Why we need the American Families Plan
President Biden’s plan represents the most consequential piece of family policy legislation in American history
This piece builds off my op-ed recently published in the Deseret News. Space is naturally limited in op-eds, so this is an expanded analysis of the AFP.
Raising a family is hard. Raising a family in the United States is harder than in most rich nations because there is little structural support for childrearing in the US. Canada, the United Kingdom, Sweden, Germany, and similar countries provide mothers and fathers many more supports than the United States. Take, for example, the following chart which shows the amount of support families receive from government as a percentage of Gross Domestic Product (GDP). By comparison, the United States spends far less on supporting families through cash transfers, family-centric support services, tax breaks, and educational spending (including pre-K childcare and preschool) than its counterparts. In fact, Organization for Economic Cooperation and Development countries, which represents the very richest nations, average 6.6 percent of GDP on family supports. The United States spends slightly less than 5 percent of GDP in this area — almost half what is spent in Iceland and only slightly more than what is spent in the lowest-ranked nation, Turkey.
Spending on families has real world benefits — regardless of whether families use programs or not. Public policies set priorities and help us understand what is valued in a society. An excellent paper by Dana Wray at the University of Toronto illustrates this point. The Canadian province of Québec shows that fathers became more involved with child care when paternity leave benefits were expanded — regardless of whether fathers took advantage of the program or not.
My own research focuses mostly on how fathers engage with and provide physical care for their children. Recently, I’ve expanded my scholarly interest in this topic to consider how government supports for families either act as impediments or facilitators of fathering behavior. The figure below provides evidence of how family supports help shape father involvement in five nations (United States, Canada, United Kingdom, Germany, & Sweden). The equation is seemingly simple — increased spending on family supports produces increases in paternal caregiving, warmth, and positive discipline. But, not all forms of support are equal. Tax credits, for example, provide far less support for fathering, in agregate, than cash transfers or spending on family programs.
The American Families Plan (AFP) addresses many areas of concern: the cost of education, pre-K programs, school nutrition, and health care premiums are all examples of the broad spectrum of policy areas covered by the proposed bill. Here, however, I want to focus on the three centerpieces of the legislation: subsidized childcare, monthly cash transfers to families, and paid family leave.
The AFP has a provision that limits the cost of childcare for families of young children to 7 percent of income and provides expanded tax credits for families with older children in childcare. Low- and middle-income families stand to benefit substantially from this program. For example, poor- and working-class households commonly spend more than 10 percent of their income on childcare, alone. Québec’s universal childcare program, launched in 1996, provides an illustrative example of what may happen if the AFP is passed. First, the program had beneficial economic effects. Families saw increases in their incomes and standard-of-living because many mothers were freed to work with capped child care costs. Analyses of the macro-economy illustrate that the policy also had positive benefits for the provincial economy.
Some have raised concerns about Québec’s childcare program and its influence on school readiness and child development. A few years ago, headlines blared that Quebec’s childcare plan was a “cautionary tale” that yielded “sobering outcomes.” Yet, recent evidence suggests a more complicated picture — including substantial benefits for poor children and small-to-nonexistent differences (see below figure) in cognitive, emotional, and school readiness outcomes between children in Québec and the rest of Canada, where universal, subsidized childcare programs do not exist. Certainly, Québec’s program is not a panacea. For example, public daycare providers seem to be more beneficial to children than private subsidized providers.
In total, however, subsidized, universal childcare has net positive benefits in my view— particularly for the poorest families.
A second key feature of the AFP is that it fundamentally changes the way that child tax credits are delivered to American families. Currently, child benefits are delivered through the Earned Income Tax Credit and child tax credits which are bundled in one’s tax return, paid out once a year, and, as a result, are commonly spent on consumer debt, non-essentials, and adult-centric goods and services. In contrast, the Canada Child Benefit (CCB), provides EITC and child tax credit-like payments to families monthly. As a result, families tend to spend this money on items like food, utilities, and child necessities. The differences between US- and Canadian-style programs is clear when looking at child poverty in the two nations. The effect of CCB-style programs is undeniable. The figure below illustrates the point. In 2006, Canada had a higher child poverty rate than the United States. Through the enactment of the CCB and, in particular, changes to the program in 2016, the child poverty rate in Canada has fallen substantially. For example, from 2013 to 2017, Canada’s child poverty rate was cut by 40%. The resulting gap between Canadian and American child poverty rates has grown substantially, as a result.
Notably, nearly 70 percent of American children are Black, Indigenous, or People of Color (BIPOC). Expanded child tax credits not only address the social ills associated with poverty, they also represent one of the most substantial proposals regarding racial justice in recent memory.
In July, American families will receive temporarily recieve a CCB style benefit, when the government pays out half of the child tax benefit in monthly instalments for the remainder of the year. What are the potential effects of this program? Work from the Century Foundation helps us understand the potential impact. Child poverty rates in the United States would essentially be cut in half if CCB-style policies were implemented permanently in the United States. Thus, the effects of cash transfers to families with children are enormous and potentially life-altering.
Paid Family Leave
The final piece of the AFP is 12 weeks of paid family leave. Under the Biden plan, individuals would be paid at 66 to 80 percent of their regular pay, depending on income-level. The United States is the only rich nation and one of three countries in the world (Papua New Guinea and Guyana are the other two) that does not guarantee paid family leave to mothers. Its only one of three rich nations (Ireland and Switzerland are the others) without paid paternity leave.
The positive effects of paid family leave are myriad. Mothers are healthier, recover from childbirth more quickly and easily, and are less stressed when they are able to take leave. The effects are even stronger when fathers take leave, as well. Fathers who use paid family leave are more satisfied with parenting, happier, healthier, and experience less work-family stress. Children are more likely to be breastfed, have better global health, are more likely to meet developmental milestones, do better in school, and have fewer behavioral problems when one or both parents take family leave. Notably, the effects are long-lasting.
Leave policies have effects beyond individual benefits, as well. My own analysis of paternity leave policies across the world’s 30 richest nations (see below) demonstrates that the generosity of government guarantees for paternity leave improves women’s representation in government and closes gendered pay gaps. Businesses, meanwhile, benefit financially from worker retention, productivity, loyalty, and increased competitiveness in the marketplace.
Raising a family is a challenge. The American Family Plan can help make it a little less challenging — leading to healthier, happier, and stronger families in the process.