Curing Child Poverty in the United States

by Barbara R. Bergmann
Citation
Title:
Curing Child Poverty in the United States
Author:
Barbara R. Bergmann
Year: 
1994
Publication: 
The American Economic Review
Volume: 
84
Issue: 
2
Start Page: 
76
End Page: 
80
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Language: 
English
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Abstract:

THE ECONOMIC SUPPORT OF CHILD- RAISING'

Curing Child Poverty in the United States

Millions of American children, more than one in five, live in deprivation, with sharply reduced chances of developing into reason- ably happy, productive, and law-abiding citi- zens. Single-parenthood, highly conducive to childhood poverty, is growing among all racial and ethnic groups. In the United States, as indeed in most of the developed countries, long-term marriage-the institution that has in the past been depended upon to channel economic resources toward child-raising-is sheltering an ever-shrinking proportion of the children that are born (Nancy Folbre, 1993).

Rhetorical appeals for a return to "family values" are unlikely to make headway against the problem of child poverty. Charles Murray's (1984) suggestion that we force a return to near-universal child rear- ing within marriage by eliminating govern- ment support for single parents would, at least in the short run, bring a huge and probably unacceptable increase in the out- right destitution of young children and would force the separation of many children from their mothers. A more efficacious and humane approach to the cure of child poverty would be to take the weakening of marriage as a given and to look for politi- cally acceptable ways of capturing more economic resources for children in single- mother families. Such policies may further weaken the incentives to marriage, but that may be unavoidable.

'Discussants: Myra Strober, Stanford University; William A. Darity, Jr., University of North Carolina; Henry Aaron, Brookings Institution.

*Department of Economics, American University, Washington, DC 20016. Thanks are owed to Fred Bergmann, Nancy Folbre, Julia Lane, Robert Lerman, and Harriet Presser.

Potential methods include getting single parents into substantial jobs, increasing wage subsidies, increasing transfer payments to at-home single mothers, and better enforcing child-support payments from ab- sent parents. Another way to direct major resources toward child-raising, one that has had relatively little discussion, would be the provision by government of high-quality child care, not merely as a temporary help for the mother in leaving welfare, but as a permanent benefit to all lower-income chil- dren. With child care provided free, moth- ers in even the lowest-wage jobs would re- tain enough of their earnings to attain a minimally decent standard, and would be substantially better off than those currently on welfare.

I. Accounting for Needed Resources

In thinking about the pros and cons of the various ways one might capture resources for the nurture of children in single-parent families, it is useful to look at expenditure budgets for single-mother fami- lies, including taxes, that would allow a standard of minimal decency. That permits one to see what would have to be provided and to consider the sources from which these provisions might come. The official poverty line is not appropriate for this use, because it was derived without attention to differences in the needs of at-home and on-the-job single mothers (Molly Orshan- sky, 1978). Trudi Renwick and I (Renwick and Bergmann, 1993) provide a detailed method for building basic-needs budgets (BNB's) that do attend to such differences.

The BNB includes specific allowances for minimally decent food, shelter, clothing, medical care, transportation, and child care that are tailored to the ages of the children and the work behavior of the parents (see

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VOL. 84 NO. 2 THE ECONOMIC SUPPORT OF CHILD-RAISING

TABLE 1-THREE METHODS OF PROVIDING

THE LEVEL OF LIVINGPRESCRIBED

IN THE BASIC-NEEDS BUDGETFOR A SINGLE-PARENT

FAMILY WITH TWO PRESCHOOL 1993

CHILDREN,

Full Good- Wage-
welfare job supplement
Budget items solution solution solution
Food $3,508 $3,508 $3,508
Housing 4,280 4,280 4,280
Clothing, health care,      
personal care 2,596 2,596 2,596
Childcare 0 9,600 9,600
Transportation 463 1,024 1,024
Cost of goods      
and services: $10,847 $21,008 $21,008
Social Security tax 0 1,856 676
Federal income tax 0 1,816 0
Dependent care credit 0 -1,056 0
Earned-income tax      
credit 0 0 -1.384
State income tax 0 638 175
Total required: $10,847 $24,262 $20,476
Annual wage 0 24,262 8,840
AFDC, 1993 level in      
median state 4,404 0 0
Food stamps, 1993      
levels 2,690 0 1,890
Child care provided 0 0 9,600
Additional cash      
inflow required 3,753 0 146
Government benefits      
less taxes: $10,847 -$3,254 $12,168

