4/5 Building Social Capital At Home - FIVE POLICY SOLUTIONS
Federal policymakers keen to increase family affordability should prioritize the following policies:
1. REMOVE GOVERNMENT BARRIERS TO AFFORDABILITY AND CHOICE
Too often government policies drive up costs and limit choices for families, especially for low-income families. Wherever possible, government barriers standing in the way of family affordability should be removed.
States and localities should review their zoning laws to allow for more multifamily and low-income housing, which would improve families’ budgets, job opportunities, and children’s outcomes. According to a recent poll, “Half of respondents (50 percent) said they would somewhat or strongly support including incentives to local communities in a reconciliation bill, to remove zoning and land-use restrictions that prevent the development of more housing.”
Zoning reform could help to reduce achievement gaps between high and low performing schools, according to research by economist Jonathan Rothwell Large. Ideally, quality K-12 is even more thoroughly delinked from high-cost housing by an increase in lotteries, charter schools, and school choice. School choice has been found to improve student test scores and attendance rates, in particular for those who previously only have access to low quality schools. Students from low-quality neighborhood schools benefit greatly from choice and lottery winners are more likely to graduate from high school, attend a four-year college, and earn a bachelor’s degree. According to a recent poll, 85 percent of Hispanics believe that parents should be able to pull a child from a poor performing school and enroll them in a school that is succeeding academically.
With respect to child care, states should reduce barriers to make it easier for new providers to enter the child care market as well as to encourage a proliferation of different types of providers that better match family preferences. As written about in a Niskanen paper by Patrick Brown, this could include:
streamlining child care regulations not directly linked to safety and quality
creating an alternative CCDBG application process for non-profit and faith-based providers (a handful of states offer faith-based child care providers waivers from certain regulatory mandates)
boosting the amount of subsidy to non-profit providers (small providers are currently reimbursed at a lower rate in nearly every state for subsidized child care, which has likely contributed to their declining numbers)
It could also include creating apprenticeship programs that allow for more people to enter the caregiving profession, as several states have piloted, instead of erecting more costly educational requirements.
Wherever possible, marriage penalties in benefit programs should be reduced or eliminated, as detailed in an accompanying paper in this series: “Family Stability: Bridging America’s Social Capital Divide” by Brad Wilcox, Chris Bullivant, and Peyton Roth.
2. IMPLEMENT A NATIONAL PAID PARENTAL LEAVE PROGRAM
Childbirth should not be associated with job loss or financial instability. Congress should implement a national paid parental leave program to ensure that all parents— irrespective of their state of residence or occupation—have the time and financial resources to care for their infant in the weeks after birth. Paid parental leave is an economic and health support to parents and their children—but it’s also a cultural shift and norm around the value of care and new life. Post-Dobbs, it is an even more essential safeguard to family affordability for unplanned pregnancies.
Paid parental leave is associated with reduced neonatal fatalities, increased rates of breastfeeding, reduced reliance on welfare and debt, and an increase in labor force participation and wages. Fathers who take paid parental leave have more involvement later in a child’s life, helping to strengthen family bonds. Paid parental leave also reduces the pressure on the child care system, as infants are the most expensive group to care for. A public paid parental leave program would pay particular dividends to low- income and minority parents. State-based paid family leave programs have been found to increase parents’ access to paid time off and benefit at-risk children financially and developmentally, as Angela Rachidi, Peyton Roth, and I wrote about in a recent AEI paper.109 The largest increases in leave taking from public programs have accrued to Black and Hispanic parents.110
In practice, a paid parental leave benefit could be structured a number of different ways:
Congress could provide parents a flat, lump sum benefit upon the birth or adoption of a child, either in pregnancy or upon birth, in the form of a CTC payment or otherwise. This could be paired with an expansion of the Family and Medical Leave Act, specific to birth and for a more limited amount of time but for which nearly every worker would be eligible (relative to the 40 percent of workers excluded from FMLA protections today)
Congress could allow workers to advance Social Security payments to financially cover a time of unpaid family leave, as several Republican Senators have proposed, though ideally this would be done as a broader overhaul of entitlement benefits given the existing financial challenges in the Social Security system
Another option is to create a stand-alone paid parental leave program at the federal level, as was proposed by the Trump Administration and the AEI-Brookings Working Group on Paid Family Leave.111 This would allow for recipients to claim a portion of their wages for the duration of leave. A social insurance program is how the existing state-based paid leave programs are structured.
