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

Episode Date: February 17, 2022

Among O.E.C.D. nations, the U.S. has one of the highest rates of child poverty. Until recently, it looked as if Washington was about to change that. But then … Washington happened.

Hey there, it's Stephen Dubner. Last year, we started producing a series of episodes about American culture and how the U.S. is an outlier in a variety of ways. If you're interested, the whole series can be found at Freakonomics.com slash American hyphen culture slash. The idea was to explore why the media and policing and transportation policy in the U.S. are so different than in most places. One other big difference we examined was how other countries support families with young children, especially lower income families. Children, as it's been said, are our future.

And some countries tend to view an investment in children as an investment in a more prosperous shared future. In the U.S., not so much. But in recent years, the American approach seemed to be changing, especially through an aggressive expansion of what's known as the child tax credit. This happened during the Trump administration and the first year of the Biden administration. And of course, it coincided with the economic catastrophe wrought by the pandemic on many lower-income families. According to researchers at Columbia University, this additional aid has been extremely effective, keeping nearly 4 million children out of poverty. So it seemed like a no-brainer that this aid would be extended, perhaps made permanent. In Washington, it had bipartisan support and momentum.

But then, Washington being Washington, it wasn't extended. So we thought it was a good time to update this episode that we first put out last year. It's called, Why Does the Richest Country in the World Have So Many Poor Kids? 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, that they'll inevitably turn out perfectly fine. Would you say that's an accurate assessment? 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. So you're saying I have to talk to my children among all the other things I have to do. You need to talk and interact with them. Yeah, all of those things are really important. Sounds exhausting.

Why would anyone want to be a parent? 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. 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 Suskin makes in a book she's publishing in April. It's called

Parent Nation, Unlocking Every Child's Potential, Fulfilling Society's Promise. She begins it 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. 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.

You write about the mythic idea of American individualism and how that affects child rearing. What do you mean by that? 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. When it comes to supporting children, there are two central facts that confirm Dana Susskind's claim that the U.S. is an outlier. The first is that even before the pandemic, roughly one in seven children in the U.S. were living in poverty. That is 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 GDP in the world and one of the highest per capita GDPs, is relatively stingy when it comes to supporting kids and parents. The United States spends about 1% of GDP on family benefits. France, for example, spends 3.5% of GDP.

So today on Freakonomics Radio, how did it come to this? There are a variety of explanations, some of them pretty surprising. Social security. And what's being done about child poverty. We'll hear from a U.S. senator who happens to be a Republican. 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. 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?

This is Freakonomics Radio, the podcast that explores the hidden side of everything, with your host, Stephen Dubner. Dana Susskind's Research Center at the University of Chicago is about helping kids early. 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 Suskin sees a hidden epidemic repeating itself from generation to generation. 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 if we could just see those neural connections occurring,

I would bet that we would invest quite differently. 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. By which I mean the brain is highly malleable to ongoing experience. That means if we change the experience, in poverty is correlated with many bad outcomes. Cognitive development, school performance, even later in the job market. 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 the randomized controlled trial. So Noble helped design and run exactly such a trial.

It's called Babies First Years. Her collaborators are Lisa Genedian, 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? 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. 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. 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 achievements, 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. A couple months ago, the researchers published their first batch of results. They analyzed the brain activity of the babies in the study. They are now about a year old. The children born into families that received more cash each month had greater brain activity, patterns associated with developing cognitive skills. The researchers still have a lot to understand about this, like will these results last over time? And what's causing the

increased activity? Does it have to do with how the families are spending the money? Does it have to do with lowering stress in the family? 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% 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 three 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 OECD, 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 OECD average, with very little in the way of direct financial aid. One major form of aid is the EITC, 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 OECD or European Union countries which provide or at least subsidize childcare. 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, expanded the child tax credit, which provides monthly cash payments to families under a certain income level.

The payments were scheduled to last only a year, but as we'll hear later, there was 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 Hillary Hoynes. I'm a professor of economics and public policy at UC Berkeley, and I study poverty and inequality and the role of the social safety net. With particular attention to children or not really?

Very much with a particular attention to children. How would you summarize the means by which the U.S. government has addressed child poverty compared to other wealthy nations around the world? 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%, roughly double what it is today. But Hoyne says that progress has stalled over the past couple decades. 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. 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 US 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? Social security. You know, the 1% of GDP on family benefits in the United States compared to 3.5% in France. If you look at spending on the elderly, we're actually pretty good. We expanded social security and that reduced elderly poverty. So is the problem really that children don't vote? I think the problem is that we don't see this as a necessary investment in society.

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

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, when we first put out this episode, was acting mayor of Boston. She's a Democrat. Janey later stood for election and lost to Michelle Wu. At the time, Janey was the first woman and first Black person to serve as mayor of Boston. 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. 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. 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. As acting mayor, Janie had 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 multi-generational Black residents? $8. Not $8,000, even $800. $8. Janie is familiar with poverty. My parents divorced while I was very young. I grew up poor with my mom, experienced food insecurity, housing insecurity. I was bused when I was 11 years old during the 1970s battle to desegregate Boston Public Schools, which came decades after Brown versus 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. 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 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. It comes down to the way we think about mothers and American individualism. That, again, is Dana Suskind from the University of Chicago. Government stepping in in this early childhood space has always felt uncomfortable at some point. And you think that relates to American individualism? 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% 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. 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? 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 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? There's no question there will be unintended consequences. And remember, if you'd like to hear the earlier episodes in this series about how the U.S. is different from other countries, you can find that at Freakonomics.com slash American hyphen

culture slash. You can listen to our entire archive on any podcast app or on Spotify or Amazon Music. You can also get all the other shows in the Freakonomics Radio Network, No Stupid Questions, People I Mostly Admire, and Freakonomics MD. We'll be right back. Over the past few decades, much of the government aid to families and children in the U.S. has been tied to employment. Lisa Genedian is an economist at Duke. That's really different than comparable benefits offered to families worldwide. Whether you think about Scandinavian countries and the United Kingdom or Canada. Genetian also helps run the research project we heard about earlier, Babies First Years, where researchers are giving money to poor families to see how it affects their children's development.

