How to Help Young Kids: Give Their Parents Cash

AUSTIN, Texas — By his mid-20s, Tommy Andrade was tired of working dead-end jobs. With a young child at home, he realized he needed more than a high school diploma to support his family. When he heard about a new, advanced manufacturing program at Austin Community College (ACC), Andrade was intrigued.

Some of the jobs that graduates would be trained for carried salaries well into the six figures, enough to give Andrade financial security, he figured, even in a city like Austin where the cost of living was spiking fast. 

But first Andrade would have to take a pay cut: The 14-week program required him to participate in an internship that paid $17 an hour, less than he’d earned in his previous jobs as a salesman and bookkeeper. He worried he wouldn’t be able to afford rent, bills and afterschool care for his son.

Then came some unexpected good news: ACC was launching a new guaranteed income pilot program for student parents, and program officials wanted him to join. Participants would receive $500 a month for two years with a few conditions: They must enroll in nine credits each semester and attend monthly meetings with other student parents.

Buoyed by the extra income, Andrade signed up. “Five hundred isn’t anything to live off of, but it’s enough to make a difference,” he said. “I have some flexibility to take some risk.” Now, a year after enrolling in the program and on track to graduate, Andrade, 29, is living in Seattle with his partner and son, having recently accepted a full-time job as a contractor at a large technology company. 

Andrade’s story points to the potential of guaranteed-income programs. These programs, which provide consistent financial support to participants over a period of time, were placed on the national radar in 2020 by former presidential candidate Andrew Yang, who called for a monthly income for all U.S. residents. The idea exploded in popularity during the Covid-19 pandemic, as state and local governments, philanthropists and even some colleges like ACC sought to support people experiencing financial distress. More than 48 guaranteed income programs have been started in cities across the country just since 2020. Advocates and researchers say this approach holds promise as a long-term anti-poverty strategy as well – especially for families with young children.

More than 48 guaranteed income programs have been started in cities across the country since 2020, at least 11 initiated in 2021 alone.

Indeed, a growing body of research shows cash transfer programs can have a particularly big impact on young kids by providing family stability during children’s first few, formative years. This is likely due, in part, to a reduction of parental stress. Studies show that when parents experience high levels of distress, it trickles down to their kids, who exhibit higher levels of emotional distress as well. Constant stress or exposure to adverse childhood experiences like food and housing insecurity can lead to trauma and even cause changes to young children’s brains, making them less able to cope. But that harm can be mitigated if children’s basic needs are met and their parents have financial security.

“That’s what it’s about, really empowering parents to parent and having the resources,” said Michael Tubbs, a former mayor of Stockton, California, and a father of two, who launched a basic income program in 2019 and later founded Mayors for a Guaranteed Income, a network of mayors advocating the idea. “My kids,” he said, “are dependent on me for their sustenance, security, for a level of support. I’m able to do that when I’m not anxious, when I’m not stressed, when I’m not worried about how things are going to be paid.” 

Parents in Stockton’s guaranteed income program, for example, reported being more involved in their children’s lives and better able to provide for them. A survey of low-income families in Chicago during the pandemic found that parents were more likely to engage in positive interactions with a child if they retained some income after losing a job, such as through federal or state aid, while parents who lost their income were more likely to lose their temper or yell at a child.

Financial support for parents can even lead to changes in infant brain activity associated with the development of thinking and learning, according to findings from the Baby’s First Years project, which provided monthly payments of $333 to low-income mothers in four U.S. cities for a year. Another recent study found that kids whose families received federal tax credits following the birth of the parents’ first child went on to do better in school and earn more money as adults.

“At least for low-income people, the period after childbirth seems to be a period of low financial resources and high stress,” said Andrew Barr, a professor at Texas A&M University’s department of economics and co-author of the study. Having some reliable income, he said, “allows the family to stay on a better path.”

While critics say such programs could encourage recipients to stop working or to spend money on alcohol or drugs rather than on basic needs, the data largely disputes that. “The world is full of these racist and classist tropes about ‘What those people will do if you give them money,” said Mayor Melvin Carter of St. Paul, Minnesota, who launched a guaranteed income program in 2020. “When low-income folks have money, they pay for groceries and pay rent.”

In many European countries, a guaranteed income in the form of a family allowance is standard. Denmark, Sweden and Norway, for example, all give parents funds at regular intervals to help with the cost of raising children. Canada also gives low-income families money for each child under the age of 6. 

During the pandemic, America briefly experimented with giving families a guaranteed income, in the form of an expanded child tax credit. For six months, beginning in spring 2021, families below a certain income threshold received monthly tax refunds, up to $300 per child under the age of 6. The money had positive effects: Recipients reported improved nutrition, reduced reliance on credit cards and increased investments in education, such as child care and tutors, without reducing their employment.

Black and Hispanic families saw the sharpest decline in their poverty rates. And, briefly, the country’s rate of monthly child poverty tumbled by nearly a third, from 15.8% to 11.9%.

