Introduction

Relative to its European peers, the United States spends virtually nothing on benefits for families with children.¹ This dearth of family benefits leads to two cruel outcomes: it denies many people the ability to have the families that they want and inflicts financial ruin on many of those who go through with parenthood despite the lack of social support.

The prevalence of financial problems among families with children causes many would-be parents to have fewer children than they would prefer and causes some to forego parenthood altogether. A recent survey found that one-fourth of people between the ages of 20 and 45 had fewer or expected to have fewer children than they wanted.² The most common reasons were economic: 64 percent said child care is too expensive; 44 percent said they can’t afford more children; and 43 percent said they waited too long because of financial instability.

When people do have children, they often struggle to afford child care, pre-k, and even everyday expenses. The effects of this social neglect are felt most severely by those on the bottom of our society. Twenty-one percent of American children live in relative poverty—a higher percentage than that of any European country.³

Current policy discussions around benefits that help families with children are fractured in strange and unhelpful ways. Ideas to expand child care and pre-k services tend to get grouped in with education policy or stand alone under the heading of “early childhood education and care.”⁴ Programs that provide public health insurance to children are categorized as healthcare policy.⁵ Paid leave proposals almost always seek to bundle leave for parents with leave for medical reasons and then wind up classified as women’s policy.⁶

These issue-area assignments are not wrong in an objective sense, but they create a muddled and rudderless policy framework. A more effective approach would be to bring all these policy ideas under the heading of family benefits and then pitch family benefits as having a simple unified purpose: making parenthood easy and affordable for everyone.

In Section One of this paper, I lay out a general theory that explains why having and raising children is so difficult in a laissez-faire capitalist system. In Section Two, I introduce the Family Fun Pack, a suite of family benefits that solves the problems identified in the first section. These benefits include free child care, free pre-k, free healthcare for children, and a child allowance, among other things.

Progressive candidates looking for a fresh platform would be wise to consider adopting the Family Fun Pack agenda. It is a coherent set of programs that conveys a simple message. These programs, which are common throughout the world, are extremely effective at reducing the burden of parenthood and especially effective at reducing child poverty.

Section One

The Problems

Capitalist economies only provide income to those who work and those who own. Since children neither work nor own, they find themselves locked out of the primary mechanisms of resource distribution in a capitalist society. To the extent that children receive resources, they do so indirectly through a family unit. But relying solely on that unit to funnel incomes to children runs into two major problems that generate high levels of inequality, poverty, and financial stress.

Problem 1

The Mere Addition Problem

The first problem, which I call the mere addition problem, is that adding children to a family unit increases the amount of resources and time needed by the unit, but our current economic system does nothing to address this need. Similar workers receive the same wages and time off even though some have to pay for diapers and child care while others do not. Because income is paid out to the factors of production without any regard for its final family-level distribution, families with children wind up in dramatically worse financial circumstances than families without children, even when the families are otherwise identical.

The best way to understand the severity of the mere addition problem is through a concrete example with realistic figures. So, imagine two married middle-class couples, the Smiths and the Johnsons. Both families earn $80,000 per year, but the Smiths have a son and a daughter when they are in their mid-20s while the Johnsons never have kids.

According to the latest figures from the usda and the Current Expenditure Survey, the Smiths will spend $233,970 out of their own pockets getting each of their children to age 18.⁷ That’s $467,940 for both kids. The Johnsons, being childless, will spend $0 over the same period. If both of the Smith’s kids attend a four-year public college, that will cost the family another $116,720, bringing the grand total with college to $584,660 versus the Johnson’s $0.⁸

A table demonstrating the differences in expenses between a family with children (The Smiths) and a family with no children (The Johnsons).

Despite working the same middle class jobs, the Smiths are much worse off than the Johnsons. By merely adding two children to their family unit, they find themselves half a million dollars in the hole. This dynamic opens up huge inequalities between families with different numbers of children and causes many lower income families to drown under the financial burden.

