How Basic Income Could Help Address the Child Care Problem

Cash for Care

Child care is expensive in the U.S. No matter what care your family chooses, it often costs a pretty penny. The cost of care has risen further in recent years, to the point where it is more expensive to send a child to daycare than some in-state colleges.

Unaffordable care for young children costs the U.S. economy some $122 billion annually, according to a 2023 study by bipartisan nonprofit ReadyNation, more than double the pre-pandemic figure.

Now one U.S. city is testing a potential solution to this pressing problem: cash.

RxKids

Based in Flint, Michigan, a guaranteed basic income (GBI) pilot called RxKids is giving $1,500 to pregnant mothers living in the city, and another $500 per month through their child’s first birthday. Unlike some similar programs, RxKids has no household income requirements.

More than 900 families are enrolled in RxKids already, according to a Business Insider report, and the program plans to operate through 2026 at minimum.

There are many programs nationwide studying the economic impacts of giving money to U.S. families with no strings attached. Several of these pilots, including a recently-concluded study backed by OpenAI CEO Sam Altman, have found that participants use the money to pay for necessities like child care rather than discretionary purchases.

Win-Win-Win?

Critics argue that funding GBI programs is not sustainable. However, over time, these programs may be a net benefit for the economy. Nearly a quarter of working parents have been fired from a job due to limited access to childcare, per ReadyNation. Programs like RxKids could curb this, alleviating financial stress and encouraging engagement and upskilling among working parents.

So instead of thinking of it as funding a social program, thinking of GBI programs as an investment in companies as in families may be closer to the truth. Much like child care benefits, which can provide a return on investment for employers, cash payments for working parents could reduce turnover and boost productivity, promoting growth for workers, businesses, and the broader economy.

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