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With the recent distribution of COVID relief checks, many are considering how best to manage this financial aid. If you’ve ever doubted the effectiveness of government assistance, I encourage you to reflect on the positive impact it can have on those in need. For parents, the latest relief package offers a glimpse into a form of universal basic income (UBI) that has been explored internationally and proposed by the current administration. From July to December, families with children under six will receive $300 monthly, while those with kids under 18 will get $250 per child.
This initiative differs from existing child tax credits as it specifically targets those at the lower end of the income spectrum. The aim is to assist families that previously earned too little to access such benefits. This is not about providing for the super poor; rather, it’s about helping those struggling at the margins, as eligibility is based on earned income and tax contributions, excluding unemployment benefits and public assistance.
Biden’s relief initiative isn’t the first to explore the potential of direct cash transfers. A notable experiment began in Stockton, California, in February 2019, where 125 residents received $500 monthly with no strings attached. Funded by philanthropic organizations, the Stockton Economic Empowerment Demonstration provided these individuals, whose average incomes were below the median of $46,000 per year, with financial support to use as they wished. There were no drug tests or work requirements—just a commitment to trust and assist.
Contrary to popular beliefs, those who received the funds did not become unmotivated or misuse the money on substances. Instead, they paid their bills, spent time with family, and left harmful relationships. Growing up in poverty myself, I understand that people find ways to cope, whether or not assistance is available. Living in challenging conditions often involves juggling multiple jobs just to survive, and sometimes, small indulgences can provide necessary relief. While not everyone makes sound financial choices, it’s essential to recognize that spending decisions can be deeply personal and context-dependent.
Recent findings from the Stockton study underscore the significant advantages of reliable income for individuals facing uncertain financial situations. The pandemic has highlighted the instability of gig work, making it harder for many to meet their monthly expenses. Participants in the Stockton program reported reduced stress and improved decision-making, allowing them to transition from part-time to full-time employment and regain a sense of control over their lives.
Universal basic income does not promote laziness; rather, it fosters healthier individuals. As Michael Turner, former mayor of Stockton, aptly noted, “Cash can often be a more effective remedy for certain mental health issues than medications.” Many health problems in communities stem from the chronic stress of financial insecurity.
More U.S. cities are exploring UBI programs, but to truly tackle poverty, a federal solution is necessary. Currently, 27 million children in the U.S., including a disproportionate number of Black and Latino kids, miss out on the full benefits of the child tax credit due to inadequate earnings. If the proposed relief measures were sustained, nearly 10 million children would rise above the poverty line, with the new tax credits potentially offering up to $3,600 per child under age six and $3,000 for those aged six to 17.
Misconceptions about “free money” or universal basic income are prevalent. The best approach to assist those in need is to provide them with the resources they require. It’s important to ask why some children are born into wealth while others struggle. It often comes down to luck and opportunity rather than sheer determination. Many hardworking individuals remain trapped in poverty, lacking access to equitable opportunities.
Is it fair that lower-income families are expected to constantly toil without respite or support? If society aims to alleviate the burden on welfare systems, investing in UBI could empower individuals to break free from poverty.
This article initially appeared on March 29, 2021.
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In summary, the Stockton experiment demonstrates that providing individuals with a stable income can lead to positive outcomes, reducing stress and improving life decisions. Universal basic income is not merely a financial handout; it is a vital step toward empowering those in need and creating a more equitable society.
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