Table 1). Some out-of-pocket medical expenses are allowed for in the adaptation of the BNB that is used here, but nothing for health insurance, assuming that all single parents will in the future have that pro- vided. For single mothers with jobs, the standard of life envisioned in the BNB in- cludes safe, high-quality full-day care for their preschool children and after-school care for their elementary-school children.

It would not do to assume (as commonly is tacitly done) that all single mothers have relatives capable of giving free high-quality child care, who could provide it at little or no sacrifice to themselves. Child-care choices among mothers with jobs suggest that a substantial proportion of mothers do not have such relatives (Harriet B. Presser, 1989). Some mothers get child-care services from relatives, who, seeing no alternative, feel compelled to give it at considerable financial and psychological cost to themselves. Other mothers get no free child-care services at all; many have their children in substandard care.

Accordingly, the family of the mother with a job has been assigned money in the BNB ($400 per child per month in this adapta- tion)' to purchase licensed child care, as well as additional amounts for transporta- tion to work. If a mother goes from welfare to work, these additional costs raise the amount needed to buy goods and services under the BNB by 94 percent, as seen in Table 1.

11. Alternative Ways to End Child Deprivation

Table 1 has been constructed to show three alternative ways in which a single mother with two preschool children might attain the standard of decency prescribed by the BNB. The first column of figures shows what can be called the "full welfare solu- tion." A mother with two children on wel- fare in a state with median benefits currently gets $7,094 in AFDC and food-stamp benefits. She could achieve the BNB stan- dard if given an additional $3,753 in benefits.

The second column displays what can be called the "good-job solution." In order to provide the $21,008 that allows the mother to purchase the goods and services that make up the BNB standard, without gov- ernment help beyond what is currently man- dated, she needs a job paying $24,262 be- fore taxes2

'A study relating costs of private and public child- care centers to measures of quality (Suzanne W. Hel- burn, 1994) suggests that costs this high or higher would be required if good-quality care were to be provided.

he increases in the earned-income tax credit en- acted in 1993 will lower the earnings necessarJ1 to finance the BNB by $1,080 to $23,180 when fully phased in, in 1996. Improvements in child-support enforce- ment and the possible adoption of child-support assur- ance, as proposed by Irwin Garfinkel (19921, could have a bigger impact on the needed wage. However, a substantial number of working single mothers would still be short of the cash to buy the goods and services called for in the BNB.

The third column, the "wage-supplement solution," shows a set of benefits that would allow a mother earning the minimum wage full-time year-round to meet that standard. In addition to the currently mandated earned-income tax credit (EITC) and food- stamp benefits, she would need additional benefits totaling $9,746.

Obviously, the problem of child poverty would be more tractable if a high propor- tion of single mothers could do well enough in the labor market to achieve the good-job solution. Unfortunately, there are large numbers of single mothers for whom that is not currently possible, no matter how well motivated they might be. The 1993 median weekly wage for full-time women workers who head families provides a 52-week in- come of $20,540. Thus only a minority of single mothers already holding jobs earn enough to finance the BNB for a family of three. It is a reasonable conjecture that an even smaller proportion of the single moth- ers currently on AFDC would be able to earn that much if they took jobs, even after training.

Since the good-job solution is out of reach for a majority of single mothers, eliminating child deprivation would entail a choice be- tween the other two alternatives. The full welfare solution has its adherents. However, prevailing sentiment appears to be that the government should not offer a comfortable life, exempt from job-holding, to women who lack private support for themselves and their babies, unless they are widows.

