… The best rationale for universal child benefits is that they substantially reduce child poverty.
Consider what happened when Tony Blair and the Labour Party introduced a universal benefit in the UK in 1999. The measure was part of a broader set of proposals meant to tackle child poverty, including tax credits, means-tested programs, a national minimum wage, a workers’ tax credit, universal pre-K, expanded child care, and much longer parental leave. The result was that absolute poverty fell by more than half from 1999 to 2009, while relative poverty (the share of children under 60 percent of the median income) fell by 15 percent; things got dramatically better for the poor, but because the middle class gained too the relative poverty fall was smaller.
A universal child benefit would be particularly attractive in the US, which currently offers basically no cash assistance for families with children and no earnings. Weak labor markets for people with low skills and little education can prevent low-income parents from getting steady work, and limit their benefits from the Earned Income Tax Credit and Child Tax Credit, both of which only go to households that earned money working.
A universal benefit, by contrast, would offer thousands of dollars to struggling families outside the labor force, letting them escape deep poverty, and letting some escape poverty altogether.
The best rationale for universal child benefits is that they substantially reduce child poverty.