Policy Lessons from Children's Allowances for Children's Savings Accounts
Curley, Jami, Sherraden, Michael, Child Welfare
This article examines the history and current structure of children's allowances around the world as well as the history of such allowances in the United States in an effort to provide the United States with a policy framework for children's savings accounts. The authors also provide policy direction for children's savings accounts.
Children's allowances, a common feature of 20th century welfare states, are cash grants from the government to families with children. Unlike most economically developed nations, the United States has not enacted a universal children's allowance policy. Providing a monthly cash benefit as income security for all children has never had widespread political appeal. The United States has been a cautious and reluctant welfare state [Jansson 1996], and the children's allowance (CA) concept has conflicted with America's primary values of individual initiative and limited government involvement.
Despite this history of opposition to children's allowances, proposals for universal support of children today are emerging in the United States, but in the form of long-term savings rather than as income for immediate consumption.* Children's Savings Accounts (CSAs) would use public resources to promote savings and asset accumulation for all children. The most typical proposal is for the establishment of educational savings accounts (e.g., the KidSave proposal of Senators Joseph Lieberman (D-CT) and Bob Kerrey (D-NE) [Kerrey 1995]. Other policymakers have proposed CSAs for purposes such as homeownership, business initiatives, and other development goals. At present, Singapore may be the only country with a universal children's saving account. Under its Edusave program, the government deposits a given amount annually in the Edusave accounts of all Singapore children, to be used for educational expenses [Sherraden et al. 1995].
CSAs should be viewed, not as a replacement for other child welfare approaches, but as a complementary tool that can improve the well-being and long-term development of children. Current U.S. child welfare policies consist primarily of cash and inkind support and services. For the most part these policies address the needs of children who are in some type of difficulty, with the programs designed to ameliorate those difficulties. Although far from perfect, these policies have assisted millions of children.
Changes in the Policy Climate
Many of today's child welfare policies have their roots in the religious and child-caring institutions of the 19th century, and especially in the work of a group of visionary social leaders (for the most part women) in the Progressive Era. The first White House Conference on Children in 1909 charted the direction that child welfare policy was to take throughout the 20th century. In large measure, as Jane Addams and other Progressive Era leaders realized, these policy initiatives were a response to social problems created by an industrial economy [Addams 1910]. As today's economy shifts toward information and services, social issues are changing, and it seems possible that child welfare policies will change as well. For example, the new economy will require increased investment in education and skills training or "human capital" if young people are to become self-sustaining in adulthood. A greater emphasis on investing in people could complement traditional policies of problem solving and consumption support. Thus, as a policy instrument, it may be that asset accounts, in various forms, will become a complement to income-- based policy [Sherraden 1997,1998b].
In many countries, domestic policy has already begun shifting toward asset accounts. In the United States, this is evident in the rapid growth of 401(k)s, 403(b)s, IRAs, Roth IRAs, Individual Development Accounts (IDAs), and proposals for universal systems such as Personal Savings Accounts in Social Security and Universal Savings Accounts (USAs). A major concern in this shift is inclusiveness-ensuring that everyone is brought into the emerging asset-based system [Sherraden 1998a]. …