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Experiments in the US with a guaranteed income

Defenders and tenants in New York are marching to ask Governor Andrew Cuomo to cancel the rent amid the October 10, 2020 pandemic.

Andrew Liechtenstein Corbis News | Getty images

The new federal coronavirus relief bill, which will be approved on Capitol Hill, could put unprecedented amounts of money in the hands of American families.

This includes new incentives to check up to $ 1

,400 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 increased the ante and called for repeated checks on incentives and unlimited extensions of unemployment benefits during the pandemic.

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For some experts, this move shows that the idea of ​​a guaranteed income, in which a certain amount of money is given to a target set of people, may gain momentum in the United States.

The idea of ​​direct inspections of Americans has become more popular. Former Democratic presidential candidate Andrew Young drew the country’s attention to the concept when he offered direct payments to people in the 2019 debate.

At that time, cities such as Jackson, Mississippi and Stockton, California, began testing to see exactly how these types of programs could work.

Now even more places are embracing the concept, with 42 cities joining mayors for a guaranteed income, a program that helps them follow Stockton’s leadership and manage their own pilots.

These developments come as the coronavirus further reveals the shortcomings of the economy, especially with regard to income inequality, according to Amy Castro Baker, an assistant professor at the School of Social Policy and Practice at the University of Pennsylvania. She also works as a principal investigator for the Stockton or SEED Economic Empowerment Demonstration.

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

Now the pandemic has exacerbated this situation for many people and families. The Pew Research Center recently found that 1 in 10 Americans say they will never recover from the current crisis.

“Something’s 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 based in Jackson, Mississippi that helps connect families living in affordable housing with resources to help improve their lives, witnessed the devastation that Covid-19 brought to the community.

“It will take years, if not a generation, for families to return to the support they had,” said Aisha Nyandoro, Springboard’s chief executive.

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 for $ 1,000 a month for a year.

In 2018, the trust held its first one-year program with 20 mothers. Magnolia completed its second round of payments of $ 1,000 to 110 mothers last month. The program is now preparing to launch a third program for about 100 mothers.

Preliminary studies show that the program has helped 40% of participants avoid borrowing money. Meanwhile, 27% are more likely to go to the doctor when needed, and 20% are more likely to have children who perform above school.

“You can trust black mothers to do what they need for their families,” Niandoro said of the results. “We don’t have to have all these layers of bureaucracy to just give families 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 published the preliminary results of its program, which launched in 2019. It gave 125 of the city’s residents $ 500 a month for 24 months.

The results showed that participants in the program were twice as likely to find a full-time job as people who were not part of it. In addition, participants also said they were better able to bear emergency costs and saw improvements in their physical and mental health.

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

“What I thought was how right we were when we talked about not having $ 500 to replace work, but allowing people who choose to do so to work in more stable jobs,” said founder Michael Tubbs. of Mayors for a Guaranteted Income and former mayor of Stockton.

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

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

“I’m sure their results during Covid-19 will be far better, unfortunately, than the people who failed to participate in the program.”

Guaranteed income compared to universal basic income

A sign supporting Democratic presidential candidate Andrew Young’s plan for a monthly 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 a guaranteed income adopted at the federal level.

Of course, this kind of policy has attracted fierce criticism as well as support.

Baker remembers people telling 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 repulsion we received was unlike anything I’ve ever experienced in my career.

Now the pandemic has only shed light on the urgent need for such programs, Baker said.

Mayors act first because they do not have the luxuries of time, she said. But there could be a bipartisan interest in providing more assistance to families at the federal level.

It is not yet clear whether this will be in the form of a guaranteed income or a universal basic income, according to Baker.

The universal basic income, in which everyone receives a certain amount of money, has its share of critics.

One problem is that support based on universal basic income is divided, said Daron Atsemoglu, a professor at the Institute at the Massachusetts Institute of Technology, Department of Economics.

Some want significant universal basic incomes in addition to existing state aid programs. Meanwhile, others want to eliminate these benefits in favor of flat payments for all.

“I think this discrepancy is dangerous,” Atsemoglu said.

To date, experiments conducted in the United States are a guaranteed income. The advantages of these are that they are targeted and therefore cost less.

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

More tests need to be done before a national policy can be adopted, he said.

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

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