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On: June 13, 2024

When it comes to easing the effects of child poverty, one truth is abundantly clear: a little cash assistance goes a long way.

There’s plenty of research to back up this conclusion, and the numbers don’t lie. But how many numbers do we really need?

The Numbers

The experience of other nations, notably European countries with generous social safety nets, indicates that higher levels of guaranteed income correlate with better outcomes for children, including longer life expectancy and reduced levels of obesity. And here in the United States, study after study has shown that Unconditional Cash Transfers (UCTs) – no-strings-attached cash payments made to families living in poverty – have beneficial and measurable effects on the health and well-being of children in poverty. 

Just one example: the pandemic-era expansion of the federal Child Tax Credit (CTC) – which provided an average benefit of $4,380 to 36 million households – helped reduce the child poverty rate to a record low of 5.2% in 2021. But when Congress allowed that expansion to lapse in the following year, the child poverty rate more than doubled, rising to 12.4% in 2022.

At a recent conference sponsored by the Urban Institute and Berkley’s Opportunity Lab, three researchers presented results showing the positive impact of relatively small amounts of  cash on the lives of children:

  • Kevin Werner of the Urban Institute used a microsimulation module called the Social Genome Model to estimate the long-term impact of permanently expanding the CTC. According to Werner’s findings, children’s test scores would improve by about 5% for each additional $1,000 in household income. And the expanded CTC would lead to an increase of 7% to 12% in yearly earnings by age 30 – about $3,300 in additional income per person.
  • Katherine Rittenhouse, an economist at the University of Texas, studied thousands of low-income California families over a 20-year period. All the families benefited from several different child-related tax credits, but, because of a quirk in the tax code, some families received the credits a year earlier than other families. As a result, those families got about $2,900 in extra cash during the first year of their children’s life – a relatively modest difference that, Rittenhouse found, nonetheless led to significantly lower chances that their children would suffer from parental neglect, be referred to Childhood Protective Services, or be placed in  foster care.
  • Lisa Gennetian, a Duke University economist and a Family Health Project Advisory Board member, presented the findings of a study by six university researchers into the impact of Baby’s First Years, a trial program providing unconditional cash assistance to 1,000 poor mothers in four cities around the country.  The study found that, after one year of receiving $333 a month in cash support, infants in low-income families were more likely to show faster-paced brain activity, which has been associated with the development of thinking and learning. As a note, Family Health Project was established based on the pathbreaking research of Baby’s First Years.

Rebutting Criticisms

Gennetian said the study also found that families receiving cash assistance generally spent the money on “child-focused expenditures,” including the purchase of healthier food and toys for the children. It found no increase in alcohol or tobacco consumption among the parents, indicating that the extra cash was not used for those purposes – rebutting a commonly heard criticism of UCT programs.

Another presenter at the Urban Institute conference directly confronted a different criticism: the idea that unconditional cash assistance  is a disincentive to work. Michael Tubbs, former mayor of Stockton, CA and founder of Mayors for a Guaranteed Income, argued that the data suggest that the opposite is true. “On average, folks who receive guaranteed income are more likely to go to work, less likely to be unemployed, and more likely to go from part-time to full-time work” he told the conference. “The reason why is because it costs money to go to work. You have to pay for transportation, you have to pay for your uniform, you have to pay for childcare.”

Taken together, all these results provide irrefutable evidence that cash assistance works to improve the lives of  children in poverty. 

A Solution

Those numbers indicate results that are spectacular for moms, babies, and families,” said Joe Knowles, founder and President of Family Health Project. “At this point, we don’t really need more research about whether cash works – we know it works.”

The real question, for Knowles, is finding the best way to deliver UCTs to poor families. “The most urgent question confronting us is, which program design works best?” he said. “All will have some impact, a few more than others. But which programs can deliver cash consistently, over time, with the least added cost of delivery?”

Family Health Project was modeled after the pathbreaking study, Baby’s First Years, and was born out of the idea that direct giving can be done simply. FHP’s direct giving programs are designed with scalability in mind and consist of four simple components. Federally Qualified Health Centers refer participants, a cash transfer company to automate recurring, reliable payments to moms, comprehensive wraparound support to moms, and funding solely from philanthropic gifts. Given philanthropic support, this model allows us to expand programming easily.

This year we plan to expand our programs to support more moms and babies.