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We examine the transition to adulthood in a poor, white, rural community in Appalachia. Young adults come of age in a context of persistent poverty, economic decline, an ongoing opioid and addiction crisis, and strong community norms about family and work bolstered by religious institutions. For low-income young adults in this community, this stage in the life course is both expedited and emerging. Marriage and childbearing are expedited, frequently occurring in late teens or early twenties. However, other adult markers—such as stable employment, pursuing education, and leaving the parental home—are often slow to emerge and are usually only tentatively achieved. This pattern is in contrast to middle-class young adults in this community.

Financial stability depends on emergency savings. Low-wage workers regularly experience drops in income and unexpected expenses. Households with savings absorb these financial shocks but most low-income Americans lack rainy day savings. Therefore, even a small shock, like car repairs, can result in a cascade of events that throws a low-income family into poverty. Nonetheless, existing policies address emergency savings only indirectly. However, the Earned Income Tax Credit (EITC) already functions as an imperfect, makeshift savings tool. This lump sum refund at tax time gives workers a moment of financial slack, but many EITC recipients lack emergency reserves later in the year. By creating a “Rainy Day EITC” component of the existing EITC, policymakers can help low-wage workers build up emergency savings.

To reduce child poverty and income instability, and eliminate extreme poverty among families with children in the United States, we propose converting the Child Tax Credit and child tax exemption into a universal, monthly child allowance. Our proposal is based on principles we argue should undergird the design of such policies: universality, accessibility, adequate payment levels, and more generous support for young children. Whether benefits should decline with additional children to reflect economies of scale is a question policymakers should consider. Analyzing 2015 Current Population Survey data, we estimate our proposed child allowance would reduce child poverty by about 40 percent, deep child poverty by nearly half, and would effectively eliminate extreme child poverty. Annual net cost estimates range from $66 billion to $105 billion.

Shaefer and Edin (2013) have found a large rise in “extreme poverty”—defined as cash income of no more than $2 per person per day, for a month or calendar quarter—among U.S. households with children between 1996 and 2011. This article explores some underlying dynamics of this phenomenon, referred to here as “$2-a-day poverty,” presenting evidence from both qualitative fieldwork and quantitative analysis of the Survey of Income and Program Participation (SIPP). The rise in $2-a-day poverty has been concentrated among children experiencing it chronically—that is, for seven or more months during a calendar year. Both qualitative and quantitative evidence find that a large majority of children experiencing $2-a-day poverty live in households where an adult worked during the year, while only a small proportion live in households accessing TANF. Finally, households experiencing $2-a-day poverty appear to be more likely to face material hardships than other low-income households.