American experiences with guaranteed income

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

This 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 raised the bar and called for recurring stimulus checks and an indefinite extension of unemployment benefits for the duration of the pandemic.

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For some experts, the move shows that the idea of ​​a guaranteed income, where a certain floor of money is provided to a targeted group of people, could gain momentum in the United States.

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 individuals on the debate stage in 2019.

Around this time, cities like Jackson, Mississippi, and Stockton, Calif., Started running tests to see exactly how these types of programs might work.

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

These developments come as the coronavirus has further exposed the loopholes in the economy, especially when it comes 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 is also working as the Co-Principal Investigator of the Stockton Economic Empowerment Demonstration, or SEED.

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

Today, the pandemic has made this situation worse for many individuals and families. The Pew Research Center recently found that one in 10 Americans say they never recover from the current crisis.

“Something is broken,” Baker said.

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

“It will take years, if not a generation, for families to get back on their feet,” said Aisha Nyandoro, CEO of Springboard.

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 launched its first one-year program with 20 mothers. Magnolia completed her second round of $ 1,000 payments to 110 mothers last month. Now the program is preparing to launch a third program for around 100 mothers.

Preliminary research shows that the program helped 40% of participants avoid borrowing money. During that time, 27% were more likely to go to the doctor when needed and 20% were more likely to have children performing above their grade level.

“You can trust black moms to do what they need for their families,” Nyandoro said of the results. “We don’t need all these layers of bureaucracy just 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 the city’s 125 residents $ 500 a month for 24 months.

The results showed that program participants were twice as likely to find full-time work than those who were not. In addition, participants also said they were better able to manage emergency spending and saw improvements in their physical and mental health.

The money was mainly used for food, sales, and merchandise such as housewares or clothing, utilities, and car expenses, the data showed. Alcohol and tobacco accounted for less than 1% of expenditure.

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

Data released this week shows the effects of the program’s first year. Full results expected in 2022 will show how the program impacted participants during the pandemic.

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

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

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

Certainly, these types of policies have attracted strong criticism as well as support.

Baker remembers how people told her she was crazy when she started working with Project Stockton.

“I was told I was risking my research career,” Baker said. “The amount of perspective we’ve gotten is unlike anything I’ve experienced in my career.”

Today, the pandemic has only highlighted the urgent need for these kinds of programs, Baker said.

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

Yet it’s still unclear whether that would take the form of a guaranteed income or a universal basic income, according to Baker.

The universal basic income, by which everyone receives a certain amount of money, has its share of criticism.

One of the problems is that universal basic income-based support is divided, said Daron Acemoglu, an institute professor in the economics department 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 these benefits in favor of lump sum payments for everyone.

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

To date, the experiments carried out in the United States are guaranteed income. The advantage of these is that they are targeted and therefore cheaper.

“The world has changed,” Acemoglu said. “We haven’t updated our safety net, our fiscal policy.”

Before a national policy is adopted, more tests should be carried out, he said.

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