In the above example, the Smiths earn $80,000 per year and therefore can probably absorb the extra costs of raising children without going broke. But for lower class families, the story is much more bleak. Retail workers, food service workers, and others with low incomes often find themselves completely crushed by these expenses. Without a robust set of family benefits available to offset child-rearing costs, these families frequently wind up in poverty.

Indeed, because of the mere addition problem, the presence of children is one of the leading causes of poverty in American life. In social statistics, poverty is a function of family income and family size. When children are added to a family, the family’s size increases, but the family’s income does not. This necessarily pulls a family closer to the poverty line and plunges many families below that line.

In 2017, 158 million Americans lived in families with children.⁹ Over 28 million of those people lived below the poverty line, and that’s even after counting transfer programs like food stamps and the Earned Income Tax Credit.¹⁰

If these children did not exist, then obviously there would be no child poverty. More interestingly, if they did not exist, then half of the poor adults who currently live in families with children would no longer be poor.¹¹ That’s right: half of poor adults who live with children are only poor because of the expenses of raising children. It is thus the presence of children in these households that is driving the adults into poverty. Based on this analysis, children directly or indirectly cause 36 percent of all the poverty in America.

Since children increase the amount of resources families need to maintain their standard of living, a society that fails to match that need with public benefits will generally wind up with high levels of interfamily inequality and high levels of child and child-adjacent poverty.

Problem 2

Lifecycle Income Problem

The second problem, which I call the lifecycle income problem, is that peak childbearing years occur in early adulthood when individuals are working entry level jobs and therefore receiving entry level pay. As workers gain experience, they generally receive promotions and raises that increase their incomes, but much of this money comes too late to help with the punctuated costs of raising children. This mismatch between peak earning years and peak childbearing years drives up inequality and poverty in society.

People generally have children in their late 20s and early 30s. The average age of first birth is 26.6 years old.¹² The birth rate, i.e. the percent of women who have children in a given year, peaks at 11 percent around age 30.¹³ The percentage of adults living with children under the age of 5 peaks at 35 percent around age 33.¹⁴ The percentage of adults living with children under the age of 18 reaches a high of 66 percent at age 39.¹⁵

Yet adults receive their highest levels of income in their 40s and 50s. Median personal earnings peak at age 44; median family income peaks at age 49; and median equivalized family income, i.e. family income adjusted for family size, peaks at age 59.¹⁶ The result of this lifecycle income pattern is that family incomes are lowest right around the time people start having children, increase gradually while people are raising kids, and then reach their peak after kids have moved out.

Put simply, the distribution of income in a capitalist economy is at odds with the rhythm of human life and especially the rhythm of family life. Child-bearing comes too early to amass savings. Income arrives too late to finance contemporaneous child-related expenditures.

Even the patterning of income during parenthood itself is nonsensical: parents of older children have higher incomes than parents of younger children despite the fact that older children do not require child care and despite the fact that the younger years are the most crucial for child development.

One of the particularly disturbing ways to illustrate the lifecycle income problem is to look at the poverty rates and income levels of children at different ages. Newborns are 32 percent more likely to live in poverty than 15-year-olds.¹⁷ Likewise, first graders have a 33 percent higher poverty rate than 11_th graders.¹⁸ There is no good reason for these age-based disparities.

Fifteen-year-olds and 11_th graders are not more virtuous or harder working than newborns and first graders. They are just older, which means their parents are older, which means their family income is higher.

Of course, it is not just poor and middle class children who feel the pinch of the lifecycle income problem. Income levels increase as children age at every percentile of the income distribution. The family income of the 10th percentile 15-year-old is $5,200 higher than the family income of the 10_th percentile newborn (p10 in the graphs below). That represents an income increase of 55 percent from birth to age 15.

Similarly, the family income of the 90_th percentile 15-year-old is $23,600 higher than the family income of the 90_th percentile newborn (p90 in graph), which represents an increase of 15 percent relative to birth. The same upward trend is also seen at the 25_th (p25), 50_th (p50), and 75_th (p75) percentiles.

