Growing up in poverty increases the chances that an American will continue to live in poverty as an adult. That's of course bad for the people directly affected and also bad for the economy. Furthermore, it casts a long shadow on The American Dream.
The real tragedy here is that we know what programs work to combat intergenerational poverty. We simply fail to support them.
A common response to intergenerational poverty is to scale back forms of direct aid to families — welfare, food stamps, etc. — that are frequently labeled as creating dependency. "Let's give people a hand up — not a hand out." This approach may make for a nifty sound byte. But, like many sound bytes, it flies in opposition to the facts. Research shows that giving aid to a family increases the chances that a child will not continue to live in poverty as an adult. If we want to end intergenerational poverty in America, we should be giving families more aid — not less.
To state the obvious, money is a big deal. Having more money makes all sorts of things possible — a healthier diet, higher quality child care, a move to a safer environment, a trip to a museum or other experiences that expand a child's world. Kids with access to any of these things are more likely to thrive.
A study of the earned income tax credit (EITC), which benefits low-income families, found that mothers who received the credit worked more hours for higher pay. In the long run, the increase they paid in federal taxes more than offset what they received in the EITC.
Why would someone who had just been handed money go out and earn more of it? Well, maybe she had newfound access to childcare or reliable transportation. Maybe she could get a better job because she could afford a decent interview outfit. Money, it bears repeating, is a big deal.
Here is the intergenerational impact: These mothers' children did better in school, were more likely to attend college and earned more as adults.
There are similar findings about the Supplemental Nutritional Assistance Program, a.k.a. Food Stamps, a perennial target of budget cutters. When a family receives Food Stamps, the positive effect on children lasts long into adulthood, according to a study by the National Bureau of Economic Research. Kids who benefitted from Food Stamps are more likely to grow up to achieve economic self-sufficiency than their peers. There are also pronounced health benefits for these kids into adulthood, particularly for women. Children who receive adequate nutrition are more likely to become healthy and productive workers. Again, this is not a shocker.
America is not unique in this respect. A study of cash transfers to pregnant women in Uruguay found that the subsidies prevented low birth weight. "Taken together, our results imply that cash social assistance may help break the cycle of intergenerational poverty by improving child health," the authors write. Critics of the transfers had argued that expectant mothers could use the cash to buy cigarettes or liquor, thus causing more harm than good. The clear improvements in birth weight show that this did not happen. Parents generally want what is best for their children. Many social programs would be more efficient and effective if we recognized this.
The fear is that if we give cash directly to families, they will squander it. That's the problem with "hand outs," we are told. Instead we should be giving a "hand up" that will encourage independence. The research demonstrates that parents use so-called hand outs to give their children a better start in life — and that this will lead to a lifetime of greater prosperity.
A hand out is a hand up. That's actually quite a nifty sound bite. And it just happens to be based on the facts.