It's time to ensure the financial security of all families by providing a guaranteed income.
June 21, 2021
Everyone in this country should have the financial resources to support themselves and their family members. It’s long past time to unbuckle the “bootstraps” narrative arguing that people experiencing poverty simply need to work harder or make better personal choices. In fact, policies and laws that create and perpetuate poverty and racial inequity are written into the fabric of our nation.
Systemic factors and inequities, including the legacy of racism and white supremacy, contribute to America’s high poverty rate. In particular, Black and Latino/a/x families, who face discrimination in employment, housing, and access to government benefits, suffer higher rates of poverty and have been unable to build generational wealth.
It’s time to ensure the financial security of all families by providing a guaranteed income. A guaranteed income program provides recurring cash payments, with no strings attached, to a targeted group of people. Unlike Universal Basic Income (UBI), a guaranteed income program channels money to people who truly need it. As a result, guaranteed income programs are more effective at reducing the racial wealth gap and increasing equity.
A guaranteed income program provides assistance to families in need quickly, with little bureaucracy, and can fill gaps left by existing social safety net programs. Families know how to spend money in ways that would best help them. Assistance flows in the most efficient way possible—simply by giving people in need cash that they can use to meet their needs.
A guaranteed income also gives families resilience in the face of financially stressful life events, such as unemployment, divorce, disability, or health problems. The COVID-19 pandemic exposed how many Americans are close to the brink and lack sufficient resources to weather emergencies.
In response to the COVID-19 crisis, direct economic support through Economic Impact Payments (more commonly known as “stimulus checks”)—once unimaginable—became policy, and during the Trump Administration no less. Early data show that most families used the money to buy basics, including food and gas.
More recently, several key federal tax credits, including the Child Tax Credit, Earned Income Tax Credit, and Child and Dependent Care Tax Credit, were temporarily expanded and made refundable. Eligible tax filers can get a sizeable check back from the federal government. Many families who in past years simply would have owed no money in federal taxes will now be getting checks for well over $10,000—some of which will be paid on a recurring monthly basis and nearly all of which will be exempted as income under public benefit programs. The Child Tax Credit alone is expected to reduce child poverty by 45 percent, with particularly large reductions for Black, Latino/a/x, and Native American children.
A guaranteed income can dramatically reduce poverty and improve families’ long-term well-being. Across the country, pilot programs offering a guaranteed income to local residents have measurably improved participants’ financial stability. Participants in these programs are using funds in ways that benefit their families’ long-term economic health—by paying for rent in a better school district, taking a community college course to improve job skills, saving to cover the expenses of starting a small business, or eliminating old debts that would otherwise trap a family in perpetual poverty. For example, in Stockton, California, 125 residents living at or below median income were given a $500 monthly stipend with no strings attached for 24 months. Not only did recipients’ quality of life improve, but researchers found that their participation in full-time employment jumped from 28 to 40 percent.
In the Shriver Center’s home state of Illinois, several guaranteed income initiatives and pilot programs are underway. At the local level, Chicago Alderman Gilbert Villegas has proposed a pilot program to provide $500 per month for a year to 5,000 low-income residents of the city, to be funded with $30 million of the city’s $1.9 billion in American Rescue Plan funds. Other pilot programs supported by private philanthropy are also underway. Cook County plans to build on a successful initiative that gave direct payments to families facing financial hardship during the pandemic with a similar program in 2021. And at the state level, a broad coalition of community-based and grass tops organizations is working together to study the results of Illinois pilot programs, educate legislators, and ultimately advocate for legislation to establish a statewide guaranteed income program.
At the federal level, the Shriver Center is advocating to make temporary tax credits that help low-wage families permanent, a policy position shared by the Biden Administration. The Shriver Center strongly supports policies and programs that provide a guaranteed income floor for the lowest income people.
Guaranteed income offers the best hope to provide people with resources to make important life choices that everyone wants the ability to make—where to live, how to invest in a better future through education or starting a business, and how to best support children. Where properly targeted, guaranteed income specifically gives this opportunity to people who have been systematically excluded from the financial resources to make these decisions, without imposing a massive administrative burden either to qualify or stay eligible. This is a program everyone should support.
Systemic inequities and the legacy of structural racism make it harder for low-income people and people of color to achieve financial stability.