Why Does the Richest Country in the World Have So Many Poor Kids? (Ep. 475)

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Among O.E.C.D. nations, the U.S. has one of the highest rates of child poverty. How can that be? To find out, Stephen Dubner speaks with a Republican senator, a Democratic mayor, and a large cast of econo-nerds. Along the way, we hear some surprisingly good news: Washington is finally ready to attack the problem head-on.

Listen and follow our podcast on Apple Podcasts, Spotify, Stitcher, or wherever you get your podcasts. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.

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Stephen DUBNER: I was under the impression that raising children is pretty much foolproof, that if you just give them some food and they don’t freeze to death or fall off a mountain or whatever, they’ll inevitably turn out perfectly fine. Would you say that’s an accurate assessment? 

Dana SUSKIND: Yes, first and most important is keeping them alive and getting them to adulthood. And that’s what most of the time of mankind has been focused on. But in the last 50, 100 years, we’ve expanded what it is to raise a child. And we’ve become much more focused on child development, cognitive development.

DUBNER: So you’re saying I have to talk to my children, among all the other things I have to do? 

SUSKIND: You need to talk and interact with them. Yeah, all of those things are really important. 

DUBNER: Sounds exhausting. Why would anyone want to be a parent? 

SUSKIND: Well, it can be very exhausting. And for the longest time in this country, we’ve said to parents, “You know what? It’s all on you.” So, yes, this intensive parenting has become the norm. But our structures just aren’t set up to support parents in that.

The very patient person I’ve been speaking with here is named Dana Suskind.

SUSKIND: I am professor of pediatrics and surgery and co-director of the TMW Center for Early Learning and Public Health at the University of Chicago. 

And I hope you can tell I wasn’t being entirely serious about the burden of child-rearing. But let’s be honest: parenting is a hard thing! And I say that as someone who has not only enjoyed parenting but — this is a big “but” — but as a parent who hasn’t had to worry too much about money. If you want to make an already hard thing harder, take away the money. Poverty and parenting can be a brutal combination, especially if you live in a society that doesn’t go out of its way to help. This is a point Dana Suskind makes in a book she’s writing. It’s called Parent Nation. She begins with a quote from Nelson Mandela: “There can be no keener revelation of a society’s soul than the way it treats its children.” So I asked her what the American way of treating children says about our soul.

SUSKIND: We have a beautiful soul, but we have a long way to go to support parents and children. We talk about putting parents and children at the center. But when you look at what we really do, we sideline them. And when you compare us to any developed, rich nation, we lag behind in almost any metric in investing in early childhood and in families.  

DUBNER: You write about “the mythic idea of American individualism” and how that affects child-rearing. What do you mean by that? 

SUSKIND: When you think back to how this country came into being, it was built on American individualism — “pull yourself up by your bootstraps” — and we took that idea and said, well, that also goes with parenting. We use the term “American individualism” as another way to say, “You know what, society plays no role in supporting parents.” That means for parents, it’s all on you. Unfortunately, it’s not so easy.

The last few months, we’ve been putting out a series of episodes about the intense Americanness of American culture — the idea that the U.S. is just different from other countries, and we should stop pretending it’s not. When it comes to supporting children, there are two central facts that confirm Dana Suskind’s claim that the U.S. is an outlier. The first is that, even before the pandemic, roughly 1 in 7 children in the U.S. were living in poverty. That’s a higher share than the number of elderly Americans who live in poverty. Here’s the second fact: the U.S. — despite having the highest G.D.P. in the world and one of the highest per-capita G.D.P.’s — is relatively stingy when it comes to supporting kids and parents.

Hilary HOYNES: The United States spends about one percent of G.D.P. on family benefits. France, for example, spends three-and-a-half percent of G.D.P.

So, today on Freakonomics Radio: how did it come to this? There are a variety of explanations — some of them pretty surprising.

HOYNES: Social Security.

And what’s being done about child poverty? We’ll hear from a U.S. Senator who happens to be a Republican.

Mitt ROMNEY: I wish I could tell you that the compensation that I’m describing is sufficient to raise a child. But it’s not.

And a big-city mayor who happens to be a Democrat.

Kim JANEY: My mother used to say the hardest job in America was being poor. 

We’ll also hear from our regular assortment of econo-nerds, all of whom are puzzling over the same riddle: why does the richest country in the world still have so many poor kids?

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Dana Suskind’s research center at the University of Chicago is about helping kids early.

SUSKIND: One of the biggest problems is that the most important growth during the first three years of life — the building of foundational brain development — is largely unseen. All children look cute. They all are interactive. You’re like, “Oh, everything is going fine.” 

But Suskind sees a hidden epidemic, repeating itself from generation to generation.

SUSKIND: And it’s not until later that the deleterious impacts of things like poverty and toxic stress, that you see the impacts on brain development. I always say if we could just see those neural connections occurring, I would bet that we would invest quite differently.

Kimberly NOBLE: We know that developmental delay, language delay, is more common among children from disadvantaged backgrounds.

That is Kimberly Noble, a neuroscientist and pediatrician at Teachers College, Columbia University. Noble likes to say that the brain is not destiny.

NOBLE:  By which I mean, the brain is highly malleable to ongoing experience. That means if we change the experience, the brain is likely to change as well.

Decades of research has shown that growing up in poverty is correlated with many bad outcomes: cognitive development, school performance, even later, in the job market.

