As many of us receive our latest COVID relief payments, how we choose to use that money is ultimately our decision. If you’re skeptical about government assistance, I encourage you to consider the individuals and communities that could truly benefit from it. For parents, this relief package provides an introduction to universal basic income, which has been trialed in various countries and is now being proposed by the current administration. Starting in July and continuing through December, families with children under six will receive $300 monthly per child, while families with children under 18 will receive $250 per child.
This credit differs from the existing child tax credit as it specifically targets those in the greatest need—individuals in lower economic brackets who have previously earned too little to qualify for essential support. It’s important to note that this credit is based on earned income and taxes paid, intentionally excluding unemployment benefits or public assistance.
Biden’s relief initiative is not the first to explore the concept of providing “free money” to those in need. A notable experiment began in February 2019 in Stockton, California, where 125 individuals received $500 per month with no strings attached. The results have been compelling, and researchers are eager to share their findings.
Funded by philanthropic organizations, the Stockton Economic Empowerment Demonstration provided randomly selected participants, whose average incomes were below the median of $46,000, with $500 monthly to use as they saw fit. There were no drug tests or employment requirements; the focus was simply on support and trust.
Contrary to the beliefs of those who have never faced financial hardship, the recipients of this assistance did not become less motivated to work or spend irresponsibly. Instead, they managed to pay their bills, spend quality time with their children, and escape detrimental situations.
For anyone who has experienced poverty, it’s evident that people find ways to obtain their “temptation goods” regardless of assistance. Living in poverty is extraordinarily challenging, often intertwined with addiction, abuse, and the struggle of juggling multiple jobs just to survive. While some may choose to spend on items like cigarettes or alcohol, these choices do not inherently keep them trapped in poverty. I’m not claiming that everyone in poverty makes wise financial decisions, but I understand the reasoning behind purchasing what may appear to be non-essentials to outsiders. Ultimately, it’s not anyone’s place to dictate how others spend their money.
Recent data from the Stockton experiment highlights the advantages of a predictable income for people living paycheck to paycheck. The volatility of gig work became even more pronounced during the pandemic, and those of us in that line of work understand how difficult it can be to meet our monthly obligations, let alone save for the future. Participants in Stockton, receiving the $500 monthly stipend, reported lower stress levels and were able to make more informed decisions about their lives. Many transitioned from part-time to full-time employment; they could finally breathe.
Universal basic income does not promote laziness or irresponsibility; rather, it fosters better health and well-being. As Michael Hart, a former city council member of Stockton, noted, “Cash can sometimes be more effective for alleviating conditions like depression and anxiety than traditional medications. Many health issues stem from toxic stress and high cortisol levels directly related to income instability and insufficient funds to cover basic needs.”
Several other U.S. cities are contemplating universal basic income programs, but to truly eradicate poverty nationwide, federal implementation is crucial. Approximately 27 million children in the U.S., including half of Black and Latino children, did not receive the full child tax credit due to their families’ low incomes. Continuation of Biden’s relief initiative could elevate nearly 10 million children above the poverty threshold. The updated tax credit would increase the maximum annual benefit for many families to $3,600 per child under six and $3,000 for kids aged six to 17, up from the previous $2,000. Notably, parents would receive these payments throughout the year rather than only during tax season, which helps stabilize income—something the Stockton study has shown to be beneficial.
Your perceptions of “free money” or universal basic income may be misguided. The most effective way to support those in need is to provide them with the resources necessary to thrive; they don’t require alternative suggestions or judgment. Have you ever noticed how some individuals, born into privilege, sail through life with safety nets crafted by previous generations? Why should some children have access to financial support while others do not? It’s not merely about hard work or determination; it often boils down to luck and opportunity. Many individuals living at or below the poverty line work tirelessly but still lack equitable opportunities.
Why should lower-income earners be denied the chance to take breaks, spend time with their families, take risks, and pursue opportunities that could enhance their emotional and financial well-being? If your aim is to reduce welfare dependency, wouldn’t it be wise to equip individuals with the means to elevate themselves? Yes, it absolutely would.
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In summary, universal basic income is a viable solution that has shown promise in alleviating poverty and enhancing quality of life for individuals and families. It empowers people to make better choices, reduces stress, and fosters healthier communities.