Welfare Is Great for Kids, and Always Has Been

Commentary about business and finance.
Jan. 13 2014 9:15 AM

Welfare Works

New research on one of America’s oldest welfare programs shows the virtues of giving money to the poor.

U.S. Sen. Marco Rubio (R-FL) speaks to members of the media during a press conference October 30, 2013 on Capitol Hill in Washington, DC. Sen.
Despite Sen. Marco Rubio's recent statements, government spending to fight poverty can be effective.

Photo by Alex Wong/Getty Images

“Think of the children.” It's a cliché, but at times it also serves as a powerful argument in debates over public policy. Welfare payments to the poor and jobless, for example, have often been unpopular in the United States because they are seen as subsidizing indolence or criminality. And even those most inclined to take a dim view of how poor adults ended up poor have to concede that poverty has blameless victims: children who had no role in deciding to have low-income parents. This is why protecting soldiers and mothers rather than childless civilians has long been the core focus of American social policy. And yet, while it’s easy to see that poverty is bad for children, it’s harder to know the extent to which anti-poverty programs succeed in ameliorating those ill effects.

That’s in part because social programs are rarely designed to produce proper experiments. But it’s also because a human life takes decades to run its course. To really get a sense of long-term impacts, you need to wait a long time.

That’s what makes new research into Mothers’ Pensions, one of America’s earliest welfare programs, so fascinating. These state-level programs for widows became popular in the early decades of the 20th century, before the financial strain of the Great Depression rendered them nonviable; later, the New Deal stepped in with the federal program Aid to Families With Dependent Children (AFDC; later replaced by Temporary Assistance for Needy Families or TANF). Anna Aizer, Shari Eli, Joseph Ferrie, Adriana Lleras-Muney, and a team of research assistants took a detailed look at kids who grew up in Mothers’ Pension households and drew some conclusions about the long-term benefits of modest cash transfers. The program is old enough that almost all the kids whose moms received money are dead now, allowing the researchers to conclude definitively that it increased life expectancy. What’s more, World War II draft records show that poor kids whose moms received pensions were substantially healthier, had more years of schooling, and earned higher incomes than similar kids whose moms didn’t get pensions.

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One key to the research is that Mothers’ Pension programs did not have the kind of bright-line eligibility criteria that we usually see in a more modest social assistance undertaking. States had different policies as to whether families disrupted by divorce or abandonment—rather than death or incarceration—were eligible. But beyond a broad directive that the money be directed to needy families, there was no sharp income cutoff.

Since the eligibility criteria were vague and inconsistently implemented, the pool of families that applied for and got pensions turns out to be quite demographically similar to the pool of families that were rejected. As a result, Mothers’ Pension programs ended up with overlapping pools of accepted and rejected applicants. On average, the rejects were better off financially than people who were accepted—but only very slightly so. The economic similarities between the two groups allow for meaningful comparisons to be made between long-term outcomes for the sons of accepted mothers and those of rejected mothers. (Daughters are harder to track because of post-marital name-changing.) Using 1940 census records, draft records, and county-level death records, the researchers determined that the sons of the accepted had early adult incomes that were 20 percent higher than those of rejected mothers; these sons were also 35 percent less likely to be underweight as adults, lived a year longer, and had about a third of a year of additional schooling.

Since the rejected sons’ families were, on average, somewhat better off, these figures should somewhat understate the real impact of the pensions. The benefits weren’t gigantic—but the sums of money involved were pretty modest as well. Benefit levels varied from state to state, but averaged out to about $260 a month (adjusted for inflation), or around half of a modern-day TANF check.

It’s of course difficult to draw ironclad policy conclusions about the present from studies of the past. In particular, the large impact of early 20th century welfare on reducing the share of underweight young adults isn’t necessarily relevant to today’s nutrition issues. But the success of cash transfers in promoting long-term well-being for children is another suggestive piece of evidence that simply giving money to poor people may be the best way to fight poverty. Health outcomes in particular are impacted by many factors other than medicine or doctors’ visits, so giving people money to buy what they need—including, possibly, medicine—may often be a better way to improve health than specifically covering doctors’ bills.

At the same time, this program’s results serve as a reminder that anti-poverty programs have in many ways been an underrecognized success. On Jan. 8, Sen. Marco Rubio marked the 50th anniversary of Lyndon Johnson’s war on poverty largely by proclaiming it a failure and deriding the notion “that government spending is the central answer to healing the wounds of poverty.” It is clear, however, that government spending programs have in fact substantially reduced the number of poor people over the decades. And one of America’s first welfare programs didn’t just temporarily cushion the blow of financial hardship; it led to sustained health and income gains for children.

In the 1920s, a monthly check was no more a comprehensive solution to all the challenges associated with growing up poor and without a present father than it is today. But it turns out that the check helped quite a lot. Politicians who are talking about their commitment to the poor while cutting nutrition assistance programs should take note.

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