The blog of the Urban Institute
January 27, 2020

Misconceptions on Social Welfare Spending for Children Can Prohibit Needed Progress

January 27, 2020

According to the Urban Institute’s most recent Kids’ Share report, the federal government spent about $6,200 per child younger than 19 in 2018, less than what was spent in 2017 after adjusting for inflation. As a share of the economy, federal investments in children fell to 1.9 percent of gross domestic product in 2018, the lowest level in a decade.

Drawing in part on Kids’ Share data and a special tabulation provided to her by Urban, Angela Rachidi of the American Enterprise Institute recently argued that child poverty in the US is on par with other high-income countries and that our safety net is working as it should. As Rachidi states, “A common view… is that the US has high child poverty rates and a weak social safety net to address it, but neither is true based on objective analysis of the data.” 

We read the data somewhat differently.

What does the evidence say about child poverty in the US?

Scholars continue to debate the best ways to measure poverty, but no cross-national studies we are aware of show child poverty in the US to be in line with (or below) rates in other high-income countries. Studies drawing on different data sources (from the Organisation for Economic Co-operation and Development (PDF) and LIS (PDF), formerly Luxembourg Income Study) and using multiple measures consistently show American children are more likely to be poor than their peers in other rich nations.

As one study (PDF) concludes, “For some five decades now, the United States has been a clear and constant outlier in the child poverty league. As a nation, it does less to help children and their families than any of the other rich countries and therefore finds itself with the highest child poverty rates and the least upward mobility for poor children.”

Beyond child poverty, multiple data sources reveal that, in general, American children are worse off than their international peers. A National Academies of Sciences, Engineering, and Medicine report looking at the health and survival of Americans relative to other high-income countries (for which the first author was the study director) documented a large and growing “US health disadvantage” at all ages below 75, including the first two decades of life.

Another international report comparing child well-being in rich countries (PDF) found American children in the bottom third on every measure considered, including material well-being, health and safety, education, behaviors and risks, housing, and the environment.

In short, as a group, US children are not faring well, and this general finding should be a matter of great concern to American policymakers and private citizens alike.

How should our government respond to child poverty?

As Rachidi explains, “Child poverty can be attributed to a number of factors, and government policy is certainly one of them.” In looking at government policies, specifically social welfare spending (which generally includes spending on child and family benefits, health care, and education), Rachidi confirms how challenging it can be to compare spending across different countries.

And she correctly notes that—contrary to many narratives—overall social welfare spending in the United States is indeed on par with other developed countries, especially when tax-based subsidies are considered. Past research by Jacob Kirkegaard and Kimberly Morgan has come to similar conclusions.

But more importantly, research also shows that US social welfare spending is less redistributive and less likely to benefit children, families, and lower-income Americans. Therefore, as Morgan explains, “the United States’ system of social protection does less to reduce poverty and inequality than that of virtually any other rich democracy.” This critical finding may help explain the persistently poor outcomes we see among American children, especially those living in lower-income families.

Rachidi’s analysis, along with the work of other scholars, shows that to improve the lives of children and families, we should be asking how and to whose benefit social welfare investments are made—not just how much is spent.

Many public policies, including our tax code, are at the heart of these questions and answers, and they should be examined alongside the growing evidence that American children and their families, especially those living on lower incomes, are not doing well and not getting their “fair share” of social investment or positive life outcomes compared with their counterparts in other advanced nations.

Photo by mrs via Getty Images.

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