US Guaranteed Income Experiments

Lawyers and tenants in New York’s homes are stepping up to demand that Governor Andrew Cuomo cancel rent amid the October 10, 2020 pandemic.

Andrew Lichtenstein | Corbis News | Getty Images

The new federal coronavirus virus bill to be approved on Capitol Hill could put unprecedented amounts of money into U.S. families.

This includes new stimulus checks of up to $ 1400 for adults and their dependents, as well as up to $ 300 per month per child through an improved child tax credit.

This week, some Democratic senators put forward the prospect of repeated stimulus controls and indefinite extension of unemployment benefits for the duration of the pandemic.

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For some experts, the move shows the idea of ​​guaranteed income, where a certain amount of money can gain momentum to a targeted set of people in the US.

The idea of ​​direct investigations into Americans has become increasingly popular. Former Democratic presidential candidate Andrew Yang drew national attention to the concept when he proposed direct payments to individuals in 2019.

Around that time, cities like Jackson, Mississippi, and Stockton, California, began conducting tests to see how these types of programs could work.

Now there are even more places that accept the concept, with 42 cities that mayors have entered into for a guaranteed income, a program that helps them follow Stockton’s guidance and manage their own pilots.

The development comes because the coronavirus has further exposed the economy’s shortcomings, especially with regard to income equality, according to Amy Castro Baker, assistant professor at the University of Pennsylvania’s School of Social Policy and Practice. She also works as a co-principal investigator of the Stockton Economic Empowerment Demonstration, or SEED.

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

The pandemic has exacerbated the 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.

‘Give families the support they need’

Aisha Nyandoro, founder of Magnolia Mother’s Trust

D’Artagnan Winford

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

“It will take years, if not a generation, before families return to the foothold they once had,” said Springboard CEO Aisha Nyandoro.

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 presented its first one-year program with 20 mothers. Magnolia completed its second round of $ 1,000 payments to 110 mothers last month. Preparations are now underway for the launch of a third program for about 100 mothers.

Preliminary research shows that the program helped 40% of the participants to borrow money. Meanwhile, 27% were more likely to go to the doctor when needed, and 20% were more likely to let children perform 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 this low bureaucracy to give families just the support they need.”

$ 500 a month as a ‘financial vaccine’

Michael Tubbs, former mayor of Stockton, California.

Nick Otto | AFP | Getty Images

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

The results showed that the participants in the program would find twice as full-time work compared to people who did not participate in it. Furthermore, participants also said that they were better able to handle emergency expenses and that they saw improvement in their physical and mental health.

The money, according to the data, was mostly used for food, sales and merchandise such as household goods or clothing, utilities and car expenses. Alcohol and tobacco account for less than 1% of spending.

“What struck me was how right we were when we talked about how no $ 500 would replace work, but allow people who prefer it to do more stable work,” said Michael Tubbs, founder of Mayors for a guaranteed income and former Stockton mayor.

The data released this week shows the effects of the first year of the program. The full results that appear in 2022 will show how the program affected the participants during the pandemic.

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

“I’m sure their outcomes during Covid-19 will unfortunately be much better than people who could not be part of the program.”

Guaranteed income versus universal basic income

A sign supporting the plan of Andrew Democratic presidential candidate Andrew Yang for a universal basic income of $ 1,000 at a rally on May 14, 2019 in New York.

Drew Angerer | Getty Images

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

Admittedly, these kinds of policies have drawn fierce criticism as well as support.

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

“I was told I was risking my career as a researcher,” Baker said. “The amount of setbacks we had was nothing short of what I had experienced in my career.”

The pandemic has now only highlighted the urgent need for such programs, Baker said.

Mayors act first because they do not have the luxury of time, she said. But there may be dual interests in providing more assistance to families at the federal level.

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

Universal basic income, through which everyone receives a certain amount of money, has a share of the critics.

One of the problems is that support is distributed based on universal basic income, said Daron Acemoglu, institute professor at the Department of Economics in Massachusetts.

Some want substantial universal basic income in addition to existing government assistance programs. Meanwhile, others want to eliminate the benefits in favor of fixed payments to everyone.

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

To date, the experiments taking place in the US are a guaranteed income. The advantages of this are that it is targeted and therefore costs less.

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

Before adopting a national policy, more testing needs to be done, he said.

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

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