All children, families, and caregivers deserve financial security to fulfill their potential, access opportunity, and and live a good life. In order to create a society where every person can flourish, we want to start thinking about how to provide a basic floor for wellbeing. Though supporting families can have important economic benefits, this is first and foremost a matter of justice and equity. The Care Index makes it clear that something big needs to change: our patchwork early care and learning system and the constant trade-offs between cost, quality and availability, is not serving families, children, the industry, businesses, nor the economy well. Experimenting with universal forms of cash assistance, such as a universal child benefit or a universal basic income, is a promising way to support families, invest in children, and value care.
In order to create a society where every person can flourish, we want to start thinking about how to provide a basic floor for wellbeing. Though supporting families can have important economic benefits, this is first and foremost a matter of justice and equity.
The evidence is clear: Raising a child is expensive. In total, raising a child born in 2013 from birth to age 18 (that is, not including college tuition) will cost $245,340 on average for a middle-income family, according to the USDA. Expenditures include housing, food, transportation, healthcare, and many other expenses—and, of course, education and child care. Education and care are now among the largest costs for families, making up 18 percent of average child-related expenses, and often much more: The Care Index found that the average cost of child care in a center is nearly one-fifth of U.S. household median income. For lower-income families, these costs can become unbearable. The Care Index found that the cost of one child in center-based care could eat up nearly two-thirds of a minimum-wage earner’s income. And the rate of child poverty in the U.S. is high: One in five children live below the poverty line, and one in ten live in extreme poverty. For single-parent families earning minimum wage, the Care Index found that average cost of child care can eat up nearly two-thirds of their earnings. Child poverty can have long-term consequences including poor health, behavioral issues, and low earnings as adults—but the flip side is that providing assistance to low-income children and their families, which can help ensure that children receive high quality early education, can yield substantial and lasting benefits.
Though the United States has some cash transfer policies in place to help families with children, including Temporary Assistance for Needy Families (TANF), the Child Tax Credit (CTC), and Earned Income Tax Credit (EITC), these policies are nowhere near sufficient to meet families’ needs. Only 23 percent of eligible, low-income families actually receive TANF, and many are discouraged from even applying. For those families who do receive TANF, benefits are small: Payments vary by state, but, for a family of three with no other income, the median state maximum monthly payment is $427, or just over $5,000 per year. The CTC fails to reach the poorest families and nonworking families, since it is phased in gradually only once families have $3,000 in earned income and is not fully refundable. It also doesn’t help much with day-to-day budgeting, since it is distributed annually, and it is capped at $1,000 per child. The EITC is more substantial and is one of the U.S.’s more effective antipoverty programs; its maximum credit for a family with one child is $3,359. But it’s not enough—the Care Index found that cost of child care in centers eats about 18 percent of median household income nationwide. For families with a single earner making minimum wage, that’s 64 percent of their income.