NOBLE: But correlational work really doesn’t speak to causality, by which I mean we can’t say for sure whether poverty is simply associated with those differences or whether poverty is really causing those differences. And so, to address that question from a scientific perspective, we need to employ a randomized controlled trial. 

So Noble helped design and run exactly such a trial. It’s called Baby’s First Years. Her collaborators are Lisa Gennetian, Katherine Magnuson, Greg Duncan, Nathan Fox, Hiro Yoshikawa, and Sarah Halpern-Meekin. It is the first project to analyze the causal impact of poverty on brain development. How do you run a randomized trial on that?

NOBLE: So, of course, you can’t randomize people to live in poverty or not live in poverty, but you can randomize people to receive different amounts of poverty reduction. 

By “poverty reduction,” Noble means money. The researchers recruited 1,000 low-income mothers from four metropolitan areas. These were women who had just given birth.

NOBLE: Right there, in the labor and delivery floor, we approached them about enrolling in the study. They were told they had the opportunity to receive a monthly unconditional cash gift, which they would be free to spend however they like. 

This is where the randomization comes in: different mothers would receive different amounts of money.

NOBLE: So, what we call the high-cash gift group receives $333 a month, which amounts to $4,000 a year. And what we call the low-cash gift group receives $20 a month, or $240 a year. And that difference in annual income has been associated in the correlational literature with improvements in school achievement, improvements in time spent in the labor force as adults, and even improvements in health as adults. But now, we’re actually going to be able to test whether there’s a causal relation there. 

This is the moment I’d like to tell you the results of Noble’s study. But there aren’t any yet, at least nothing the researchers are willing to share. So: we’ll have to keep an eye on that. But let’s pull back for a moment and look at the big picture. As of 2019, 14.4 percent of U.S. children lived in poverty. As I mentioned earlier, that’s about one in seven kids. Broken down by race: one in four Black kids lives in poverty; for Hispanics, it’s one in five; and for non-Hispanic white kids, one in 12. Still, that’s more than 3 million white kids in poverty in the U.S. All these numbers, remember, are pre-pandemic; Covid has made things even worse for low-income families. How does the U.S. do with child poverty compared to other countries? Not very well. If you look at a graph of child-poverty rates among countries in the O.E.C.D., the U.S. is among the very worst, bunched up with Mexico and Chile, Turkey and Spain. Among the countries with the least child poverty are Finland and Denmark, even Poland and Ireland. The U.S. spends a much smaller share on child poverty than the O.E.C.D. average, with very little in the way of direct financial aid.

One major form of aid is the E.I.T.C., or Earned-Income Tax Credit. As the name implies, this is aid connected to income, which makes it conditional on employment. For a lot of parents, this can be a Catch-22 since employment often requires child care, which in the U.S. can be expensive — unlike a lot of other O.E.C.D. or European Union countries, which provide or at least subsidize child care. There are a variety of other, conditional-aid government programs, including TANF — Temporary Assistance for Needy Families, often known as welfare, and the SNAP program, formerly known as food stamps. But the desperation of the pandemic has also led to more unconditional aid. The Biden administration, as part of the American Rescue Plan, recently expanded the child tax credit, which provides monthly cash payments to families under a certain income level. As of now, these payments are scheduled to last only a year but as we’ll hear later, there’s a good chance for extended aid. The Biden payments seem to have been inspired by a 2019 report called “A Roadmap to Reducing Child Poverty.” It was written by a National Academies of Sciences panel that Congress had asked to identify evidence-based policies that would reduce child poverty by half within a decade. One member of that panel is Hilary Hoynes.

HOYNES: I’m a professor of economics and public policy at U.C. Berkeley. And I study poverty and inequality and the role of the social safety net. 

DUBNER: With particular attention to children, or not really? 

HOYNES: Very much with a particular attention to children.

DUBNER: How would you summarize the means by which the U.S. government has addressed child poverty compared to other wealthy nations around the world? 

HOYNES: People ask me all the time, “Why is the child poverty rate so high in the United States? And there’s really two simple answers. One, we do less in terms of the social safety net. And secondly, we have a country where in many states, wages are very low. The federal minimum wage, as your listeners know, hasn’t changed in many years. And so we end up with a situation where a mom can be working full time at the minimum wage and be classified as poor.

To be fair, the rate of child poverty in the U.S. used to be much higher: as recently as 1959, it was 27 percent, roughly double what it is today.  But Hoynes says that progress has stalled over the past couple decades.

HOYNES: We see reductions in poverty when one of two things occur. One is we expand the social safety net. And so that’s part of the story in the ’90s. The expansion of the Earned Income Tax Credit dramatically reduced child poverty. But the second thing that happened is there was an increase in employment among single mothers. And wages started to also show some real growth. And so those are the reasons why it declined in the 1990s — and then really stayed stable, because there was nothing going on in the policy space, and wages were at best treading water.

DUBNER: One thing that I find curious is if you go back 50 or 60 years, you see that the share of older people in poverty in the U.S. was higher than the share of children in poverty. But that has flipped now. Now it’s children who are disproportionately likely to be poor. What happened? 

HOYNES: Social Security. The one percent of G.D.P. on family benefits in the United States compared to 3.5 percent in France — if you look at spending on the elderly, we’re actually pretty good. We expanded Social Security and that reduced elderly poverty.

