How to Improve the Plight of Families With Children

Children present significant poverty and financial risks for families for two main reasons.

First, as yesterday's post explains, the mere addition of children to families is enough to push many families into poverty because having a child increases the money a family needs to stay out of poverty. In 2013, children pushed 4.7 million adults into poverty who wouldn't otherwise be in poverty. This is equal to 15.4% of all impoverished adults.

Second, people normally have children in their mid-20s, which is also when they are at the lowest part of their income lifecycle and are thus more likely to be working lower-paying, entry-level jobs. This means children are generally born to the poorest adults in the workforce. You can see how this plays out pretty vividly in this graph:

It shows that 1-year-olds (who have younger parents) are 42% more likely to be in poverty than 15-year-olds (who have older parents). You can also see it in the following graph, which tracks how much family income increases as a child ages (and thus as their parents age) at various percentiles of the family income distribution:

Taken together, the mere addition problem and the lifecycle income problem will always conspire to make children powerful agents of poverty and financial distress in a society that relies heavily on the market to distribute the national income.

How to Deal With These Problems

There are two basic ways people approach the problems identified above.

The first way, typically associated with the right-wing, is to say that families should conform their child-having decisions to the demands of the market income distributive system. Instead of having children when you feel you are most ready psychologically, physically, emotionally, or otherwise, you should have children when your market income is high enough to fully support them. Given the lifecyce income problem, in practice, this view means that many parents should majorly delay child-having, and (logically) that some people should never have children at all. For those families that don't adequately conform their child-having to the demands of the market income system, the resulting financial problems are apparently theirs alone to deal with. 

Of course, few proponents of this approach actually seem willing to take it all the way to its logical end. Even in our current world with low family benefits, families with children do receive very significant subsidies without which it would be nearly impossible for huge swaths of them to ever really "provide" for their children. This is most obvious in the case of public education: 90% of US children attend free public K-12 schools, a welfare benefit that costs $12,500 per year per child. If you truly intended that parents bide their time until their market income is high enough to cover their kids' expenses (including their education) without any public support from child tax benefits and public school subsidies, even middle class families would severely struggle to afford to have more than 1 child. The timing of their income across the lifecycle just wouldn't allow it.

The second approach, typically associated with the left-wing, is to provide a robust set of family benefits that enable people to comfortably have children according to their own family preferences. Instead of demanding that people conform their family decisions to the dictates of the market income system (which is a construct of our own making), this view holds that we should conform our income distributive system to support people's family decisions.

A decent bundle of family benefits would include the following:

  1. Maternity Grant. A couple of months before birth, a family would receive a lump sum payment to help offset the one-time initial costs of a child (e.g. a crib, clothes, bottles, etc.).
     
  2. Maternity/Paternity/Parental Leave. For some period of time after the birth of a child (e.g. 9 months), the parents would receive paid leave to care for the child.
     
  3. Child Care Benefits. After the leave period is up, parents would receive child care benefits to help cover the costs of caring for the child until they are school age. These benefits can come in the form of subsidizing center-based care, providing money to assist in-home care, or some combination of the two.
     
  4. K-12 Education. Children would receive schooling from kindergarten through grade 12. You could also provide them all a free lunch while they are at school.
     
  5. Health Care. Children would receive free health care throughout their childhood. This could be accomplished in the US by expanding Medicare to children.
     
  6. Child Benefit. Parents would receive a monthly check for each of the children they are caring for. Previously, I've proposed a benefit of $300 per child per month, which would replace all of the existing tax benefits for children.

Taken together, this set of universal family benefits (which is on offer in one form or another in some countries in the world right now) would greatly improve the plight of families with children, lower-income families especially.

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