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. 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, let's say, 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. 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 Hillary Hoynes, a member of the panel that Congress directed to reduce child poverty. And that's like not really

rocket science, but this was something that was literally not part of the conversation in the late 1990s. 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? 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. 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? 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 waning 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 it's one out of 10 eligible households are receiving. What happens if then you were able to invoke, let 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? We know that it does put upward pressure on rents. We know that. You know, 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, quote, 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. Your enthusiasm and your support for these seemingly no-nonsense ideas sounds so viable. Like, all it needs, really, is a crap load of money.

Is that essentially the problem? 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. 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's 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? 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 IRS 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. What if I say, okay, Hillary, you're a smart person. You know this topic. I accept your indictment of our country. And so I hereby declare that we, the U.S. government, Congress, are going to triple our spending. And next year, we push child welfare spending to 3%. 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? 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, you know, 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 for the American Rescue Package. Starting with very simple, unconditional child tax credit, child allowance, the bedrock of most European countries' child benefit system could get us all the way there. And that seems to have appeal to all political players, yes? 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 four 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. I'm Mitt Romney, and I'm the junior senator from the state of Utah. Romney, a Republican who twice ran for president, last 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. 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? 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 reduce the number of marriages we hope

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

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? 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 block. And as a senior myself, we're allowed, we have a lot to say politically and 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 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 got some work to do. 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. 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, health care, 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. 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? 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 number one. And number two, 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. 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? No, no. And I would note that there are several Republican senators who've 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. 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? 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. If you're giving people money with no conditions, they're going to be less likely to work or to work the full amount of hours that they may otherwise work. Lisa Genetian again from Duke. 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, you know, 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. And then the third argument goes back a little bit to how people are poor in the first place. If you give 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 our 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?

Here's the thing. We don't have great evidence to support any of these arguments, especially with the first two. You can look internationally and globally. There's 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 slash 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. Well, let's talk about single motherhood. That, again, is Kim Janey, who at the time was acting mayor of Boston. You may remember her own mother was poor, and Kim had a daughter herself when she was in high school. Let's talk about the people who make this argument

who were hell-bent 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. 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?

You know, 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 that Washington has been 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 as we noted earlier, there is growing evidence that the aid so far has been working.

Researchers have found the additional money has helped lower child poverty and related problems like food insufficiency. Given what we heard from Mitt Romney and what the Biden administration has been pushing for, it looked like there might be a lot more money on the way. I'm honestly still surprised it's happening right now. The economist Hillary Hoynes again. 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. Absolutely.

Lisa Genedian again. 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. 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. 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. But it does appear that Susskind's hope was misplaced or perhaps premature.

Since we first ran this episode, the likelihood of expanded or permanent child aid has fallen. The Biden administration had made it part of its Build Back Better plan, an omnibus proposal that also includes big changes in healthcare delivery, climate change, and more, and which is politically dead in the water, at least for now. There's some speculation that Build Back Better will be split up into separate pieces of legislation, in which case a family aid package might stand a better chance, but it also might not. On the Democratic side of the Senate, Joe Manchin from West Virginia has said the child

tax credit is too generous and that he wants it to include work requirements, requirements that, as we heard in this episode, are hard for some low-income families to meet. As for Republican Senator Mitt Romney, who proposed his own poverty reduction bill last year, he has called Biden's new child tax credit ill-crafted. So, whatever bipartisan kumbaya seemed to have broken out last year seems to have dimmed, at least for now, at least to some degree. Again, in Washington, nothing is permanent or predictable. We put in a call to Hillary Hoynes, the Berkeley economist, and played her back this tape cut from last summer when things were looking good. I'm honestly still surprised it's happening right now. 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. Hoynes chuckled when she heard it. I think it's caught up to us, she said. That's exactly where we're at now. Hoyne says she's still optimistic that one or two senators will change their minds and revive the momentum. But, she admits, expanding a permanent cash benefit to parents won't be easy. She said, we don't trust poor mothers to make decisions that are best for their children. What do you think? Is Hoynes right? Will the U.S. start to look more like other countries when it comes to family benefits? We'd love to hear what you think. We are at radio at Freakonomics.com.

Coming up next time on Freakonomics Radio. The first secret is use incentives that can scale. Be as diverse as you possibly can as early as you can. Make all of your decisions on the margin. The experimental economist John List, who's been on the show before, has just published a book called The Voltage Effect, How to Make Good Ideas Great and Great Ideas Scale. Next week, we'll hear from it and him in a special edition of the Freakonomics Radio Book Club. We all have lifelong ambitions, don't we?

That's next time. Until then, take care of yourself, and if you can, someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio. We can be reached at radio at Freakonomics.com. This episode was produced by Mary DeDuke. Our staff also includes Allison Craiglow, Greg Rippin, Zach Lipinski, Ryan Kelly, Morgan Levy, Rebecca Lee Douglas, Jasmine Klinger, Eleanor Osborne, Emma Terrell, Lyric Bowditch, Jacob Clemente, and Alina Kullman. Our theme song is Mr. Fortune by the Hitchhikers. All the other music was composed by Luis Guerra. You can get the entire archive of Freakonomics Radio on any podcast app. If you'd like a transcript or show notes or to leave a comment, go to Freakonomics.com.

As always, thanks for listening. Did it record? Can you imagine an hour and a half, nothing recorded? I would die. I would die.