DUBNER: So is the problem really that children don’t vote? 

HOYNES: I think the problem is that we don’t see this as a necessary investment in society. 

DUBNER: But how can that be? Because every legislator, everybody was a child once and a lot of them have children. How can that be? 

HOYNES: In my list of things that might have led us to this moment, one of them might be changing the conversation to this being an investment. Because it used to be the conversation was all about, “Well, okay, I care about reducing child poverty, but I’m worried that it’s distorting behavior.” Remember Paul Ryan and the women in their hammocks? You know, “everyone in their hammocks because of the social safety net.” Like that was the discussion — the beginning of it, the middle of it, and the end of it. 

 JANEY: There has been all kinds of messaging, racist messaging around welfare queens and trying to put that on the backs of poor, working women of color, specifically Black women. That was true in the 1980s. And there is a lot of that still with us to this day.

That is Kim Janey, who since March has been the acting mayor of Boston. She’s a Democrat and the first woman and first Black person in that job.

JANEY: And so I think people are making false judgments that are based in this racist notion of what it means to be poor. And so that certainly has an impact in terms of the willingness for folks to put forth solutions and policies when they think it will benefit a certain segment of the population that they deem being unworthy of that support.

DUBNER: I can’t imagine that what you say isn’t true. On the other hand, it’s odd because there are many, many, many, many white kids living in poverty as well.

JANEY: Absolutely, absolutely. And that was true 50 years ago as well. But again, it was the painting of this picture that I think has helped contribute to where we are. 

Janey has been pushing to make Boston’s economic recovery from the pandemic a more equitable recovery. The underlying disparities are jarring. According to a 2015 report from the Federal Reserve Bank of Boston, the median net worth of Boston’s white residents was just under $250,000. The number for multigenerational Black residents: $8. Not eight thousand dollars, even eight hundred. Eight. Dollars. Janey is familiar with poverty.

JANEY: My parents divorced while I was very young. I grew up poor with my mom, experienced food insecurity, housing insecurity. I was bussed when I was 11 years old during the 1970s battle to desegregate Boston Public Schools, which came decades after Brown vs. Board of Ed. I had rocks and racial slurs thrown at me. My parents, though, always fought for me in terms of my education. I think the more we invest in children, particularly in those early years — I mean, there are studies that support this, that child development from birth to five and particularly birth to three is so critically important. And if we really care about eliminating the opportunity and achievement gap, there would be much more investment in these early years. 

DUBNER: Let’s talk about that zero-to-three gap, because academic researchers do say that a lot of the deficits among poor kids, by the time they get to school — language and cognitive deficits and so on — they’re already formed. The government typically doesn’t get involved in the welfare of children until early education. But if so many kids are falling behind at the family unit, what’s the government supposed to do?

JANEY: Well, the government has helped create these issues in the first place, in terms of denying who would be able to build generational wealth. And that is well documented. People can throw their hands up and say, “Oh, these are personal choices that people are making.” That’s rubbish. These conditions, in terms of the so-called urban ghettos that are largely populated by Black and brown folks who are poor in this country, those conditions were created by government. And so I believe government has a role. 

What does Kim Janey mean when she says those conditions were created by government? Well, there were decades of discriminatory housing and educational policies; a criminal-justice system tilted against minorities and poor people. But even if none of that were the case — even if no part of our child-poverty problem were caused by government itself — wouldn’t you still want the U.S. government to play a bigger role in fixing the problem? Some people might; others might not.

SUSKIND: It comes down to the way we think about mothers and American individualism.

That, again, is Dana Suskind from the University of Chicago.

SUSKIND: Government stepping in in this early childhood space has always felt uncomfortable at some point.  

DUBNER: And you think that relates to American individualism? 

SUSKIND: I think that it’s probably even more than that. That might be a little bit of an excuse. Look, it costs money to invest in our future. My colleague Jim Heckman has shown up to a 13 percent return on investment in investing in early childhood, but that seems far off for people. But what Covid has really shown us is that investing in the early childhood space is as much an issue of gender parity as it is civil rights, and that we need to invest in that now, if we want women in the workforce, if we want every child to have a chance. 

DUBNER: When you start talking about a top-down government retooling of how children are supported, I think there is this strain of American individualism that’s like, “We’re America, damn it. And we do individualism, and we do self-reliance. And we don’t really want the government messing around with our kids, do we?”

SUSKIND: Well, guess what, Stephen? I couldn’t agree more. We don’t want top-down. Fundamentally, to understand what it is for parents to be able to choose how they want to raise their kids with the idea that every parent wants the best for their kids, we need to create contexts that allow parents to do it. You can’t tell me that having to work three jobs without benefits and having no high-quality child care is really giving parents the choice to do what they need to do. No, just the opposite. We’ve created a structure where parents have no choice, where parents aren’t able to parent the way they want to. 

Maybe it was Covid; maybe it was something else — but over the last several months, Washington, D.C., finally seems to have got religion when it comes to child poverty. So, after the break: what happens next?

ROMNEY: There’s no question there will be unintended consequences.

And if you want to hear the earlier episodes in this series about how the U.S. is different from other countries — go to Freakonomics.com/AmericanCulture. Or you can listen to episode numbers 469, 470, and 471 on any podcast app — or on Spotify or Amazon Music. One of those episodes is called “The Pros and Cons of America’s (Extreme) Individualism.” You can also get all the other shows in the Freakonomics Radio Network: No Stupid Questions, People I (Mostly) Admire, and Freakonomics, M.D. We’ll be right back.

