Could a $1,000 “baby bonus” help people afford to have children?

This story originally appeared in New York Focus.

This month, more than a million New Yorkers with children are receiving checks in the mail from the state. The payments of up to $330 are a one-time supplement to the state’s child tax credit, passed as part of the state budget negotiated by the legislature and Gov. Kathy Hochul this spring.

But a New York Republican state senator wants the state to go further and permanently give all new parents a $1,000 “baby bonus.”

“When I hear younger people in particular talk about starting a family, cost is a big factor in that and often cited as one of the reasons why they could be discouraged from pursuing a family,” state Senator Jake Ashby, who represents a district between Albany, New York, and the Vermont border, told New York Focus. “So I thought that this legislation could be helpful in addressing that.”

Ashby’s bill, introduced earlier this month, would supplement the state’s existing child tax credit, which gives low- and middle-income families up to $330 a year per child under 17. The $1,000 newborn payments would go to all parents. More than 200,000 babies are born in New York every year. Both the existing and proposed credits are fully refundable, meaning parents can receive them even if the credit amount is more than they owe in taxes.

Affordability and child poverty are pressing matters for state lawmakers and the governor, even if they’ve done little in recent legislative sessions to tackle key drivers of rising costs, such as housing. People with young children move out of New York at higher rates than other New Yorkers because they can’t afford the costs of raising a family, and almost 19 percent of children in the state live in poverty—one of the highest rates in the nation.

Expanding the state’s child tax credit is an idea with support both from people like Ashby who are concerned about people being able to have families and from anti-poverty advocates and lawmakers. But the baby bonus proposal is new to New York.

“This is the first of this kind of proposal I’ve seen in New York to target a broad credit to families with newborns,” said Pete Nabozny, policy director at the Rochester, New York-based advocacy organization Children’s Agenda.

The idea has been tried elsewhere. Federal lawmakers have proposed various versions of a baby bonus as part of the federal child tax credit. A new program in Flint, Michigan, sends $1,500 to pregnant residents and an additional $500 payment when the baby is born. And this fall, Baltimore will vote on a ballot initiative, backed by a group of local teachers, that would authorize sending one-time $1,000 cash payments to new parents.

“The simple reality is when you have a baby, your income goes down and your expenses go up,” said Nabozny. Research has shown that having a child is a common reason that people enter into poverty, and that baby bonuses reduce those poverty increases.

New York has a paid family leave law, but it only partially replaces workers’ wages, so parents are still likely to experience an income drop when they have a child. And people who don’t work or who hadn’t worked enough consecutive weeks before going on leave can’t benefit from paid family leave at all.

“A lot of the fate of these proposals depends on how people interpret them: Is it a poverty reduction measure, or is it paid leave, or is it broad family support?” said Joshua McCabe, director of social policy for the Niskanen Center, a center-right think tank that has advocated for child tax credit reform and expansion. If payments for having a child are viewed as paid leave, policymakers might try to attach work requirements, McCabe said. If they’re seen as a poverty reduction measure, it will lead to debates about stringent means testing.

He said that the “baby bonus” framing—pitching it as an idea to help parents cover the costs of a baby when their earnings are taking a dip—could help it win broader support from lawmakers concerned about New York being affordable for families, not just from those focused on poverty reduction.

Ashby isn’t the first to propose changes to New York’s child tax credit.

As part of state budget negotiations in the spring, Democratic Senator Andrew Gounardes of Brooklyn proposed a more expansive family tax credit overhaul, which would have provided up to $1,600 in credits per child and allowed the state’s poorest families to receive the maximum credit. (Parents making under about $10,000 a year currently get a reduced amount.) According to researchers with the Center on Poverty and Social Policy at Columbia University, Gounardes’ Working Families Tax Credit would have lifted tens of thousands of children out of poverty. But that costlier measure did not make it into the final budget.

Hochul in particular has talked frequently about affordability and tried to show that she’s sensitive to the concerns of voters struggling with rising costs. The state is also under a specific mandate to tackle its persistently high child poverty rates.

In 2021, Hochul signed a law committing New York to cut child poverty in half by 2030. That law set up the Child Poverty Reduction Advisory Council to recommend policies to achieve that goal. Researchers at the Urban Institute estimate that measures passed by the state since the law was signed, such as raising the minimum wage and including children under the age of four in the existing state tax credit, have the potential to reduce child poverty by up to 7.6%—which would still leave the state far short of the mandate. The council is expected to make its recommendations to Hochul later this year, before she proposes her state budget.

The council has the challenge of coming up with recommendations that could reduce child poverty in accordance with the law, even as the governor and legislature will be concerned about the price tag.

Targeting payments to families with young children could be one way of doing that, said McCabe of the Niskanen Center.

“Getting money to families with children early in a child’s life is an important priority,” McCabe said. “I would hate to see them pitted against each other, but if you had to choose between benefits for 17- and 18-year-olds or something like a baby bonus, I’m going for the baby bonus.”

Not only are the early years essential for a child’s development, but parents’ incomes tend to be lower when their children are younger, McCabe said. In New York, younger children are more likely to live in poverty.

Nabozny, a member of the Child Poverty Reduction Advisory Council, said that the council has considered a larger credit for young children, but “hasn’t contemplated a unique, separate credit for newborns.”

Gounardes estimates that his expanded tax credit would cut child poverty by 20 percent. Ashby and about a third of the Senate are cosponsors of that measure. Gounardes said that Ashby’s baby bonus proposal is in line with policies he has been looking at, such as providing a bigger tax credit for parents of newborns.

“We’re contemplating how we can potentially supplement the Working Families Tax Credit with some type of birth credit, whether that is an addition to our bill or a different bill,” he said.

The challenge of tackling child poverty or overhauling the state’s tax credits will be getting Hochul and the legislature to spend the money, Gounardes said. “These programs cost a lot of money, but there’s a reason for it, and as policymakers we have to make a decision,” he said. “In a budget of $239 billion, do we think it’s too expensive to spend 1 percent of that to support child poverty reduction?”