Nurturing the future: Luke Shaefer builds the case for a universal child allowance

May 9, 2018

“Raising kids is expensive!” says H. Luke Shaefer, Associate Professor of Social Work and Public Policy, and director of the University of Michigan’s Poverty Solutions Initiative.

So what would be a quick, easy way to help parents and kids? Most likely, the much discussed, much debated child allowance, a monthly cash stipend for families, particularly those with low or middle incomes. Monthly cash payments of $250 per child have been floated. It’s a policy form getting increasing attention by policy makers in the U.S.

Why? The New York Times bluntly states that the United States has a higher proportion of poor children than Russia. According to LIS, an international data tracking center in Luxembourg, one in five American children is poor (the international definition of poverty is one-half the income of a family on the middle rung of the income ladder). Can we not afford $3,000 per year for these children? Many other industrialized countries have a child allowance, including 19 European nations and Japan, South Korea, New Zealand, and Canada; there is a precedent in the U.S. in the IRS’s child tax credit and earned income tax credit; and we have a delivery mechanism in place thanks to Social Security. It’s simple, it’s easy.

And yet...

“As a universal program,” Shaefer acknowledges, “the child allowance is expensive; it would take a lot of political will.” And Shaefer cites one more sticking point. “Historically,” he explains, “there has been difficulty in the U.S. with providing cash assistance to the poor that’s not connected to work. Something ingrained in our society hesitates to give cash unless a family is meeting goals that we think make them deserving. We can be proud of the EITC, but you have to be working to receive it, so it’s not a “safety net” in that it doesn’t catch you when you fall. The program that provides cash to families at the very bottom is only getting smaller and smaller.” A growing body of research, however, indicates that cash may be the most efficient and effective way to help struggling families.

Political analysts and researchers across the spectrum have long advocated for a child allowance. In the wake of his award-winning $2.00 a Day: Living on Almost Nothing in America, Shaefer’s collaboration with Kathryn Edin (now at Princeton University), Shaefer and a team of colleagues decided to write a paper developing their own case for a child allowance. Recently Shaefer interviewed with State & Hill, and he spoke, too, about what drives his scholarship:

“I grew up in a low-income family, but my extended family had means,” he says, “so I have had a long-time interest in thinking about how to bridge divides between parts of society. Researching $2.00 A Day I got to know not just the data, I got to know poor families and their day-to-day experiences. Doing that work enriched my understanding of what poverty really looks like, and deepened my knowledge base to address it.”

Of the child allowance, Shaefer, himself a father of two, says, “Society has a stake in making sure kids get the nurturing they need to be healthy and productive citizens, and this is a simple way to do it. Every family would get a small cash stipend to put toward the cost of raising kids. Our suggestion of $250 per child per month is in line with other countries that have this allowance. There has been a rise of in income volatility. We think this simple universal policy is the way to deal with that.”

At a recent Brookings Institute conference, Shaefer and colleagues vigorously aired pros and cons of the allowance and generated coverage in the New York Times and Vox. They attracted Senator Michael Bennet’s (D-CO) attention, and, in October 2017, he and Sherrod Brown (D-OH) introduced The American Family Act, a version of Shaefer and company’s policy in which payments were phased out for higher income families. It’s the furthest that major policymakers have ever gone in terms of introducing a child allowance in Congress.

Shaefer notes that many influential political thinkers are talking about the child allowance with a new urgency. Jared Bernstein, chief economist and economic advisor to Vice President Biden, said the allowance should be part of a package Democrats should consider in the near future. Jason Furman, chair of President Obama’s Council of Economic

Advisors, recently advocated for an expansion of the child tax credit to $2,000, to include families no matter their income. There is pressure from Republicans, too, and Sam Hammond, a poverty and welfare analyst at the libertarian Niskanen Center in Washington, DC, is also a strong advocate of an expanded child tax credit.

Shaefer says, “I don’t think we will see a bill become law in the next two years. But I am thrilled that, over the long term, there is so much growing interest. It’s very exciting.” 


--Story by David Pratt

Below is a formatted version of this article from State & Hill, the magazine of the Ford School. View the entire Spring 2018 State & Hill.