were, or one in 33 children. And poverty among the children of single mothers was at an all-time low—lower by four or five million than if poverty had remained at its 1993 level, when welfare reforms were already in full swing in some states.5
Nevertheless, while child poverty in the United States is rarer than many observers believe, it remains too high. How can we reduce the share of children with low incomes, both today and in the future?
One possible approach—a child allowance—has suddenly risen to the forefront of policy debate. A child allowance would send unconditional cash benefits to nearly all families on a per-child basis. In February 2021, Sen. Mitt Romney (R-UT) released a child allowance proposal that one study projected would lower the child poverty rate by a third.6 Meanwhile, congressional Democrats are pushing to expand the child tax credit into a child allowance, giving shape to one of President Joe Biden’s priorities during the 2020 presidential campaign. The proposal would be less generous than Romney’s, though one analysis has it reducing child poverty by more, due to other policy changes in the Romney plan.7 It is likely to be passed into legislation in March and signed into law in the coming weeks. While temporary, observers anticipate that Democrats will push to make the child allowance permanent later in the year.
These proposals have strengths and weaknesses, like all proposals. Yet support for child allowances has become a litmus test of whether someone cares about child poverty. The widespread support for child allowances on the political left is unsurprising. Perhaps less predictable was the broad support the Romney proposal has received from many camps in the conservative coalition.
