1/5 Building Social Capital At Home - EXECUTIVE SUMMARY
Families are the primary unit of social capital. But forming a family is a costly endeavor. Rising child-related expenses relative to income, outdated government and workplace policies, and an increase in single parenting have impacted family affordability. This paper will include a spotlight on Hispanic families. One in four children in America are Hispanic—the youngest and largest of any minority group in the country—and these families face a unique set of affordability challenges. Federal policymakers should aim to make America a better place to raise children for the sake of parents, children, and the future of our country by addressing these five problems:
FIVE PROBLEMS
1. Rising costs relative to income
Child-related costs such as housing, education, and child care are increasing more than income, and government policies are often to blame. Nearly half (46 percent) of working parents report difficulty paying for personal expenses in the past 12 months compared to 35 percent of non-parents.2 More Hispanic children live in poverty—4.2 million in 2020— than children of any other racial or ethnic group.
2. Outdated workplace policies
Outdated workplace policies put unnecessary costs on children and parents. Most parents are in the labor force, yet few employers offer family-friendly policies such as paid parental leave, flexible work, or predictable schedules. These benefits are conspicuously rare in lower-paying and part-time jobs. This impacts parents’ ability to work and care for their children in the way they prefer. Hispanics have a higher labor force participation rate than average, but the least access to family-friendly policies.
3. Inadequate and poorly targeted government investment
Inadequate and poorly targeted government investment has failed to deliver support how (and when) it is needed. Despite the spendthrift of our federal government and running up of the federal debt, the share of the budget going to children is relatively small and declining. The government programs that do exist often leave out low- and moderate- income families who need help the most; deliver support at tax-filing, not when expenses are incurred; and do not align with parental preferences. Hispanics have a lower take-up rate of child-related government benefits relative to Whites or Blacks despite their eligibility.
4. People are having fewer children
Fertility rates have fallen by 20 percent since 2007. This is likely attributable to a wide variety of reasons, such as delayed marriage, an increase in women’s education, and changing preferences. That said, families who would like to have (or to have more) children than they currently do cite costs as the leading reason why they are not growing their families. Hispanics in the U.S. have the highest fertility rate relative to Black, White, and Asian parents, but it has dropped in recent years.
5. Parents are increasingly isolated
An increase in parenting alone has exacerbated affordability issues. America has the highest rate of single parenthood in the developed world. Social capital has frayed, including church and community involvement, which previously would have provided financial, emotional, and social cushion to support family affordability. Hispanics have not been immune to these trends; in 2016, half of Hispanic children were born to unmarried mothers, up from 34 percent in 1990.
FIVE POLICY SOLUTIONS
Federal policymakers keen to increase family affordability should prioritize the following policies:
1. Remove government barriers to affordability and choice
Remove government barriers that drive up costs and limit choice including around housing, school, child care, work, and marriage.
2. Implement a national paid parental leave program
Change the culture so that all parents—irrespective of their wage level or occupation— can afford to care and bond with their infants.
3. Simplify the maze of existing government programs into a monthly cash benefit
Rework ill-targeted government programs to provide a monthly cash benefit for low- and moderate-income families to increase their financial flexibility.
4. Create more opportunities for good-paying jobs and affordable care
Create more choices for work conducive to family life, such as flexible work, part-time work, wage support, and increased care and education choices—including in-home care and faith-based providers.
5. Equip and engage local community organizations, such as churches
Equip and engage the local community, including churches and other faith-based organizations, to provide support for marriage, parenting, children, and families to strengthen social capital.
Two other reforms impact family affordability. While the details of these reforms are beyond the scope of this paper given their complexity, their value to family affordability is fundamental:
First, immigration reform is imperative to family affordability
Undocumented immigrants in the U.S. are the parents of 6 million children under the age of 18. A path to legal worker status is necessary to ensure that parents can earn higher wages and benefits from legal work, unafraid to claim government benefits for which their children are eligible (nearly 80 percent of children of undocumented immigrants are U.S. citizens.) To prevent moral hazard, a path to legal status or citizenship must accompany security at the border and visa entry-exit points.
Second, a growing economy improves family affordability
A growing economy improves family affordability by supporting new work and business opportunities, stable price and tax levels, and a reliable social safety net. This approach requires turning away from the loose monetary and fiscal policies that have marked the last decades and the implementation of a sustainable fiscal trajectory and pro-growth policy agenda. Fiscal balance has eluded policymakers for too long, despite dire warnings from the Congressional Budget Office, Government Accountability Office, and others about our “unsustainable path. Delaying reform in this area will worsen inflation and lead to a debt crisis, the cost of which will be borne by working families and their children.
The policies outlined in this paper will make America a more affordable place to have a child, which will increase the opportunities and choices that families face.