The wage-supplement solution is more costly to the public purse than the full wel- fare solution, but it has the selling point that it requires the mother to hold a job. Another major selling point is that it could be formulated to deliver most of its benefits directly to the children, with little cash to the parents beyond benefits currently of- fered, as shown in Table 1. Programs with government-supplied child care as a center- piece are in effect in some of the European countries, and in conjunction with national health insurance, child allowances, and child-support enforcement these programs keep poverty among children low (OECD, 1990, 1994; Jonathan Bradshaw et al., 1993; Bergmann, 1994). Fertility does not appear to vary with the generosity of these pro- grams.

Of course all of the benefits in the wage- supplement-solution package could be pro- vided in cash, contingent on job-holding by the mother. However, child-care services cannot be exchanged, as cash can, for items that do not benefit the child. Providing such services puts a floor under the quality of the care that the child gets.

In-kind child-care benefits (through pub- lic facilities or vouchers) would go directly to the children themselves, rather than to their parents. High-quality child care that is free to parents could provide a safe, nurtur- ing, and comfortable daytime environment for the children. It could insulate them for most of their waking hours from the stresses of a poverty-stricken milieu and could serve to acculturate them to mainstream values and habits. In public facilities, or publicly regulated facilities, children can receive preventive health care, nutritional meals, and attention to cognitive and behavioral development. Abuse would be more likely to be detected than now.

The provision of child care could be ac- companied by time limits on welfare, or its outright abolition. However, there would have to be provision of jobs for mothers in high-unemployment areas and support for mothers disabled from work.

Government child-care help to a family would increase with additional births, but nobody could argue, as many now do, that women would have additional births with the purpose of gaining additional benefits. Providing child care and severely restricting or ending welfare might not be as discour- aging to out-of-wedlock births as simply ending welfare and providing no help with child care. However, the public desire to prevent such births must be weighted against the public's interest in the well-being of whatever children will in any case be born.

111. Costs of the Child-Care Solution

The provision of child care, if it were to be instrumental in solving the problem of child deprivation, could not be restricted to

VOL. 84 NO. 2 THE ECONOMIC SUPPORT OF CHILD-RAISING

people coming off welfare. Nor could it be restricted to one year per child, nor be a half-day program, as Head Start now is. It could be restricted to single-parent families, but only at the expense of discouraging marriage and ignoring the well-being of poor children of married couples. It would be desirable for at least some child-care subsi- dies to be extended to the middle-income groups to establish political support for the program, and to bring in a constituent group that would be effective in demanding high quality standards. To avoid "notch" effects and to reduce costs, sliding-scale fees could be established.

One can easily make a rough estimate of the cost of providing care to children of low- and middle-income families. There are 19 million children under the age of five in the United States. If high-quality child care for preschoolers (averaging the costs of pro- viding care for infants and for the older children) can be procured at $4,800 per child per year, then providing the lowest- income fifth with free care, and the next two-fifths with partially subsidized care on a sliding scale would cost $36 billion annually. There are 29 million children between ages 5 and 12. Providing three-fifths of them with care on the same basis before and after school, and in the summer, at a cost of $3,400 each, would cost an additional $39 billion. As more mothers went to work, there would also be a rise in expenditures for the EITC. Any resultant increase in the unem- ployment rate would mean somewhat higher outlays for unemployment insurance for the experienced unemployed, who would now be competing with the former welfare moth- ers for job vacancies. There would be some savings: costs for AFDC and the food stamps single mothers get, currently running at about $32 billion, would decline; not all children of mothers in the middle income ranges would participate.

The additional expenditures required by the wage-supplement solution are large. However, society could easily "afford" them in the sense that items amounting to that much could surely be found in the federal budget which most citizens would consider to be of lower priority than a program that successfully attacked child deprivation. While the expense would be a difficulty, the main difficulties in enacting such a program probably lie elsewhere.