When confronted with these figures and the lifecycle income problem more generally, some react by saying that we should try to get people to delay childbearing. If capitalism distributes more income to people when they are older, then, according to this argument, we should just have people wait until they are older to have children. But this reasoning is wrong for two reasons.

First, it is philosophically repugnant. Economies should be constructed to support human beings in their lives, not the other way around. In this specific case, people should be able to have children when they want to do so based on their own calculations of when they are ready, not be forced to contort their family-formation preferences around an economic order that is hostile to family life.

Second, delaying childbirth for financial reasons prevents many families from having the number of children that they would like. Among the quarter of adults who say they had fewer children than they wanted, 44 percent cite waiting too long because of financial instability as a reason for their deficit.¹⁹ Basic biological realities ensure that solving the lifecycle income problem with delay means denying many people the families that they want to have.

The window for fertility is set by biology while the distribution of national income is established by people through the creation of economic institutions. The US has put together an economic system that ignores the nature of the human lifecycle and has thereby inflicted severe financial pain on children and the parents attempting to raise them. We can’t do much about our biology, but we can create an economy that supports family life, if we want to.

Section Two

The Family Fun Pack Solution

The easiest solution to the problems posed by family life under capitalism is to levy broad-based taxes and then use the revenues from those taxes to fund a set of benefits that provide resources to families with children. The reason this strategy works is because it causes net transfers of income across three axes: family size, age, and income level.

The set of benefits I am calling the Family Fun Pack causes income to be net transferred away from smaller families and towards larger families; away from older families and towards younger families; and away from richer families and towards poorer families.

The net transfers from smaller to larger families directly address the mere addition problem while the net transfers from older families to younger families directly address the lifecycle income problem. The net transfers from richer to poorer families is a cherry on top that also ensures that older and smaller families with lower incomes are partially shielded from taxes required by the Family Fun Pack scheme.

The Family Fun Pack consists of the following seven programs.

Baby Box

Around three months before the birth of a child, mothers will be eligible to receive a baby box that contains essential baby items like clothes, diapers, and wipes. The box the items comes in will be made of sturdy cardboard and lined with a mattress in order to serve as a bassinet. Baby boxes are currently provided to mothers in Finland and Scotland.²⁰ Four US states—Ohio, Alabama, New Jersey, and Texas—also have baby box programs for some mothers.²¹

The Social Security Administration will administer the program by contracting with vendors who prepare baby boxes and ship them to benefit recipients. Individuals will establish their eligibility for a baby box through a certification of pregnancy submitted by their doctor.

Parental Leave

Around the time of the birth of a child, parents will be eligible to take a total of 36 weeks of job-protected leave from work and receive an income benefit from the Social Security Administration while they are on leave.

If there is only one custodial parent, then that parent will be entitled to the entire 36 weeks of leave. If there are two custodial parents, then each parent will be entitled to 18 weeks of leave by default, but will also be permitted to transfer as much as 14 of their 18 weeks to the other parent. The option to transfer leave allows couples to split their parental leave entitlement in the way that they prefer.

The income benefit will be based on the highest earning year from the last three years of the recipient’s Social Security earnings record. The benefit will replace 100 percent of earnings up to the minimum wage (currently $15,080 per year) and 66 percent of earnings that exceed the minimum wage. The maximum benefit will be capped at the national average wage as measured by the national average wage index (currently $50,321.89 per year).²² All new parents will be eligible for benefits equal to at least the minimum wage even if they have no earnings on record.

This parental leave proposal is an improvement on the leading alternative, called the Family Act, for five reasons.²³

This proposal truly is a parental leave proposal in that it only provides benefits to new parents. The Family Act combines parental leave with other leave benefits, which leads to conceptual and political muddling.
This proposal ensures all new parents receive at least the minimum wage while on leave. The Family Act would provide no benefits to parents without earnings records and would provide below-minimum-wage benefits to many low-earners.
This proposal uses a more generous earnings replacement formula: 100 percent replacement up to the minimum wage and 66 percent replacement afterwards. The Family Act uses a flat 66 percent replacement formula.
This proposal provides 36 weeks of parental leave per child. The Family Act only provides 12 weeks if one parent is present or 24 weeks if both parents are present.
This proposal allows parents to transfer as much as 14 weeks of their leave entitlement to the other parent. The Family Act does not permit any such transferring.

