By James Pethokoukis

“Many children in the United States do not have the resources or relationships they need to build a strong foundation for their future,” declares “Rebalancing: Children First,” the recent consensus report of the AEI-Brookings Working Group on Childhood in the United States. In other words, it’s time to update America’s generational contract. (In 2019, the share of the federal budget spent on children was 9.2 percent and the share spent on the adult portions of Social Security, Medicare, and Medicaid was 45 percent.)

This is the second post in a mini-series I’m doing on that AEI-Brookings report. (The first one can be found here.) The subject of this edition is a look at the current resources available to American kids. Kind of survey of the current landscape. So let’s check the facts with three key trends that the group has identified:

• First, there has been a sharp decline in the share of children living with married parents, from 88 percent in 1975 to 76 percent in 2019; this decline has been sharper still among those parents with less education.

• Second, there has been an increase in the share of children with a working mother, In 2019, 63 percent of children ages 12 or younger had mothers who worked, up from 38 percent in 1975. For children being raised by a single mother, the increase in employment was especially sharp in the mid-1990s in the wake of welfare reform and a major expansion of the Earned Income Tax Credit 

• Third, child poverty rates have come down significantly over the past four decades.

Now let’s talk resources. From the report: In 2018 the federal government spent about $370 billion — providing cash or near-cash benefits — on programs that were generally targeted to low-income families: the earned income tax credit, child tax credit, Supplemental Nutrition Assistance Program, and Temporary Assistance to Needy Families. In addition, the federal government spent $116 billion on Medicaid and other health insurance programs for children.

Taken together, according to the report, the social safety net reduces child poverty from 25 percent (which would be the rate in the absence of taxes and transfers) to 15 percent (the rate after the impacts of the current safety-net programs). In other words, although the social safety net lifted 7.4 million children out of poverty, 11.1 million children remained in poverty.

The report also includes a lengthy review of studies of various programs, finding “positive long-run benefits of having additional resources in childhood, with lasting improvements in both health and economic productivity in adulthood.”

Let’s focus on one of them, the EITC, the value of which the working groups support increasing by 10 percent. This would provide an immediate income boost to the 44 percent of families with children who currently receive the credit. From the report:

The EITC has been expanded several times since it was introduced in 1975, and researchers have been able to study the impact of these expansions to estimate its impact. Because the EITC is available only to families with positive earned income, it leads to increases in employment, which further raises family incomes (Hoynes and Patel 2018; Schanzenbach and Strain 2020). Studies of the EITC therefore measure the combined effects of both increased income as well as changes in parental employment — likely positive to the extent that employment brings additional income to the family, but potentially negative to the extent that children attend a low-quality childcare program or receive a smaller investment of time from their parents. The EITC has been shown to improve a wide range of children’s outcomes. Infant health is improved — both increasing average birth weight (Baker 2008; Strully, Rehkopf, and Xuan 2010) and decreasing the share of low-birth-weight newborns (less than 5.5 pounds) (Hoynes, Miller, and Simon 2015). The EITC also improves educational outcomes, from test scores to high school graduation and college enrollment (Bastian and Michelmore 2018; Chetty, Friedman, and Rockoff 2011; Dahl and Lochner 2012, 2017).

For more, please check out the AEI-Brookings Working Group on Childhood in the United States.

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