American Experiments with Guaranteed Income

The new federal coronavirus relief bill that is about to be passed on Capitol Hill could put unprecedented sums of money in the hands of American families.

That includes new stimulus checks of up to $ 1,400 for adults and their dependents, as well as up to $ 300 per month per child through an enhanced child tax credit.

This week, some Democratic senators upped the ante, calling for recurring stimulus controls and an indefinite expansion of unemployment benefits during the pandemic.

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For some experts, the move shows that the idea of ​​guaranteed income, where a certain floor of money is provided to a specific group of people, could be gaining momentum in the US.

The idea of ​​direct checks to Americans has become more popular. Former Democratic presidential candidate Andrew Yang drew national attention to the concept when he proposed direct payments to people on the debate stage in 2019.

Around this time, cities like Jackson, Mississippi, and Stockton, California, began testing to see exactly how these types of programs could work.

Now even more places are embracing the concept, with 42 cities signing Mayors for a Guaranteed Income, a program that helps them follow Stockton’s lead and run their own pilot programs.

Those developments come as the coronavirus has further exposed the failures of the economy, particularly with regard to income inequality, according to Amy Castro Baker, an assistant professor in the School of Social Policy and Practice at the University of Pennsylvania. She also works as a co-principal investigator for the Stockton Economic Empowerment Demonstration, or SEED.

“The curtain has drawn on the fact that most communities and most households, especially working-class households, have not recovered from the loss of wealth from the Great Recession,” Baker said.

Now, the pandemic has exacerbated that situation for many individuals and families. The Pew Research Center recently found that 1 in 10 Americans say they will never recover from the current crisis.

“Something is broken,” Baker said.

Springboard to Opportunities, a Jackson, Mississippi-based organization that helps connect families living in affordable housing with resources to help improve their lives, has witnessed the devastation Covid-19 has wreaked in the community.

“It will take years, if not a generation, for families to get back to that foothold they had,” said Aisha Nyandoro, Springboard CEO.

Nyandoro is also the founder of Magnolia’s Mother’s Trust, a program that provides African American mothers living in extreme poverty in the city with $ 1,000 per month for one year.

In 2018, the trust ran its first one-year program with 20 mothers. Magnolia finished its second round of payments of $ 1,000 to 110 mothers last month. Now the program is preparing to launch a third program for about 100 mothers.

Preliminary research shows that the program has helped 40% of participants avoid borrowing money. Meanwhile, 27% were more likely to go to a doctor when needed, and 20% were more likely that children would outperform their grade in school.

“You can trust that black moms will do what they need for their families,” Nyandoro said of the results. “We don’t have to have all these layers of bureaucracy to give families the support they need.”

This week, Stockton’s SEED program also released preliminary results from its program, which began in 2019. It gave 125 of the city’s residents $ 500 per month for 24 months.

Results showed that program participants were twice as likely to find full-time work compared to non-participants. Additionally, the participants also said they were better able to manage emergency expenses and saw improvements in their physical and mental health.

The money was used primarily for food, sales and merchandise, such as household items or clothing, utilities and car costs, according to the data. Alcohol and tobacco accounted for less than 1% of spending.

“What struck me was how accurate we were when we said that $ 500 would not replace work, but would allow people who choose to do so have more stable jobs,” said Michael Tubbs, founder of Mayors for a Guaranteed Income and former Mayor of Stockton.

Data released this week shows the effects of the program’s first year. The full results to be delivered in 2022 will show how the program affected participants during the pandemic.

“We know that the $ 500 acted as a financial vaccine for the people who received it,” said Tubbs.

“I am sure that their results during Covid-19 will be much better, sadly, than those of the people who were not able to be part of the program.”

Both Nyandoro and Tubbs hope to see the concept of guaranteed income adopted at the federal level.

These types of policies have undoubtedly attracted strong criticism and support.

Baker remembers how people told her she was crazy when she started working on the Stockton project.

“They told me I was risking my career as a researcher,” Baker said. “The amount of rejection we received was unlike anything I have experienced in my career.”

Now, the pandemic has only shed light on the urgent need for these kinds of programs, Baker said.

Mayors act first because they don’t have the luxury of time, he said. But there could be bipartisan interest in providing more help to families at the federal level.

However, it is still unclear whether that would be in the form of guaranteed income or universal basic income, according to Baker.

The universal basic income, for which everyone receives a certain amount of money, has its critics.

One of the problems is that support based on the universal basic income is divided, said Daron Acemoglu, a high school professor in the department of economics at the Massachusetts Institute of Technology.

Some want a substantial universal basic income in addition to the government assistance programs that already exist. Meanwhile, others want to eliminate those benefits in favor of fixed payments for all.

“That inconsistency, I think, is dangerous,” Acemoglu said.

To date, experiments carried out in the US are guaranteed income. The advantage of these is that they are targeted and therefore cost less.

“The world has changed,” Acemoglu said. “We have not updated our safety net, fiscal policy.”

Before a national policy is adopted, more testing must be done, he said.

“I think we need a lot more knowledge about what works, what will be effective, what will help poor families more effectively, so the experimentation is excellent,” Acemoglu said.