Is A Child Allowance Pro-Work for Poor Parents?

To the current conversation about the merits and demerits of a child allowance, I would like to add another layer of perspective, drawn from the thoughts and experiences of women who are poor and working class. What keeps them from work? What helps them maintain it?

I spent a recent weekend talking with five different mothers, three of them currently living in public housing on the same street in a small town in southwestern Ohio, one who was recently evicted from her unit on that street and is now living with her two children and fiancé at a friend’s house, and one who got married last year and moved away from that street and into a rental unit in a neighboring town. Two of them I met recently, and the other three are women I’ve known for the last ten years as they’ve graciously been willing to share their lives with me as the years go by in our small town.

The women I talked with are not ideologues. (On her Facebook profile one aptly describes her political affiliation as “whatever works.”) But they are observers of life as it plays out in their homes, workplaces and cul-de-sacs, and their expertise is essential to the current debate.

One takeaway from my conversations is that to focus excessively on work disincentives is likely to misunderstand the motivations and experiences of low-income moms and what really discourages their employment outside the home. And yet to completely dismiss concerns about welfare and work incentives is also at odds with what these moms, who express concerns about people taking advantage of the system and modeling bad behavior for their children, have to say.

In the coming weeks, as I reflect on the stories of these women, I’ll be blogging about what I heard and how it might inform policymakers as they consider a variety of policy goals to help American families. In this post I ask the questions, “What are some barriers to employment for low-income mothers? And is it possible that a child allowance might mitigate some of those barriers?”

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Cortney is a cashier at a dollar store, where in recent months she was twice named star cashier of the week. During the holiday season Cortney also took a second seasonal position at a nearby warehouse for a retail store (“Oh my god, Amber, the pay was great!”), but after the grandmother who helped to raise her died suddenly, Cortney took too much time off and was let go.

She kept her job at the dollar store, which was within walking distance of her house, but when she was evicted she had to move in with a friend, too far from that location. She was able to be transferred to a somewhat closer store, but now needs a car before she can go back to work. She estimates that she needs to save $1200 to get a car, but with no income she isn’t sure how that will happen any time soon. She says that a child allowance for her two kids would make it possible for her to buy a car and keep up with payments, insurance, tags, and gas so that she could get to work.

Cortney’s fiancé starts a new job at a dog food manufacturer this week and Cortney is considering trying to get hired there to simplify transportation. But first she needs to find “a stable babysitter that’s suitable” for her two kids—someone without a criminal history, she specifies. Yet it’d have to be someone willing to accept a wage low enough to make Cortney’s work worthwhile.

For Brittany, a restaurant employee and married mother of three, a lack of sick leave and workplace flexibility has affected her ability to maintain employment. She has ulcerative colitis and her doctor suspects and is doing testing for another autoimmune disease. When her symptoms recently began to flare, just on the heels of a bout with the stomach flu, her manager was not pleased and gave her a hard time about needing time off for sick days and doctor visits. (And, yes, she was at work prepping food while she had the stomach flu, in case you were curious.) Rather than deal with what she saw as an unfair attitude from management (and also to take time to focus on her health and care for her six month old baby), Brittany quit.

Like Brittany, Savannah is a married mom with a baby who left her job at a nursing home after her baby was born and the pandemic began. As I wrote about earlier this week, her husband picked up a second job delivering pizzas in the evenings to pay the bills. Savannah says she would like to get a part-time job but they make too much to qualify for daycare assistance and her paycheck would “pretty much be going to pay the daycare every week.”

Gina was an assistant general manager at a fast food restaurant making a salary of $40,000 before the pandemic shut down her three children’s daycare in March of last year. Without family or other child care, she took a leave of absence, which was reported as “voluntary” to unemployment, so she says she has not received any unemployment compensation, and that because her bank account was handed over to debt collections neither did she receive the second stimulus check.

“I used to work my ass off. And then I lost everything when COVID hit. Since then I live off the government,” Gina told me. Her rent in public housing went down to zero and she relies on churches and friends to pay her other bills. “If the pandemic had never happened I would still be right where I’m at doing what I’m supposed to be doing every single day. The pandemic completely destroyed my life.”

Gina was recently rehired, but the new area coach told her that she’d need to start out again as a crew member. “And I told him, ‘I’m definitely fine with that. Put me at crew. Because I know my capabilities.’” Gina plans to work her way back up to assistant general manager. “I have an empire I need to build,” she told me.

But the day after her interview the alternator on her car went out. She also had to come up with the money to get back her driver’s license. After letting her car insurance lapse, Gina had continued to drive and then got into an accident. Her license was suspended and she faced fines—an instance of how a crisis creates cascading problems with a cumulative weight much greater than the original cause. There is a high cost to being cash poor. And those costs are a barrier to employment.

Because of this, a bit more liquidity via a child allowance (as well as adequate sick and family leave and company cultures that don’t penalize people for taking time off that is legally and rightfully theirs) could go a long way towards helping low-income parents maintain employment. All of the women I spoke with liked the idea of a child allowance. (Though some of them talked about the potential for abuse, something I’ll discuss in a future post.)  Cortney and Gina said that a child allowance would help them most by helping them afford the transportation necessary to get to work.

As The Niskanen Center’s Samuel Hammond argued in a debate on the child allowance with the American Enterprise Institute’s Scott Winship, “at very low income, income effects can potentially even be positive because of these liquidity and supply constraints where you would go out and hand out resumes but you need to first have the money to hire a babysitter.” In Canada, he points out, the effect of a child allowance on labor force participation varied among groups. For unmarried single moms work actually increased.

Too often the story among those underemployed or unemployed is not a complete absence from the workforce because of work disincentives in public programs, but serial and transitory relationships with numerous low-wage employers. And though such turnover is sometimes related to larger problems like addiction and mental illness, financial trouble is the more basic reality at play for low-income parents.

To work requires resources. To keep stable work requires some life stability. Even for many working full-time, a paycheck does not pay all the bills. Low-income parents who turn to the complex bureaucracy of the welfare system for support often find that it takes savvy and time to navigate (time being another valuable resource in short supply for parents). Because of this an injection of cash to poor families might be less of a handout and more of a hand up, acting as much-needed capital for families by allowing them to afford the things necessary to stay employed.