States, employers, and nonprofits could build off this period of leave, but there would be a standard under which no worker would fall. Since the benefits accrue to the infant as well as to the parent, a paid parental leave plan should be based on a child’s citizenship status.
3. SIMPLIFY THE MAZE OF EXISTING GOVERNMENT PROGRAMS INTO A MONTHLY CASH BENEFIT
Too many government programs aren’t working like they should and aren’t delivering support where it’s most needed. Congress should provide low- and moderate-income families with a monthly cash payment, directly deposited into family bank accounts, along the lines of what has been proposed by Senator Mitt Romney in the “Family Security Act.” A monthly payment would help give families more flexibility to meet their unique needs.
The impact of cash support relative to the existing system was on full display during the COVID-19 pandemic, where a temporary expansion of the CTC was associated with dramatic reductions of child poverty as well as reductions in food insecurity. According to the Census Bureau’s Household Pulse Survey, the most common reported uses of payments were for basic needs, including food (65 percent), utilities and telecommunications (40 percent), rent and mortgage (39 percent) and clothing (34 percent). Spending on basic necessities was most common among Black and Hispanic families. This speaks to the generalized economic insecurity that many families with children are facing. That said, cash support at the level given during the pandemic also likely exacerbated inflationary pressures and, if extended, could have had negative effects on work.
On that latter point, there has been considerable debate about a work or income requirement to a child allowance. Senator Romney has introduced two versions of his plan, the first with no income or work requirement and the second which requires family income of $10,000 or more for the full CTC benefit to kick-in. The work requirement was added to address critiques that unconditional cash may discourage work or induce government dependence, something dubbed the “income effect” in economics. Indeed, a recent University of Chicago report found that the negative impacts on work from a fully refundable CTC could reduce anti-poverty impacts. That said, a work requirement leaves out the most vulnerable families for whom the existing safety net does not appear to be working and for whom even small amounts of income are valuable.
A compromise could be that a smaller, baseline monthly CTC benefit is made available to all parents below a certain income level irrespective of work or for a period of time, such as the first year of a child’s life. The amount could dynamically increase as earnings increase to create a work incentive. Wage and child care support would also create additional work incentives as would an increase in family-friendly workplaces.To curb the inflationary impact, the benefit should phase out relatively soon up the income spectrum and be targeted to low- and moderate-income households, whereas current CTC law and proposals continue up to $400,000 in household income, far beyond when government support is warranted from a needs-based perspective and increasing the cost of the policy. Another way to curb the inflationary impacts of the benefit is to only provide it when children are young—when infant brain development is at its peak, before benefits such as public school and parents’ increase earning potential comes into play—instead of for 18 years.
A benefit like this must be paid for, (unlike the Republicans’ 2017 tax bill which doubled the CTC, or the pandemic CTC expansion, both of which were deficit- financed). In the most ideal scenario, there would be a grand bargain to return the U.S. to a sustainable fiscal trajectory that necessitates tackling old-age entitlements and could create space for new benefits. Over the next decade, the share of spending on adults over age 65 will comprise over half of all federal spending, whereas the share for children will decline to 7 percent. Instead of resetting the table of what we already spend on children and poverty, a larger share of the overall pie should be invested in youth and the next generation.
While a modest cash support would theoretically deliver most benefits to low-income families, this is not automatic. Specific outreach needs to occur to Hispanic communities, who have had a lower take-up of the credit historically, likely in part from a language barrier. In the pandemic related expansion, 75 percent of eligible Hispanic families received the credit relative to 84 percent of White families. Importantly, the CTC should be based on child citizenship, not parental citizenship. While providing the CTC irrespective of immigration status could create moral hazard around the border, children who are born here are citizens and thus should be entitled to the full set of offerings and benefits available.
4. CREATE MORE OPPORTUNITIES FOR GOOD-PAYING JOBS AND AFFORDABLE CARE
The primary lever of financial independence and affordability is work. Policymakers and employers focused on increasing family affordability should focus on creating more high-paying jobs and conducive environments for parents to blend work and care in the way that they prefer. Access to better paying jobs would also create more options for a parent to stay home or reduce hours to care for their children without financial stress.
