A major experiment conducted across four U.S. cities showed that giving cash to parents of newborns didn’t help their children, undermining the idea that such programs could alleviate the effects of poverty. So said The New York Times last month, and conservatives pounced—declaring that such no-strings-attached direct cash policies, which have become popular in progressive circles in recent years, are useless and even harmful.
“Policymakers should seek to help low-income children and families by giving them a hand up instead of a handout,” Rachel Greszler, a senior research fellow at the Heritage Institute, wrote in The Washington Times. “Employment and family support is more important than no-strings government cash,” tweeted Robert Doar, president of the American Enterprise Institute. And at least one researcher told the Times reporter, Jason DeParle, that the results were causing him to reconsider cash aid entirely.
Of course, one study—especially one loaded with caveats and asterisks, as I’ll explain—isn’t nearly enough evidence to dismiss the idea that giving new parents cash could improve their children’s lives. But “Baby’s First Years,” as this study was called, also illustrates that there isn’t a single silver-bullet policy solution for the myriad problems that the most vulnerable Americans face. Most people working in anti-poverty research already know that—and we already have plenty of evidence for how to solve these problems. But it’s a long-term project that lacks sufficient political will, especially in the age of reactionary Trumpism.
“Baby’s First Years,” which was funded by the National Institutes of Health and private foundations, was a randomized control trial of 1,000 low-income mothers who were recruited from hospitals after giving birth in and around New York City; Omaha, Nebraska; Minnesota’s Twin Cities; and New Orleans in 2018 and 2019. The mothers were “racially and ethnically diverse,” had incomes that kept them below the poverty line, and were randomly assigned to receive either $333 a month or $20 a month for the first several years of their children’s lives. The $333 was kept low so that it wouldn’t affect eligibility for other anti-poverty programs, like food stamps, and it came in a debit card that said “4MyBaby.”
At the four-year mark, the researchers in this latest study tried to measure impacts in seven child development areas: language, executive function, social-emotional development, resting brain function, visual processing, pre-literacy skills, and whether the children had been diagnosed with a development condition. The evaluation, first published in May as a working paper in the National Bureau of Economic Research, found that there wasn’t a statistical difference between the control group and the treatment group in the first four years of the child’s life along these particular measures.
There are a lot of reasons this study doesn’t support dismissing the idea of unconditional cash payments and further dismantling the safety net as we know it. The biggest one is that the years of this study included the first years of the Covid-19 pandemic. “We tend to forget, now, what a huge shock Covid was,” said Jane Waldfogel, a professor at the Columbia University School of Social Work, who wrote a book that came out this year called Child Benefits: The Smart Investment for America’s Future. “At the front end of Covid, there was that massive shock to people being sent home, and people moving in with relatives or not moving in with relatives. I mean, it was so disruptive.” Those disruptions led to serious stresses and quality-of-life changes during the pandemic, and there has been some evidence that it hurt children’s health and slightly delayed child development over that period. Those challenges affected everyone, including mothers and babies in the experiment group, and may also account for why they didn’t report lower levels of hardship.
Additionally, the federal government launched a temporary but generous safety net to help people weather the pandemic. In the first year, it issued three stimulus checks totaling $3,200 per individual (for those who made up to $75,000 in adjusted gross income), plus more for each child in the family. In addition, Pandemic Unemployment Assistance was relatively easy to qualify for, and was available to people who worked for themselves and worked only part-time, providing a $600 weekly federal supplement to what each state already provided—a sum that exceeded what many low-income workers might earn from working. Additionally, the child tax credit was transformed into a refundable tax credit—that is, as a tax refund check, even if you don’t owe taxes—that was distributed to parents monthly, up to as much as $3,600 a year for each child.
Importantly, the control group in “Baby’s First Years”—the parents who did not receive the monthly $333 the researchers were trying to assess—received these pandemic payments, which meant that they were better off than they might have been without the payments. The parents in the study group also received the additional money, which likely muted the effect of the $333 payments.
More important, this study has to be evaluated within a large body of qualitative and quantitative evidence that shows cash payments to families can have a positive effect on both parents and their children, which Waldfogel has recently surveyed for her book. “We know very robustly that if you give families money, it reduces poverty and it reduces hardship,” she said.
But perhaps even more relevant, the “Baby’s First Years” researchers were not setting out to prove that a small amount of money every month would have measurable impacts on cognitive development after only four years. Their goal with this whole project, which is ongoing, is to try to better understand child poverty in the United States, said Kathryn Edwards, a labor economist and independent policy consultant. There is plenty of evidence that not having money impacts children, especially in early years, and there’s also evidence that giving families cash is helpful. But how exactly a lack of money harms children, and how having more of it helps them, isn’t well understood.