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Over the past few decades, much of the government aid to families and children in the U.S. has been tied to employment. Lisa Gennetian is an economist at Duke.

GENNETIAN: That’s really different than comparable benefits offered to families worldwide, whether you think about Scandinavian countries and the United Kingdom or Canada. 

Gennetian also helps run the research project we heard about earlier, Baby’s First Years, where researchers are giving money to poor families to see how it affects their children’s development.

GENNETIAN: So the U.S. does stand apart on really feeling like work is important and encouraging, incentivizing people to work, and I don’t think anyone would argue against that. Certainly no economist would.  

But when you have a safety net so tied to employment, there are some things to worry about.

GENNETIAN: You worry about families and children that fall through the cracks. You worry about children who are being raised with one parent who is being asked to work and doesn’t have child care. You worry about children in a family that has a crisis, let’s say, where the lead earner is injured but not disabled and thus not eligible for disability benefits. You worry about how the jobs available might not be designed to be supportive to families and children.

Here’s another thing to worry about.

HOYNES: If we build a social safety net around work and there is no work, we have no safety net. 

And that, again, is the Berkeley economist Hilary Hoynes, a member of the panel that Congress directed to reduce child poverty.

HOYNES: And that’s not really rocket science, but this was something that was literally not part of the conversation in the late 1990s.

DUBNER: When you say there isn’t work, are you talking about a pandemic-related shutdown, are you talking about automation and technology wiping out certain kinds of jobs? Both? 

HOYNES: All the things. And even more moderate changes, like just the lack of employment growth and paired with that, of course, the lack of wage growth.

DUBNER: I think a gigantic topic that hasn’t come up yet in terms of a driver of child poverty is housing costs. How much do high housing costs affect child poverty? 

HOYNES: Where I sit, here in the San Francisco Bay area, housing insecurity is extremely high. Now, housing benefits have always been capped in terms of the funding. And so households can spend 10 years on a waiting list to get a housing voucher — or in the older days, to get a housing unit. And so we simply dedicate very little to it. For those that get the housing voucher, they’re very valuable. By far they would be the largest government assistance that a household that is lucky enough to get a voucher receives, but I think one out of 10 eligible households are receiving. 

DUBNER: What happens if, then, you were able to invoke a, let’s say, $1,000-a-month housing credit — cash, essentially — for all families under a certain level of income? What does that do to the housing market? 

HOYNES: We know that it does put upward pressure on rents. We know that. This is talked about with the Earned Income Tax Credit. If the Earned Income Tax Credit subsidizes a lot of people to go into work, is part of that increase in labor supply “captured” by employers in terms of lower wages? So the solution there is, well, you need to have a better wage floor. And so having a higher minimum wage really couples well with the Earned Income Tax Credit. And so that’s the question that comes up with housing. Do we need to combine it somehow with more rent-stabilization caps? 

DUBNER: Your enthusiasm and your support for these seemingly no-nonsense ideas sounds so viable, like all it needs, really, is a crapload of money. Is that essentially the problem?

HOYNES: Yeah, it is. I mean, as I like to say, it’s not rocket science. You just need to give people more money. I will say, we have learned a lot about different ways of doing redistribution. But at the end of the day, part of it simply requires a dedication of resources. And critically, what we’re learning now that we did not know 10 years ago, 15 years ago, is that these are investments. They’re not just spending streams.

DUBNER: But if I say, “Yes, Professor Hoynes, that all sounds really lovely. And I know you say it’s an investment and it literally pays for itself in the long run. But where does that money come from now? Who do you take from to give to these children several trillion dollars a year to bring the U.S. at least in line with other rich countries?” 

HOYNES: I think we do it in all the ways that we increase taxes. I mean, the report came out that we think that $1 trillion in avoided taxes is happening right now because we’ve defunded the I.R.S. and aren’t maintaining our existing tax code, let alone taking back some of the reductions that we’ve seen over the last 20 years. So I think I would do something broad-based that increases the base a lot, as well as increasing rates on those that have experienced such tremendous gains over the last 20 years.

DUBNER: What if I say, “Okay, Hilary, you’re a smart person. You know this topic. I accept your indictment of our country. And so I hereby declare that we — U.S. government, Congress — are going to triple our spending. And next year we push child welfare spending to three percent.” Does that solve the problem or at least begin to solve the problem? Or are there more underlying structural differences between the U.S. and these other countries that make it not so easy to solve, even with that much money? 

HOYNES: Oh, I think we can solve the problem. I mean, that’s not to say that there will be no problems in America and there won’t be disparities and labor-market discrimination and all the rest. But, this National Academy of Sciences panel that I was part of, we were charged with using evidence-based existing policy that would reduce child poverty by half in 10 years. And at the core of our proposals to meet that goal was a child allowance that looks very similar to what the Biden-Harris plan is, our one-year plan that we currently have, the American Rescue package. Starting with very simple, unconditional child tax credit, or child allowance — it’s the bedrock of most European countries’ child benefit system — could get us all the way there. 

DUBNER: And that seems to have appeal to all political players, yes? 

