A Child Allowance Last Year Would Have Cut Child Poverty In Half, Again

The Census released its supplemental poverty report last week. In my coverage of the report, I've written posts explaining that non-market incomes kept nearly 40 million people out of poverty under this metric and that one-third of Americans are beneath 150% of the supplemental poverty line. Here I analyze what effect a $300 per child per month child allowance program would have had on poverty last year.

Using the 2012 poverty data, I previously found that replacing the child tax credit with a $300/mo child allowance would cut child poverty in half and overall poverty by one-quarter. Using the 2013 poverty data, I find basically the same thing. When you adjust the $300 for inflation, it becomes $304.39 in 2013 dollars. When you add that income to each family, you get the following:

  • Child Poverty Rate - declines from 16.5% to 8.3%.
  • Child Poverty Amount - declines from 12.2 million to 6.2 million.
  • Overall Poverty Rate - declines from 15.5% to 12%.
  • Overall Poverty Amount - declines from 48.7 million to 37.7 million.

So, all else equal, such a program would cut poverty by 11 million people, 6 million of whom are children, 5 million of whom are people taking care of children. Those not lifted out of poverty by such a program would still be dramatically better off, and those near poverty would be as well.

Since I began writing about this program many months ago, it has been brought to my attention that, in addition to the countries I already knew had it, Canada has a child allowance. Right now, parents in Canada receive $100 per child per month for every child they have under age 6. The Conservative Party is reportedly considering expanding this program to cover every child, not just those under age 6. In addition to this universal program, Canada also has a means-tested supplement of $120 per child per month that covers all children of all ages. This benefit phases out at 2 cents on the dollar for every dollar a family makes over $44k.

If the Conservative Party manages to expand the universal $100 child allowance to all children and the $120 supplemental child allowance remains, it will mean most parents in Canada, low-income parents especially, will be pulling down $220 per child per month in government benefits. For a family of four with two children, that would be a boost of $5,280 per year. This is not quite the $300 child allowance I have been proposing here, but, needless to say, it would do a lot of good for Canadian families and is something we should try to copy for our own country.