In the Family Fun Pack framing, parental leave would be understood as a benefit for children, with the benefit consisting of the care provided by their parents during leave. This also differs from conventional paid leave framing, which construes the program primarily as a benefit for working adults.

Free Child Care

Parents with children between the ages of six months and three years will be provided a free spot in a public child care center. Parents who prefer to provide child care at home can forego their public child care spot and instead receive a home child care benefit paid by the Social Security Administration.

The federal government will fund the free child care program through grants, but local school districts will administer it. The federal grants will cover all of the costs of providing the child care service, including capital expenditures and worker pay. The federal government will also set standards for the provision of child care, including child-to-adult ratios and wage levels. If a school district does not cooperate with the program, the federal government will establish its own federally-administered child care centers in the area covered by the uncooperative district.

Those who opt for the home child care benefit rather than a public child care spot will be paid a weekly benefit that is roughly equal to the per-child wages of childcare workers. So, for instance, the median childcare worker has an annual salary of $22,290.²⁴ The recommended child-to-adult ratio for these workers is around four to one depending on the age of the child.²⁵ Dividing $22,290 by four gives $5,730 per year, which is $110 per week. Thus, under prevailing child-to-adult ratios and prevailing childcare worker wages, the weekly home child care benefit would be $110 per child. If the ratios or prevailing wages change, e.g. because the new public child care system sets higher wages, then the home child care allowance would change with it.

Free Pre-Kindergarten

Children between the ages of three and five will be eligible to attend free public pre-k, just as many already do in Oklahoma, New York City, and Washington DC.²⁶ This program will mirror the structure of the free public child care program. The federal government will fully fund the free pre-k program through grants, but local school districts will administer it, just as they already administer free k–12 education. If a school district refuses to cooperate with the new program, then the federal government will open its own pre-k facilities in that district. Unlike with child care, there will be no benefits available to those seeking to do pre-k at home, i.e. through homeschooling.

Free School Lunch

All children in public child care, public pre–k, and public k–12 schools will be eligible to receive a free lunch during the day. The federal government will finance the program just as they have financed free and reduced-price lunches for low-income students since the 1940s.²⁷ The national school lunch program was recently expanded via the community eligibility provision to allow schools and school districts with a sufficient number of low-income students to provide free school lunches to everyone attending their schools regardless of income.²⁸ Universal school lunches would expand upon the logic of the community eligibility provision by delivering free school lunches to all children, rich and poor alike.

Free Health Care

All individuals below the age of 26 will be eligible to enroll into the Medicare system and receive a comprehensive set of health benefits with no cost-sharing. This would be similar to recent proposals to create a Medicare-for-All system, except it would be limited to the under-26 age group. This is not meant to be an alternative to Medicare-for-All, just a version of it focused specifically on families with children. A Medicare-for-Kids program like this could also be a significant step towards a universal Medicare system.²⁹

It is also worth noting that Medicare-for-Kids would be significantly easier to implement than Medicare-for-All. Children are relatively cheap to insure. In 2012, children received 60 percent less health care spending than non-children on a per-capita basis.³⁰ Put differently: children make up 25 percent of the population but account for less than 12 percent of the personal health care spending. In addition to their low cost, many children are also already publicly insured. In 2016, 40 percent of children received public insurance, mostly from Medicaid and chip.³¹ Adding the remainder of people under the age of 26, who again are not that expensive to insure, onto the public rolls is simply not that big of a leap.

Child Allowance

Parents will be eligible to receive a child allowance of $300 per month for every minor child that they are currently taking care of. The Social Security Administration will administer the child allowance program.

This benefit would replace the confusing hodgepodge of cash benefits for children currently provided through the tax code. The benefits that will be fully replaced are:

Child Tax Credit
Child and Dependent Care Tax Credit
Dependent Care Flexible Spending Accounts
529 savings accounts used for elementary or secondary school
Head of Household filing status

In addition to these benefits, the Earned Income Tax Credit (eitc) will be significantly simplified and scaled back.