HOYNES: Well, we’ll see what happens. But we do have Mitt Romney making a proposal that has a lot of similarities to what the Biden-Harris proposal is. And the policy evolution that makes both Romney and Biden-Harris a kind of natural organic evolution is it’s building on an existing child tax credit that we’ve had since 1997 and was most recently expanded under the 2017 Republican tax plan. We have, for families with children this year, an unconditional cash benefit. And we’ve never had that before. The Biden-Harris plan, as well as the Romney plan, are fundamentally different than anything we have done in American history. But the two plans differ from one another, and we can talk about that.

Okay, let’s do talk about that. And let’s go straight to the source.

ROMNEY: I am Mitt Romney, and I am the junior senator from the State of Utah. 

Romney, a Republican who twice ran for president, earlier this year announced his Family Security Act. It would replace the child tax credit, and send a monthly cash benefit of $250 for every school-aged child in America and $350 for every younger child. It would go to families earning up to $400,000 a year, for couples filing jointly.

DUBNER: It does seem as though child welfare has captured the attention of Washington lately. Not for the first time, certainly, but it has. Why now? 

ROMNEY: Well, I think there’s a recognition that TANF, that was created some years ago, has failed to reduce the number of out-of-wedlock births, it’s failed to produce the number of marriages we hoped to see, that there are a number of people who seem to be trapped in permanent poverty. And at the same time, our birth rate continues to go down. We hear from people who are not having kids, that they’re afraid of the cost of having children. So we’re spending some $500 billion to support families, but some of the unintended consequences of what we’re spending has led to a setting where we’re not achieving as a society what we would hope to do, which is to get people out of poverty, to have more opportunity for all of our citizens, and to be able certainly to reproduce ourselves as a civilization. 

DUBNER: The child poverty rate in the U.S. is much higher than many other rich countries. Why do you think that is? 

ROMNEY: Well, part of it is the way we spend money. As you know, there are substantial penalties in our safety-net system for individuals who might get married. So a single person with a couple of children at home is going to do better off not married than he or she would do if they did become married. And guess what? Incentives have an impact. And so people don’t get married. And we know that one of the keys to being able to help people get out of poverty is being married and having two people in the home that can invest their time and talents raising a child.

DUBNER: It’s been said that older people have better aid programs in the U.S. because they’re a big voting bloc and that children haven’t been as well protected because babies don’t vote. Is that too cynical or fairly true? 

ROMNEY: Well, I think there’s a lot of attention on senior citizens, in part because of the reality that senior citizens do vote. It’s a large bloc. And as a senior myself — we’re loud. We have a lot to say politically. With regards to our children and the poor, typically the poor are not very active in terms of becoming voters. They’re not terribly active politically. And so there may not be as many people who are listening to young parents that are trying to raise children. But what I’ve found is that families are having a hard time, and many would like to have children or have more children, but they feel they can’t afford kids. Our population is declining pretty substantially. We’re down, I think, 5.8 million people from where we would have been had we maintained the birth rate of the last decade. So, we’ve got some work to do.

DUBNER: And what about you specifically? I see you have 25 grandchildren. So first of all, congratulations. That’s got to be wonderful. Are we sure that your Family Security Act isn’t some kind of Washington self-dealing to make sure that all the Romneys down the road are well taken care of? I mean, obviously, I’m kidding, but I am curious about your personal attraction to this topic. 

ROMNEY: Well, there’s no question that I love my wife. So I love marriage and I love my grandkids and kids. So I love family. So that’s true. I would note that there is an income test to the support in my plan. And fortunately — or unfortunately, depending on your point of view — my grandkids would not qualify, or their parents would not qualify, under the income test. So there’s no financial benefit to me, or to my offspring. But I do know that for many, many young couples, that they would like to have a child or like to have a child earlier or like to have an additional child. And they do the calculation and say, “We just can’t afford that.” And as a nation, we can’t afford them not having kids. And so what I’ve done is I’ve looked at all these programs we already have, many of which are counterproductive. And I collapse them into — instead of a tax refund that you might get at the end of the year for having kids, instead provide a monthly check that can be used to help the child with food, clothing, healthcare, shelter. And that’s far more predictable for a parent and obviously, there are income tests and so forth to make sure that it’s not abused. 

DUBNER: So let’s talk about the potential unintended consequences. As you noted, almost every policy has some unintended consequences. Are you at all worried that the Family Security Act may encourage some families to start having boatloads of kids in order to get what looks like easy money, even if they don’t have a desire or plan to raise a lot of children well? 

ROMNEY: Well, I wish I could tell you that the compensation that I’m describing is sufficient to raise a child. But it’s not. It still requires a sacrifice by the parents. That’s No. 1. And No. 2, there’s a limit as to how many dollars a household can receive. But there’s no question there will be unintended consequences. And I presume that legislators and leaders in the future will look for those and make adjustments, just as I’m attempting to do. 

DUBNER: So your proposal for the Family Security Act wouldn’t look terribly out of place coming from a Democrat. I hope you don’t take offense to me saying that. There are a lot of parallels to what’s being proposed by the Biden Administration. You have also been famously critical of former President Trump and the Republicans who still profess allegiance to him. Do you think about leaving the Republican Party? 

