In this file photo, children play in the street on the 2900 block of S. 18th Avenue in Minneapolis. (Photo by Nicole Neri/Minnesota Reformer)
Our country has been testing a promising strategy over the past several years: providing cash directly to families.
The most prominent examples are the (since canceled) expanded child tax credit under President Joe Biden; Minnesota’s child tax credit passed in 2023; and the guaranteed income programs being piloted in cities across the country, including in St. Paul.
The promise of this approach is in part the potential benefits for children. Several decades of research have suggested that increasing the income of low-income families could improve educational and developmental outcomes for children.
However, a recent study throws some cold water on that prospect.
The study is called Baby’s First Years. It examines four guaranteed income experiments (including the site in St. Paul, Minnesota) in which low-income families received $400 a month as part of the experiment. The BFY study selected newborn children at the beginning of the project and then measured the children at age 4. The study examined the 4-year olds on outcomes like language, social-emotional development and executive function.
The researchers found no differences between the kids in families that got $400 a month and kids in control group families that got only $20 per month.
The extra cash the families received – $16,000 over four years – appears to have had no impact on child development.
There may be mitigating factors in these findings, most notably the pandemic, and specifically pandemic policies that provided more cash and other enhanced benefits to all families (while probably exacerbating inflation). In other words, those families in the control group receiving $20 actually received more from other sources during the pandemic, so we can’t be sure of the differences between the two groups.
These factors could have diminished the impact of the extra cash provided through the experiment.
But it is hard to simply write off or ignore this study; it’s a gold standard research design and a top set of researchers.
This is not the last word, of course. Predictably, the researchers call for more research. A follow-up with the children at age 6 is already planned. Outcomes can change based on age.
But it is disappointing.
Improving the lives — and life chances — of children in low-income families is one of our nation’s most vexing problems. This is a setback.
Studies that provide unexpected — and, to many, unwelcome — findings can create a backlash. Why bother investing in research if it might support disinvestment in our preferred causes?
Ideology has a way of coloring how we view research.
We need to resist that temptation. Public policy is at its best when it is formulated based on quality research and reinforced by continuous learning.
If we care about the people we are trying to help, we need to invest in solutions that are proven to work.
But in the real world, tons of public investments are made with little or no proof of effectiveness. Demanding proof can feel like unilateral disarmament.
This is especially true when research is weaponized by opponents to a policy, as happened in this case. Robert Rector of the Heritage Foundation, a long-time opponent of anti-poverty programs, told the New York Times that the BFY study, “blows the arguments for unconditional cash aid out of the water.”
It doesn’t. It raises questions about one of the anticipated benefits of such programs.
I don’t think this study is a reason to stop efforts like expanding the child tax credit and experimenting with guaranteed income.
Why? Well, first and foremost we should stop ignoring the basic reality that we have a service economy with many low-wage and part-time jobs. Parents working full-time or multiple jobs can’t make ends meet.
Providing direct cash assistance is simply a recognition of that reality.
And, as I wrote in in this space in 2023, there is little evidence that such policies discourage work.
Moreover, previous research on the guaranteed income programs found other benefits for families, such as increased financial security, increased food security, more parenting time, more money spent on child activities, and in some cases increased employment.
These are all meaningful improvements in the lives of families that should stand on their own in support of the efficacy of cash aid.
The advantage of cash aid is that it is flexible — it allows each family to address their own most critical needs.
That flexibility may help families manage two escalating cost pressures: housing and child care.
Our direct efforts to improve the affordability of housing and child care have been, at best, inadequate. Why not just give families cash?
It is also far easier and less costly to administer direct cash aid than targeted benefits like SNAP and housing subsidies. As we’ve seen with the child tax credit, cash aid can be built right into the tax system.
While I don’t believe the BFY study is, by itself, a reason to stop efforts to provide direct cash aid to families, it does raise questions about how we adjust our strategies for supporting disadvantaged kids.
Investments in proven direct services for children, like early childhood education and quality child care, should be a continuing priority.
You know what else? More research.
Because we owe it to kids to use scarce funding for programs that make a real difference in their lives.