Family Benefits in US Fall Further Behind

January 14, 2021

Simran Kalkat

The New York Times recently noted that South Korea would be “offering monthly allowances of 300,000 won, or about $274, for every newborn and infant up to the age of 1 starting in 2022. Expectant couples would get a 2 million won cash bonus starting next year, along with increased medical and other benefits.” South Korea’s recent move further solidifies its shift from a minimalist welfare state toward the kind of family benefits found in universal welfare states. 

Using the OECD’s typology, family benefits include child care assistance, child allowances, and paid family leave. Historically, the Nordic social democracies — such as Norway and Sweden — have had the highest level of spending on family benefits. East Asian countries, like Japan and South Korea, have had very low levels, and the United States and Canada fell somewhere in-between, albeit closer to Japan and South Korea. 

As the Figure above shows, Norway and Sweden continue to have high levels of spending on family benefits. In fact, all of the Nordic countries spent above 3.2 percent of GDP on family benefits in the most recent data, except Finland, which spent about 2.9 percent. 

Among the other countries shown in the figure, the most notable change is that Canada, Japan, and South Korea now spend substantially more than the United States on family benefits. 

While Canada and the United States spent similar amounts in 2000, Canada now spends twice the US amount, as does Japan.  South Korea spent about 0.5 percent of GDP less than Canada in 2018, but their recent expansion of child benefits will bring them closer to Canada. 

Meanwhile, the United States has fallen further behind. To increase spending on family benefits to the 2018 Canadian level, the United States would have to provide roughly $221 billion more for families; to reach Swedish levels, benefits would need to increase by $594 billion.

Incoming President Joe Biden campaigned on a platform that included guaranteeing 12 weeks of paid family and medical leave, substantial new investments in affordable child care, and reforming the Child Tax Credit by making it fully refundable, increasing the benefits it provides and paying it monthly. If these plans are adopted at a sufficient scale, the United States will become a leader rather than a laggard on family benefits. 

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