ROMNEY: No, no, and I would note that there are several Republican senators who have proposed plans similar to the one I proposed. So we all care about kids and child poverty and supporting families. I really do think the Republican Party is the family party. And I can tell you that my home is in the Republican Party because of the policies of our party. I just happen to think the policies of conservatism are better for the working men and women of America. If I didn’t believe that, I wouldn’t be in this party. Now, that doesn’t mean I support every other Republican and that every Republican elected official is someone who I’m fully behind. I, after all, voted to impeach President Trump. And so, yeah, there are some people in my party that I wish were not playing as visible a role. But I’m still devoted to the principles of conservatism because they work. And if someone can demonstrate to me better principles, I’m willing to listen and to learn.  

DUBNER: So in talking about this proposal, you’ve said, “In creating an incentive for people to have children, I don’t care whether the mom is working a minimum wage job, earning $16,000 a year or a lawyer earning $100,000.” Why is it a good idea, Senator Romney, to have some child aid that’s not tied to income? 

ROMNEY: Well, the question is: is this a program designed to encourage people to get more jobs and to make more money, or is this a program designed to help people with the cost of having a child? It’s the latter. We have incentives in our system. Our earned-income tax credit has incentives for additional work and higher wages. So I’ve tried to separate out the incentives for, making more money from the need to support a family that wants to have a child. 

So Senator Romney is adamant that child aid be unconditional, and not tied to employment. It’s unlikely that many Democratic counterparts would object. But an economist might, or at least might raise some theoretical objections.

GENNETIAN: If you’re giving people money with no conditions, they are going to be less likely to work or to work the full amount of hours that they may otherwise work. 

Lisa Gennetian again, from Duke.

GENNETIAN: This is probably the biggest concern that comes up in the context of a conversation of unconditional money. The second concern is, and this is very much rooted in a perspective of people are poor because they’ve made poor choices, and part of those poor choices is they’re taking drugs, they’re buying alcohol, and they’re not investing the money that they do have in ways that can help them feel economically secure. So that line of argument says if you give cash to these people who are living in poverty, they’re just going to continue with these bad habits.

There’s a third argument too.

GENNETIAN: And then the third argument goes back a little bit to how people are poor in the first place. If you give them more money, they’re just going to keep having children, maybe irresponsibly. And they may be not incentivized to get married. If the money comes in, then there might be less of a reason to have a partner in the household contributing to income that will be to support the children.

Those are some fairly compelling arguments against unconditional aid. How good is the evidence in favor of those arguments?

GENNETIAN: Here’s the thing: we don’t have great evidence to support any of these arguments. Especially with the first two, you can look international and globally. There is decades of research from economists who have been looking at this question of if you give cash to people, what will happen? What will they spend it on? And we don’t see a lot of evidence pointing to reductions in working. We don’t see a lot of substantial evidence that people are going to use that money towards bad behavior. And, I think the third/fourth category on births and marriage is tricky because there’s lots of context and cultural components. Even some of my own work, in the U.S., looking at studies that increased income that were conditioned on work, we don’t see the reductions in marriage. In fact, in one study, we saw increased marital stability, for two-parent families. So, again, not a lot of evidence to back up these critiques.

JANEY: Well, let’s talk about single motherhood. 

That, again, is Kim Janey, acting mayor of Boston. You may remember her own mother was poor; and Kim had a daughter herself when she was in high school.

JANEY: Let’s talk about the people who make this argument, who were hellbent on keeping families separated, whether that be through housing policies that say a father could not live in the household, whether that was through discriminatory policies around the criminal justice system. What is clear is I don’t know anyone who works harder than poor people. My mother used to say the hardest job in America was being poor. And so I think it is important that we tell truth when we talk about how we got to this point, whether it be a wealth gap, whether it be poverty, and where we choose to invest and where we don’t choose to invest and why that is. 

DUBNER: The people who make policy typically are well educated, well-intentioned people who, especially when they’re making policy addressing something like poverty, we would like to assume that they’re hopefully not just there on a power trip, but they’re there to help. And yet it seems that a lot of policy, by the time it ends up getting into the lives of the people that it’s meant to help, doesn’t accomplish all it’s meant to do. So I’m curious if you could tell us what is one thing about poverty, especially childhood poverty, that you think the typical policymaker just doesn’t get? 

JANEY: I’d like to agree with you, I’d like to agree that people are well intentioned and want to do the right thing. The one thing that I would communicate is that poverty is probably the most violent thing that you can inflict on a people, on a community, on a child. There are so many things that come out of that experience. On the good side, people talk about resilience and certainly children are resilient. Poor people are resilient. But why should we have to continue to overcome things that other folks don’t have to? Particularly in one of the richest nations in the world that should care for our youngest, our future workforce, our young people who are going to take care of us in our twilight years. I think too often there are judgments being made. Too often there is blame around poverty, like this is a choice, that people wake up saying, “I want to be poor today.” Like, that’s ridiculous. We need to hear from those who are directly impacted by the decisions that are being made. And we need to make sure that we are truly hearing and listening and acting in a way that would include their voices.

It does seem, for now at least, that Washington is listening to the researchers and the advocates who’ve been calling for a radical change to how the U.S. helps raise its children. And it seems to be working: a recent federal survey found that food insufficiency dropped after the first new child-tax-credit checks went out in July. Given what we heard from Mitt Romney, and what the Biden Administration is pushing for, there might be a lot more money on the way.

HOYNES: I’m honestly still surprised it’s happening right now. 

The economist Hilary Hoynes again.