But with the expiration of that aid, many parents are struggling again to make ends meet. Pandemic aside, raising children in the U.S. has become exorbitantly expensive. Rising inflation, high gas prices and astronomical housing prices have maxed out family budgets. The cost of child care rose 41% during the pandemic, but it has consumed a large portion of family incomes for years. And while the cost of raising children has been steadily rising, America’s federal minimum wage has stagnated at $7.25 per hour since 2009. This year, it reached its lowest value in 66 years.

That’s why advocates for guaranteed income say such programs are urgently needed. Families often face multiple financial stressors and barriers. “A really small amount of cash can help unlock an entire universe of economic potential for families,” said Carter of St. Paul.

Andrea Coleman, 41, a single mother of three in St. Paul, said the $500 a month she received through the city’s program following the birth of her youngest child was a huge comfort. With the money, she was able to buy winter coats, shoes and Christmas presents for her children. She got the brakes fixed and the oil changed in her car, which she relied on for her job as a private nurse.

Coleman was also able to postpone returning to work to bond with her infant daughter, something she’d missed out on with her middle child. “I’m grateful,” she said. When she started the program, she had been experiencing depression, but after several months with the extra income, she noticed the depression begin to subside. “That was just me not being able to provide for my family,” Coleman said. But with the additional income, she was able to “keep the stress level at a minimum.”

Experts say small-scale pilots like the one in St. Paul could set the stage for state and federal action, by normalizing the idea of universal guaranteed income and generating data on the benefits of such programs.

“The general way that good public policy has developed in the country is that states have adopted really strong policy and eventually that’s led to the federal government adopting it,” said Jeremy Rosen, director of economic justice at the nonprofit Shriver Center on Poverty Law. “I suspect that’s what’s going to happen here too.”

Some states have already invested in such programs. Last year, California allocated $35 million to guaranteed income pilot programs over five years. And Alaska already has a guaranteed income program of sorts, paid for with money the state generates from oil, mines and gas reserves, which has provided Alaskans an average of $1,600 each year since 1980. That program has cut extreme poverty and contributed to disadvantaged youth staying in school, among other benefits.

Andrade, the Austin student and parent, used the monthly funds he received through Austin Community College’s guaranteed income program for bills, insurance and car payments, and for tutoring, clothes and after-school activities for his son, now 8. With the extra money, he didn’t need to pick up odd jobs to make ends meet; he could use that time for his son and his studies.

He could also afford to take risks, like accepting a pay cut in the short term with the knowledge he would eventually make more money. In May, his leap of faith began to pay off.

Fifteen credits shy of graduating with associate degrees in engineering technology and construction management, he was offered a job at a Seattle-based company that develops vehicle crash test systems. He and his partner packed up their home and drove more than 2,100 miles northwest where they settled into a 2-bedroom apartment in West Seattle with their son. Andrade enrolled in online classes with ACC to finish his degrees. Two months later, he got an even better opportunity: as a contractor earning two and a half times what he made before starting at ACC.

This upward mobility is what the founders of the ACC guaranteed income program hoped to see when they launched the experiment in fall 2021 as part of a larger initiative to support student parents. A partnership between ACC and United Way for Greater Austin, the guaranteed income program is funded by the Annie E. Casey Foundation, the Dallas Fed and federal pandemic relief dollars from the City of Austin.  The program is meant to support student parents as they pursue a degree, often while juggling a job and parenting, said Becca Bice, director of family pathways at United Way for Greater Austin. “They just have a higher load on them than some other students might have.”

Participants have used the stipend for medical emergencies, car repairs and other unexpected expenses that can sometimes force students to drop out, Bice said. Some students used it to cover rent or child care, and to cut down on their work hours so they could focus on their studies and have more time with their kids. Program officials are tracking outcomes to see if the money affects college persistence and graduation rates, and informally collecting data on participant stress levels and overall college experience.

 But while guaranteed income programs like ACC’s are spreading and producing benefits for individual participants, they remain limited in scope. Programs run by cities often receive thousands of applications for a couple hundred spots, or fewer. There can also be challenges for participants: The added income can disqualify families from other public support, like food stamps and child care assistance. Guaranteed income programs are also immensely expensive to support and sustain: A second round of St. Paul’s guaranteed income program, slated to start this year, will cost $5 million to support 333 residents for two years. The program is funded with a mix of federal coronavirus funds and private donations.

The many challenges of running these programs are why experts say a larger, more permanent way to bolster families’ income is needed. Ideally, this could be accomplished by expanding existing programs such as the child tax credit, something President Joe Biden said he is pushing for as part of a national strategy to cut child poverty and curb hunger. If approached as tax policy rather than extra income, the money wouldn’t cause participants to lose other benefits.

Andrade doesn’t see such programs as a handout. Rather, he sees them as a way to give people who start from behind a temporary leg up. “We have the opportunity now, where we don’t have to struggle,” Andrade said one recent evening. “In the end, if I put my son in a better position, I’ve succeeded.”

This originally appeared at The Hechinger Report and is published here in partnership with the Solutions Journalism Exchange.

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