Over the past several years, many Americans have felt little optimism about the economy. The Labor Department’s February consumer-price index reveals a 6.4% inflation rate, a far cry from the annual average of 1.88% between 2012-2021. Some economic woes may be due to the aftermath of the COVID-19 pandemic, which caused a mass recession and soaring unemployment rates. According to a June 2022 article by Roxanna Edwards, Lawrence S. Essien, and Michael Daniel Levinstein from the U.S. Bureau of Labor Statistics, even though the U.S. labor market has been making recoveries from the disastrous 13% unemployment rate in 2020, the labor force will need time to return to pre-pandemic norms.
In the face of the economic crisis, the COVID-19 pandemic brought along some unexpected economic programs aimed at helping Americans through that difficult period. In particular, the federal government signed off on stimulus payments paid directly to citizens on a regular basis. For example, the Child Tax Credit was adjusted to provide monthly payments of $300 per child to families during 2021. In fact, these programs sparked national debate over the idea of Universal Basic Income, a concept which would provide regular cash payments to citizens as the country’s economy continues to recover from COVID-19 and beyond.
The idea behind Universal Basic Income (UBI) is that all citizens would be eligible for no-strings-attached, direct cash payments from the government which would provide enough money for families to sustain themselves, often defined by the poverty line. A key aspect of UBI is the idea that these payments come on a regular basis over an extended period of time, much like paychecks from a job would.
As UBI in its purest sense would be a very costly program to fund, many pilot programs across the country have opted to instead implement guaranteed income programs. These programs aim to also provide enough money to provide for basic living needs on a regular basis, but do so only for individuals who have been screened on the basis of income and demographics and show demonstrated need for these resources. Guaranteed income has already become a popular idea. According to a 2021 poll by Data for Progress, 55% of potential voters either strongly supported or somewhat supported a federal policy providing $500-1000 of monthly income to individuals regardless of employment status.
While UBI has recently gained more widespread attention, the concept is far from a new idea. UBI has its roots all the way back in 1795, when the Speenhamland System was implemented to help supplement abnormally low wages made by farmers during a time of famine. Since then, UBI has seen forms of implementation in various places around the world, but the base principle has always stayed the same – to support citizens living in poverty.
In 1983, the Alaska Permanent Fund was established, which provided a payment of about $1000 per year to nearly all state residents. In a University of Alaska study done in 2016, “estimates show that the Alaska Permanent Fund Dividend has lifted 15,000 to 25,000 Alaskans out of poverty annually.” A similar program was implemented in Iran with additional optimistic results. A 2010 law called the Targeted Subsidies Reform Act provided more than 73 million people with a monthly payment of about $45 USD per person in a household. According to a July 2019 study by UNICEF, Iranian poverty rates showed declines within a year of program implementation. Furthermore, a March 2020 report by researchers at McMaster University found that a UBI program implemented in Ontario had another effect – a significant decline in the number of visits to health practitioners and emergency rooms.
As many of the results of UBI programs have been promising, many American cities have been implementing temporary guaranteed income pilot programs, either through charity funds or taxpayer dollars. Big Leap, a 2022 program in Los Angeles aimed to provide its 3,200 participants with a monthly $1000 payment for a year, funded through city taxes. According to the City of Los Angeles’s program website, the Big Leap project aims at not only providing funding, but also to help connect participants to resources aimed at providing long-term financial security. According to a May 12, 2022 article by E. Napoletano for Forbes, similar programs now exist in Chicago, New York City, Georgia, and Florida.
Despite previous promising results there are many critics of UBI programs. One of the most common arguments is that UBI programs remove the incentive for unemployed individuals to find work. While there is still lots of research to be done on the topic, the city of Stockton in California provides an intriguing counterexample. The Stockton Economic Empowerment Demonstration (SEED) provided a citywide guaranteed income of $500 a month for 2 years starting in 2019. According to a PBS News article from March 27, 2022 by Zachary Green and Pavni Mittal, full time employment among participants increased by 12%.
Other critics may point out that many of these programs are small in scale due to a lack of federal funding to cover a national UBI program. It is true that a long-term federal UBI program would be costly to taxpayers, the costs must be weighed against the benefits of reducing national poverty. Finally, many may criticize that UBI programs lack specific targeting of the root issues of poverty, such as a lack of education or systemic economic discrimination. While UBI programs may never solve these issues, one can also see UBI as a necessary stopgap to a ballooning national economic crisis as root issues continue to be addressed.
TAFDC and EAEDC are economic assistance (cash benefit) programs that help individuals and families explore opportunities, improve their finances, and reach their goals.
- To receive Transitional Aid to Families with Dependent Children (TAFDC), you must:
- have little or no income,
- be a resident of Massachusetts
- live with your child or live with and take care of a child related to you, or be at least 5 months pregnant.
- To receive Emergency Aid to the Elderly, Disabled and Children (EAEDC). you must:
- Live in Massachusetts
- Be a U.S. citizen or a certain kind of legal noncitizen
- Meet an income limit
- Unable to work due to your own disability that will last at least 60 days
- Over 65 years old and waiting for Supplemental Security Income (SSI) payments to begin
- Living with and taking care of a child who is not closely related to you
- Required in the home to take care of a disabled person who would otherwise have to move to an institution
Looking at a local example, Cody Mello-Klein reported on January 24, 2023 for the Northeastern Global News on Abbey Holland, a Northeastern graduate coordinating a guaranteed basic income program at the nonprofit Camp Harbor View. Providing more than $500 per month to 40 families, Holland reports positive financial and psychological impacts on participants as the program reaches the midpoint of its second year. With similar local programs sprouting from Chelsea and Cambridge, one might wonder if guaranteed income programs are a new way forward for struggling families in Boston.