HOYNES: And I think about all the reasons why it might be happening, and Covid-19 is absolutely one of them. It has highlighted the inadequacies of our social safety net. I was very surprised to see that this could pass even for one year in the Rescue Plan. And I was encouraged to see Mitt Romney making a counterproposal. I didn’t think that America was ready for this, or at least American policymakers. For 20 years or more, we’ve been fighting against this, “we can’t give money to people who don’t work.” And I didn’t see how that was going to be such an easy corner to come out of.

But that corner has been come out of.

GENNETIAN: Absolutely! 

Lisa Gennetian again.

GENNETIAN: For many of us who’ve been in the business of studying poverty and working hard to evaluate programs and just make the lives of low-income children better in this country, we felt like we were fighting against a tidal wave. I mean, is America ready for this? Like, we’re ready. We are prepared for things like direct cash payments. 

SUSKIND: The way I think about it is: if at the end of the day, the North Star in our country is building the healthy brain development of our children, what does it take?

And that, again, is the pediatric surgeon and researcher Dana Suskind.

SUSKIND: It simply takes that nurturing interaction with the adult and child, and protection from toxic stress. And if you keep that as the fundamental of what you’re trying to push forward, you can understand how the different policies play into that. There’s not just one policy. You basically want to give parents time, resources, and the education to allow them to do that. It makes sense why paid family and parental leave would be important in those first months of life, because that’s what’s building the brain. It then makes sense why you need high-quality child care, because we’re basically a full-workforce society. So it’s not just a one-policy approach. It’s a cultural attitude, an attitude that we really are putting children and families at the center of our country. I’m really hopeful, I have to tell you. It feels like a really big idea, and there have been lots of people working in this field for so long trying to push it forward. Could it be that what’s happened in this last year and all the horribleness, that we’re actually at that tipping point, that we actually will put children and families first? I’m not sure. I hope so. 

*      *      *

Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Mary Diduch. Our staff also includes Alison Craiglow, Greg Rippin, Joel Meyer, Tricia Bobeda, Brent Katz, Zack Lapinski, Emma Tyrrell, Lyric Bowditch, Jasmin Klinger, Eleanor Osborne, Ryan Kelley, and Jacob Clemente. Our theme song is “Mr. Fortune,” by the Hitchhikers; the rest of the music this week was composed by Luis Guerra. You can follow Freakonomics Radio on Apple Podcasts, Spotify, Stitcher, or wherever you get your podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • Dana Suskind, professor of pediatrics and surgery and co-director of the TMW Center for Early Learning and Public Health at the University of Chicago.
  • Kimberly Noble, neuroscientist and pediatrician at Teachers College, Columbia University.
  • Hilary Hoynes, professor of economics and public policy at the University of California, Berkeley.
  • Kim Janey, acting mayor of Boston.
  • Lisa Gennetian, professor of economics at Duke University.
  • Mitt Romney, junior senator from the State of Utah.