Currently, the eitc looks like this.

Single filer (2018)

Married filer (2018)

After the reform envisioned by the Family Fun Pack, the new eitc will look like this:

Canada recently carried out a similar consolidation of programs into a single child allowance. There, the Liberal government used a child allowance to replace the Universal Child Care Benefit, Canada Child Tax Benefit, National Child Benefit, income-splitting for families with children, the Children's Fitness Tax Credit, and the Children's Arts Tax Credit.³²

Combining all these various programs into a child allowance will make the benefits system simpler and more progressive. The universal cash grant design also makes it easy to directly deposit the cash sum into recipients’ bank accounts every month rather than as a lump sum tax refund at the end of the year.

Conclusion

The Family Fun Pack would bring the US system of family benefits up to where its top European peers already are and, in some ways, even surpass those peers. This would dramatically reduce poverty and inequality in society, especially child poverty. By relying on universal benefits available to all parents, the Family Fun Pack would also become deeply rooted into the American welfare state and very difficult to roll back.

As a policy matter, the Family Fun Pack is an elegant solution that addresses the specific problems confronting parents today. Parental leave, free child care, and free pre-k fully resolve the problem of how to care for children before they are able to attend kindergarten. The baby box, free health care, and free school lunch provide in-kind benefits that address a few universal childhood needs. And then the child allowance provides a modest cash grant to offset a big portion of the costs that remain.

Left alone, capitalist income distributions will always make family life miserable for many. The Family Fun Pack makes it easy and affordable for all.

Endnotes

Family benefits public spending.
Americans Are Having Fewer Babies. They Told Us Why.
Poverty rate.
Early Childhood. Early Childhood Education and Care - Home.
Congress is Going for a One-Two Punch in Taking Away Children’s Health Insurance.
Paid Family and Medical Leave: By the Numbers.
Expenditures on Children by Families, 2015.
Average Net Price over Time for Full-Time Students, by Sector.
Annual Social and Economic Supplement (ASEC) of the Current Population Survey (CPS). 2017 Supplemental Poverty Measure (SPM) research file.
Income is defined as the disposable income concept used in the SPM. The poverty line is set equal to half of the median equivalized income, which was $30,633 for a family of four. Family incomes are equivalized using the square root of family size.
For this figure, I simply remove the children from each family, and then find the new equivalized incomes for the adults in each family. Those new equivalized incomes are compared to the same poverty line as before, which is $30,633 for a family of four.
Births and Natality.
Author’s calculations of the 2012-2016 American Community Survey.
Author’s calculations of the 2012-2016 American Community Survey.
Author’s calculations of the 2012-2016 American Community Survey.
Author’s calculations of the 2012-2016 American Community Survey. Family incomes are equivalized by dividing by the square root of family size.

Author’s calculations of the American Community Survey. Poverty is defined by the official poverty measure.
Author’s calculations of the American Community Survey. Poverty is defined by the official poverty measure.
Americans Are Having Fewer Babies. They Told Us Why.
Maternity package 2018. Baby Box.
What new Texas moms should know about those free baby boxes. New Jersey gives out free baby boxes in move to lower infant mortality rates. Ohio becomes 2nd state to offer free baby boxes to curb infant deaths. The Baby Box program is here to stay in Alabama, still in high demand.
National Average Wage Index
The Family And Medical Insurance Leave (FAMILY) Act: Frequently Asked Questions.
39-9011 Childcare Workers.
Ratios and Group Sizes.
Oklahomans have embraced free, universal early education—and it’s working. Pre-K. Pre-Kindergarten (PK3 and PK4).
National School Lunch Program (NSLP).
Community Eligibility Provision.
The Path to Medicare-for-All Starts with Medicare-for-Kids.
NHE Fact Sheet.
Health Insurance Coverage of Children 0-18.
5 things to know about the new Canada Child Benefit.