Experiments in the United States 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.

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

This week, some Democratic senators stepped up the lead and called for recurring stimulus checks and an indefinite expansion of unemployment benefits during the pandemic.

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For some experts, the measure shows the idea of ​​guaranteed income, in which a certain floor of money is provided to a specific set of people, which could gain strength in the United States.

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

Then cities like Jackson, Mississippi, and Stockton, California, began testing to see exactly how such programs might work.

Now, there are even more places that accept the concept, as 42 cities have signed mayors to get a guaranteed income, a program that helps them follow Stockton’s leadership and lead their own pilots.

These events occur as the coronavirus has further exposed the flaws of the economy, especially in terms of income inequality, according to Amy Castro Baker, an adjunct professor at the University’s School of Social Policy and Practice. of Pennsylvania. She also works as a co-principal investigator of the Stockton or SEED economic empowerment demonstration.

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

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

“There’s something 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 caused to the community.

“It will take years, if not a generation, for families to return to the base they had,” 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 a month for a year.

In 2018, the trust ran its first one-year program with 20 mothers. Magnolia finished its second round of $ 1,000 payments 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 applying for loans. Meanwhile, 27% were more likely to go to the doctor when needed and 20% were more likely to have children who passed grade levels in school.

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

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

The results showed that program participants were twice as likely to find full-time employment compared to people who were not part of it. In addition, participants also said they were able to cope with emergency expenses and saw improvements in their physical and mental health.

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

“What I was left with was the reason we had when we talked about how $ 500 wouldn’t replace work, but allow people who choose to do it to work with more stable jobs,” said Michael Tubbs, founder of Mayors for a Guaranteed Income Mayor of Stockton.

Data released this week shows the effects of the first year of the program. The full results projected 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’m sure their results during Covid-19 will be much better, unfortunately, than people who weren’t able to be part of the program.”

Both Nyandoro and Tubbs expect the concept of guaranteed income to be accepted at the federal level.

Of course, such policies have attracted criticism and support.

Baker remembers how people told him he was crazy when he started working on the Stockton project.

“I was told I was risking my career as a researcher,” Baker said. “The amount of setback we’ve got doesn’t look like anything I’ve experienced in my career.”

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

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

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

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

One problem is that support based on universal basic income is split, 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 aid programs that already exist. Meanwhile, others want to eliminate these benefits in favor of fixed payments for everyone.

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

To date, experiments taking place in the United States have a guaranteed income. The advantages of these are that they are targeted and therefore cost less.

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

Before a national policy is adopted, more testing should 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 fantastic,” Acemoglu said.