RESOURCES

  • “The State of America’s Children 2021: Child Poverty,” by the Children’s Defense Fund (2021).
  • “Poverty Among the Population Aged 65 and Older,” by the Congressional Research Service (2021).
  • “Child Poverty in the U.S.,” by Melissa Kearney (EconoFact, 2021).
  • “CO2.2: Child Poverty,” by the OECD (OECD Family Database, 2021).
  • “PF1.1: Public Spending on Family Benefits,” by the OECD (OECD Family Database, 2021).
  • “H.R.1319 – American Rescue Plan Act of 2021,” by the 117th Congress (2021).
  • “Monthly Payments of Up to $300 Per Child Are Starting Today for Most Families — and Could Keep Coming for Years,” by Victor Reklaitis (MarketWatch, 2021).
  • “Child Tax Credit Payments 2021: Who Is Eligible and How Much Are They?” by Richard Rubin (The Wall Street Journal, 2021).
  • “Treasury and IRS Announce Families of Nearly 60 Million Children Receive $15 Billion in First Payments of Expanded and Newly Advanceable Child Tax Credit,” by the U.S. Department of the Treasury (2021).
  • “Lawmakers Push to Make $3,000 Child Tax Credit Permanent, but Biden Only Commits to 4 More Years,” by Megan Leonhardt (CNBC, 2021).
  • “Opinion: How to Nearly Eliminate the Tragedy of Childhood Poverty, While Also Boosting the Economy,” by Melissa Kearney (MarketWatch, 2021).
  • “Kim Janey Becomes 1st Woman, Black Person to be Boston Mayor,” by The Associated Press (NBC News, 2021).
  • “The Family Security Act,” by Mitt Romney (2021).
  • “Marginal Tax Rates on Labor Income Under Sen. Mitt Romney’s Family Security Act,” by Garrett Watson (Tax Foundation, 2021).
  • “5.8 Million Fewer Babies: America’s Lost Decade in Fertility,” by Lyman Stone (Institute for Family Studies, 2021).
  • “Transcript: Sen. Mitt Romney and Columnist Ross Douthat on the Family Security Act,” by the Sutherland Institute (2021).
  • “Household Pulse Survey Collected Responses Just Before and Just After the Arrival of the First CTC Checks,” by Daniel J. Perez-Lopez (The United States Census Bureau, 2021).
  • “Prior to COVID-19, Child Poverty Rates Had Reached Record Lows in U.S.,” by Deja Thomas and Richard Fry (Pew Research Center, 2020).
  • “Child Poverty in America 2019: National Analysis,” by the Children’s Defense Fund (2020).
  • “U.S. Fertility Rates and Births Continue to Diminish,” by Kenneth Johnson (The University of New Hampshire Carsey School of Public Policy, 2020).
  • Income and Poverty in the United States: 2019, by Jessica Semega, Melissa Kollar, Emily A. Shrider, and John Creamer (The United States Census Bureau, 2020).
  • “Monthly Poverty Rates, U.S.,” by the Center for Poverty & Social Policy at Columbia University (2020).
  • “Publication 596 (2020), Earned Income Credit (EIC),” by the I.R.S. (2020).
  • “Poverty Rate,” by the OECD (OECD Data, 2020).
  • “Kids’ Share 2020: Report on Federal Expenditures on Children Through 2019 and Future Projections,” by Heather Hahn, Cary Lou, Julia B. Isaacs, Eleanor Lauderback, Hannah Daly, and C. Eugene Steuerle (Urban Institute, 2020).
  • “Historical Poverty Tables: People and Families – 1959 to 2020,” by the United States Census Bureau (2020).
  • “Sweden, Norway, Iceland, Estonia and Portugal Rank Highest for Family-Friendly Policies in OECD and EU Countries,” by Georgina Thompson (UNICEF, 2019).
  • “Supplemental Nutrition Assistance Program (SNAP) Facts,” by the Social Security Administration (2019).
  • A Roadmap to Reducing Child Poverty, by the National Academies of Sciences, Engineering, and Medicine Division of Behavioral and Social Sciences and Education; Board on Children, Youth, and Families; and Committee on National Statistics; Committee on Building an Agenda to Reduce the Number of Children in Poverty by Half in 10 Years (2019).
  • “The EITC and the Extensive Margin: A Reappraisal,” by Henrik Kleven (Princeton University and NBER, 2019).
  • “Baby’s First Years (BFY),” by the U.S. National Library of Medicine (ClinicalTrials.gov, 2018).
  • “Baby’s First Years: Study Background,” (Baby’s First Years, 2018).
  • “2017 Tax Law’s Child Credit: A Token or Less-Than-Full Increase for 26 Million Kids in Working Families,” by the Center on Budget and Policy Priorities (2018).
  • “Dramatic Increase in the Proportion of Births Outside of Marriage in the United States from 1990 to 2016,” by Elizabeth Wildsmith, Jennifer Manlove, and Elizabeth Cook (Child Trends, 2018).
  • “The Effects of Cash Transfers on Adult Labor Market Outcomes,” by Sarah Baird, David McKenzie, and Berk Özler (IZA Journal of Development and Migration, 2018).
  • “Economist James J. Heckman: Early Education Packs a High Return on Investment,” by James Heckman (Committee for Economic Development, 2017).
  • “Federal Rental Assistance Provides Affordable Homes for Vulnerable People in All Types of Communities,” by Alicia Mazzara (Center on Budget and Policy Priorities, 2017).
  • “Debunking the Stereotype of the Lazy Welfare Recipient: Evidence from Cash Transfer Programs,” by Abhijit V. Banerjee, Rema Hanna, Gabriel E. Kreindler, and Benjamin A. Olken (The World Bank Research Observer, 2017).
  • “Changes to the Child Tax Credit: What It Means for Families,” by Lydia DePillis (CNN, 2017).
  • “Effective Policy for Reducing Poverty and Inequality? The Earned Income Tax Credit and the Distribution of Income,” by Hilary W. Hoynes and Ankur J. Patel (Berkeley Public Policy, 2016).
  • “The Color of Wealth in Boston,” by Ana Patricia Muñoz, Marlene Kim, Mariko Chang, Regine O. Jackson, Darrick Hamilton, and William A. Darity Jr. (The Federal Reserve Bank of Boston, 2015).
  • “Marriage Penalties in the Modern Social Welfare State,” by Douglas J. Besharov and Neil Gilbert (R Street, 2015).
  • “Opinion: The Hammock Fallacy,” by Paul Krugman (The New York Times, 2014).
  • “How Welfare Undermines Marriage and What to Do About It,” by Robert Rector (The Heritage Foundation, 2014).
  • “Cash Transfers and Temptation Goods: A Review of Global Evidence,” by David K. Evans and Anna Popova (The World Bank Policy Research Working Paper, 2014).
  • “The Earned Income Tax Credit and the Child Tax Credit: History, Purpose, Goals, and Effectiveness,” by Thomas L. Hungerford and Rebecca Thiess (Economic Policy Institute, 2013).
  • “What is TANF?” by the U.S. Department of Health and Human Services (2012).
  • “Paul Ryan Wants ‘Welfare Reform Round 2’,” by Arthur Delaney and Michael McAuliff (HuffPost, 2012).
  • “Cohabitation and Marriage Rules in State TANF Programs,” by Robert A. Moffitt, Robert T. Reville, Anne E. Winkler, and Jane McClure (ASPE, 2008).
  • “How Welfare Reform Can Affect Marriage:Evidence from an Experimental Study in Minnesota,” by Lisa A. Gennetian and Cynthia Miller (Review of Economics of the Household, 2004).
  • “Employment Rates for Single Mothers Fell Substantially During Recent Period of Labor Market Weakness,” by Arloc Sherman, Shawn Fremstad and Sharon Parrott (Center on Budget and Policy Priorities, 2004).

EXTRAS



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