The number one desire for working parents, across a number of polls, is flexibility from their employers. This became more possible during the COVID-19 pandemic of 2020 and the transition to remote work: a trend that is likely to continue, to the benefit of working mothers. There is some evidence that blue-collar workers are changing jobs to those that provide more flexibility. For jobs where flexibility or remote work are not options, employers offering predictable scheduling and on-site child care, or child care vouchers, would help make employment more achievable for working parents. Government and employers can also make it easier to work part-time, the preference of many working mothers in the U.S. and abroad, which better allows for work and care. One way to encourage part-time work is to allow for part-time workers to access company benefits. Another way is to encourage a system of more portable benefits, which free market conservatives should support for reducing friction in the labor market.
Child care is one of the most significant barriers to work for many low-income families and single parent households in particular. Congress should fully fund the bipartisan, state-based CCDBG systems, which functions as a school choice program for early childhood education: Just as parents using education vouchers can choose to send their children to a variety of schools, parents who need care for their children outside the home can choose among a wide diversity of options. CCDBG allows low-income families to offset the costs of child care for a provider of their choice, including center- based care, religious providers, and even family and friend providers—the latter being an underdeveloped option and the preference of many Hispanics as previously mentioned.
Continued wage support, through programs like the EITC, would boost the rewards to low-wage work, providing more financial flexibility for families. Additionally, recognition of job credentials earned abroad would be of value to foreign-born parents seeking employment as would immigration reform. Other reports in this Social Capital Campaign series explore opportunities for better work at higher wages, including increasing access to vocational training and education savings accounts.
While these reforms are directed to working parents, stay-at-home parents would also benefit. As previously mentioned, a disproportionate share of these parents are Hispanic mothers. Families that prefer stay-at-home parenting would benefit from higher wages for the parent in the labor force and as well as increase in that parent’s workplace flexibility and ability to take paid leave following the birth of a child. An increase in flexible workplace options could also increase options for stay-at-home parents to work on a reduced schedule that allows them to still be with their children much of the time.
5. EQUIP AND ENGAGE LOCAL COMMUNITY ORGANIZATIONS, SUCH AS CHURCHES
Family affordability is about more than money. A rich associational life provides a plethora of relational, social, and emotional benefits to families. As summarized in the bipartisan Communitarian movement’s position paper on the family in 1993: “A responsive community must act to smooth the path for parents so that joys of family life might be more easily felt and its burdens more fairly borne.” AEI scholar Ian Rowe describes how children grow and develop most fully in a system of layered relationships including but beyond family, such as schools and churches.
The faith-based community has an extensive network that could be mobilized further. There are an estimated 380,000 churches embedded in communities across the U.S, according to the National Congregational Study Survey. By comparison, there are only 31,000 post offices and 100,000 public and charter schools. The sheer number and geographic spread of existing churches suggests that they could help to fill a vital gap in community support for parents. Churches could increase their provision of on-the-ground support to families including parenting classes, marriage counseling, daycare provision, and mother’s day out programs, among other options. The faith community could be better integrated into existing state and local government programs, such as child care, home visitation, and mentoring programs, given their existing relationships with congregants. Post-Roe, this type of community support and investment is especially important as more children are likely to be born into compromised financial situations, particularly in Red states, and crisis pregnancy centers (often faith-based) may be shifting their missions accordingly.
To be sure, many churches face financial challenges of their own. But there are ways to support and equip them, such as rectifying incentives for charitable giving. Nearly half of the population has no income-tax liability, and thus does not benefit from the existing charitable tax deduction. An above-the-line deduction, would allow all households to deduct charitable giving even if they do not itemize their deductions. This is likely to have the effect of increasing giving to local organizations addressing poverty and childhood. That’s because while wealthier households tend to donate to art- and education-related nonprofits, middle- and low-income households (currently excluded from the charitable tax deduction) are significantly more likely to give to faith-based and poverty efforts.
Of course, there is a much broader array of community and nonprofit supports beyond faith-based groups. One way that communities can leverage their respective resources towards the common goal of better supporting families would be to set up local “opportunity councils” with a cross-sector of local leadership across the government, nonprofit, faith-based groups, and parents. This idea was proposed by former AEI economist Aparna Mathur and me in a National Affairs article and has been used elsewhere with success to address complex problems such as child poverty in Canada and child school performance through a group called StriveTogether in Cincinnati. Too often, localities’ resources are stove-piped into separate functions—housing, education, family support, etc. There is hardly ever an overarching, comprehensive focus on a single outcome. Opportunity councils could be authorized to help direct private investment or public resources around child outcomes or family affordability and help connect various parts of the community that do not regularly interact.