In the eyes of some, enacting a sizeable child-care program that extends subsidies to the middle classes would constitute an im- proper and unwise enticement for even more mothers to leave off full-time care of their children at home. Those who ho~e for a return to a system in which almost all women are housewives would resent it deeply and fight it bitterly. Another difficulty is the widespread doubt that American governmental entities would be capable of deliver- ing excellent services to children, as Euro- pean governments manage to do (Bergmann, 1994). After all, American public schools have done a notoriously bad job with poor children. In this countrv. however. vouchers

.,

acceptable by nongovernmental providers would probably have to play a major part.

Suggestions that it would be good policy to get large numbers of single mothers off welfare and into work are frequently met with the objections that there are no jobs for them, or only very poor ones. On the latter issue, concern for poor children should motivate better enforcement of the laws against-race and sex discrimination. How- ever, even the poorest job would support a standard of living above that allowed by current welfare grants, as long as child care is provided. Those who offer the "no jobs" objection assume that new entrants to the labor force must endure unemployment un- til the number of jobs grows to accommo- date them. In fact, there is considerable turnover, particularly in low-wage jobs, and new entrants compete with those previously in the labor force for the vacancies that result. Moreover, the provision of child care to them and to other low-income families would create several million jobs in child- care centers, and some jobs in public-service employment would have to be provided to take care of those who are difficult to place.

IV. Conclusion

Child deprivation in the United States could not be eliminated simply by motivat- ing single mothers to put forth work effort by cutting them off welfare and giving them at most transitional help with training and child care. Substantial additional funds would have to be spent, because the prob- lem is that under current conditions suffi- cient economic resources are not available to nurture these children.

A program to end child poverty whose main ingredient is the provision of services to the children themselves avoids some of the political liabilities that characterize other kinds of anti-poverty programs.3 Ben- efits to adults perceived as improvident are unpopular. But small children, even those born to improvident mothers, are not yet themselves guilty of improvidence. Rescuing them from deprived childhoods by providing them with high-quality care while their mothers work may command a far greater degree of public assent than allowing their mothers to raise them at home. The provi- sion of child care may be the only political- ly possible way to devote enough public resources to child-rearing to end the widespread deprivation of American children.

REFERENCES

Bergmann, Barbara R. "Can We Afford to Save Our Children? Cost and Structure of Government Programs for Children in

3~ickeyKaus (1992), a leading advocate of a sharp cutoff of benefits to adults, endorses public provision of child care. However, his approval may be contingent on his projection of low costs, because he believes that most of the mothers who shifted from welfare to work would prefer to leave their children with relatives.

the U.S. and France." Working paper, American University, 1994.

Bradshaw, Jonathan; Ditch, John; Holmes, Hilary and Whiteford, Peter. Support for children: A comparison of arrangements in fifteen countries. London: HMSO, 1993.

Folbre, Nancy, Who pays for the kids? Gender and the structures of constraint. New York: Routledge, 1993.

Garfinkel, Irwin. Assuring child support: An extension of Soclal Security. New York: Russell Sage Foundation, 1992.

Helburn, Suzanne W. "Cost of Quality Child Care." Unpublished manuscript, Univer- sity of Colorado, Denver, 1994.

Kaus, Mickey. The end of equality. New York: Basic Books, 1992.

Murray, Charles. Losing ground: American social policy, 1950-1980, New York: Basic Books, 1984.

OECD. "Child Care in OECD Countries," in OECD employment outlook. Paris: Orga- nization for Economic Cooperation and Development, 1990, pp. 123-51. . Measurement of low incomes and pocerty in a perspectir>e of international comparisions, Labor Market and Social Policy Occasional Papers No. 14. Paris: Organization for Economic Cooperation and Development, 1994. Orshansky, Molly. "Measuring Poverty: A Debate." Public Welfare, Spring 1978, 36(2), pp. 46-55. Presser, Harriet B. "Some Economic Com- plexities of Child Care Provided by Grandmothers." Journal of Marriage and the Family, August 1989, 51(3), pp. 581-91. Renwick, Trudi J. and Bergmann, Barbara R. "A Budget-Based Definition of Poverty, with an Application to Single-Parent Families." Journal of Human Resources, Winter 1993, 28(1), pp. 1-24.

 
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