Many people have recently received COVID relief checks, and while how you choose to spend that money is entirely up to you, I believe it’s crucial to consider the value of government assistance. For parents, this relief package offers a glimpse into the concept of universal basic income (UBI), which has been successfully tested in various countries and is being advocated by the current administration. Starting this July and lasting until December, families with children under six will receive $300 monthly, and $250 for each child under 18.
This new credit differs from the existing child tax credit as it primarily supports those in the lowest income brackets, who previously lacked sufficient earnings to qualify for essential aid. It’s essential to understand that this credit targets families in financial need, not just individuals who are struggling the hardest, as calculations are based on earned income and taxes paid, excluding unemployment benefits and public assistance.
Biden’s relief package isn’t the first initiative to explore the benefits of providing direct financial support. A notable case is the Stockton Economic Empowerment Demonstration, which began in February 2019. In this experiment, 125 individuals with incomes below the median of $46,000 a year received $500 monthly without any strings attached. Funded by foundations, this initiative allowed participants to use the funds freely without drug tests or work requirements, demonstrating trust in their decision-making.
Contrary to the beliefs of those unfamiliar with financial hardship, participants did not lose motivation to work or squander the funds on vices. Instead, they used the money to pay bills, spend quality time with their children, and escape harmful situations. If you’ve experienced poverty, you know that people will find ways to acquire their “temptation goods,” regardless of assistance. Living in poverty is incredibly challenging, often filled with addiction, abuse, and the grueling demands of juggling multiple jobs. While not everyone in poverty makes ideal financial choices, it’s essential to respect how individuals choose to spend their money.
Recent data from the Stockton study highlights the positive impact of stable income on individuals living paycheck to paycheck. The pandemic has further destabilized gig work, making monthly budgeting even more challenging. Those who participated in the Stockton experiment reported reduced stress, improved decision-making, and increased ability to transition to full-time employment. They found breathing room in their lives.
Universal basic income does not lead to laziness or a lack of ambition; it fosters better health and stability. “Cash is a more effective treatment for some forms of depression and anxiety than medication,” explains Sarah Johnson, former city council member of Stockton and a key figure in the project. “Many health issues arise from the toxic stress of income instability and not being able to meet basic needs.”
Cities across the U.S. are now exploring the implementation of UBI programs, but a comprehensive solution to poverty must occur at the federal level. Currently, 27 million children in the U.S., particularly half of Black and Latino kids, do not receive the full child tax credit due to their families’ low income. If Biden’s relief initiative continues, it could lift nearly 10 million children above the poverty line. The new tax credit could increase the maximum annual benefit to $3,600 for children under six and $3,000 for those aged 6 to 17, significantly higher than the previous $2,000 per child. Furthermore, parents would receive payments throughout the year instead of just during tax season, reducing income volatility, which the Stockton study showed is beneficial.
Your views on “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 they require. They don’t need alternative suggestions or criticism. And let’s not forget the privilege of trust fund beneficiaries or affluent individuals who glide through life with safety nets crafted by their families, enabling them to pass those advantages to the next generation. When taxes are paid on income, how is that income truly “earned”? Why do some children have access to financial support while others do not?
It’s not solely about hard work or determination. Often, it’s about luck and opportunity. Many individuals in poverty work incredibly hard yet still lack equitable chances. Why should lower-income individuals be restricted from taking breaks, spending time with their families, pursuing risks, or creating opportunities to enhance their well-being and earning potential? If the aim is to reduce dependence on welfare, then it benefits society to empower people to achieve that goal.
Yes, it certainly does.
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Summary:
Universal basic income (UBI) has shown promising results, particularly in the Stockton, California experiment, where participants received $500 monthly without restrictions. The findings suggest that such financial support can alleviate stress, improve decision-making, and enable individuals to thrive rather than merely survive. The ongoing conversation surrounding UBI emphasizes the need for systemic change at a federal level to address poverty effectively and ensure equitable opportunities for all, especially for children from low-income families.
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