“It’s not a policy evaluation,” Edwards said. “What we don’t understand as researchers or as scientists is what exactly is going on in family and income processes when you have this kid-apportioned money.” What researchers have found, over and over, is that the parents who receive payments for their babies routinely spend the money on things like books, toys, clothes, and winter coats for their children. In both “Baby’s First Years” and other studies around the globe, researchers have gotten reports about what the parents spend money on, and while they do sometimes just use it to pay bills, they will also use it for bigger purchases like birthday party supplies, musical instruments, and Christmas trees. These are purchases unlikely to make a massive difference in only four years, and also may make differences in children’s lives that are meaningful but simply can’t be measured. “We don’t know what the ability to provide a little bit of protective normalcy to very poor children in their early years means,” Edwards said.
Almost as important is what parents did not spend money on. “One historic concern around cash has been that families with more cash on hand might spend it in ways that are counter to policy goals … like tobacco or alcohol,” said Victoria Gibney, a senior research analyst at the Center on Budget Policies and Priorities. “That just does not pan out in the research.”
Many of the countries with the most rigorous trials of cash payments to families with children are either very poor, where even a little money can have a huge impact relative to the cost of living, or are wealthier, with a more robust safety net than the U.S., as in some European Union nations. These payments are taking place in entirely different contexts, and how such programs might fit into the existing safety net in the U.S. isn’t well understood. And no one who supports child payments advocates getting rid of bigger programs like food stamps or housing vouchers—the benefit of cash is that it allows parents to be better able to meet their children’s specific needs.
But there are so many problems in the United States, and so many holes in the already meager safety net, that simply giving parents cash can’t entirely fix them. Two of the biggest examples are health care and childcare. The price of health insurance is high because the private health insurance markets rely on profits, creating market failures like healthy people opting out of the insurance market and consumers not being able to directly negotiate prices with providers. These failures are uncontroversial and well studied by economists. Every wealthy country besides the U.S. has addressed these problems, either by having the government itself provide some level of medical care or health insurance or by heavily regulating a nonprofit industry.
With childcare, workers in the U.S. are paid so little that they often rely on government services themselves, while the cost of childcare for families has soared past the cost of college tuition and mortgages in many states. The problem has become so bad that even very wealthy families struggle to afford childcare. Americans want a reliable, safe, quality system of childcare, and they want to be able to afford it while the people who are caring for their children are fairly paid. The private market will not achieve those goals.
“We don’t want markets to determine everything, because they don’t have ethics, they don’t have morals,” Edwards said. “When we say that a market fails, we don’t mean that the market isn’t functioning. We mean that the market’s fully, efficiently functioning, and is producing a failure for our society and economy.”
The idea of giving people money doesn’t really address these fundamental problems. Market failures are societal failures, but how those failures impact people depends on whether they have enough money to insulate themselves from the worst effects. “If you’re charged $1,000 for an ambulance ride, does that break you and your family apart? Or is it nothing?” Edwards said. Many conservative-libertarian proponents of things like cash payments or universal basic incomes are abdicating their responsibility to fix the bigger problems, and just trying to help more people be insulated from the results of them, Edwards said. “It will never be enough, and it won’t ever be everybody, but that’s essentially what they’re saying,” she said.
Republicans largely dismiss the idea of cash payments for the same reason they attack social spending: They believe all assistance should come with strings attached. The Trump administration is already attaching strict work requirements to basic safety net programs like Medicaid and food stamps, as if all that the most vulnerable Americans need is a job, no matter what kind of job it is. Without such strings, Republicans believe, Americans will become dependent on the safety net—welfare queens, per Ronald Reagan’s pernicious myth. The fundamental idea is that most people can just earn their way out of poverty—and, if they don’t, there’s something wrong with them, not the system we all rely on.
At the same time, ironically, Republicans usually rely on giving money to families as their go-to policy goal—albeit not as direct cash but in the form of tax cuts. In fact, the U.S. already provides a tax cut to families with children in the form of the child tax credit, but now that the pandemic expansion of that program has expired, it’s no longer fully refundable, which means families at the lowest income levels don’t receive it. “There’s no rationale for excluding the lowest-income families,” Waldfogel said. “But there was no scope for any of those conversations this year. The tax reform bill just was rammed through with no discussion of the child tax credit.”
Not having cash definitely hurts children. We still don’t know how having a little bit more cash could help them. You could argue that providing a basic monthly benefit for families with children is one of the things a wealthy society should do for its citizens, regardless of what one popularly reported experiment shows. But even if America enacted such a program, it would only partially address one of so many problems we need to solve—the biggest one being the obtuse belief that the market will always magically come up with the best solution, and that anyone who is struggling in this country has no one but themselves to blame.
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