By Hannah Miller
This week, the Biden Administration is preparing to distribute a $1.9 trillion economic relief bill to qualifying Americans, the third round of stimulus packages which arrives one year after the COVID-19 outbreak was declared a global pandemic. Notably, a substantial portion of the bill is directed towards individuals, 54% to be exact, compared to the previous packages under the Trump administration which placed a larger emphasis on business directed assistance (Long, Flowers & Van Dam, 2021). The economic impact of the pandemic has been vast, unmeasurable even, weighing most heavily on vulnerable populations, including folks experiencing poverty and homelessness.
The ‘American Rescue Plan’ is being hailed as a significant win under Biden by politicians and the media, especially for Americans living in poverty. Not only does the bill include direct stimulus payments to individuals making under $75,000 and couples making under $150,000 a year, it also provides $1,400 per dependent (Kaplan, 2021). Other provisions include expanded unemployment benefits, heftier child tax credits and state investments aimed to help with vaccine distribution and reopening schools (Kaplan, 2021).
According to a report from Columbia University, the package (both the direct stimulus checks and the additional program investments) will cut poverty rates by 30% and reduce the number of children living in poverty by nearly 50% (Luhby, 2021). There is no doubt that the stimulus bill is a step in the right direction, but there is something to be said about the approach to addressing the economic woes of the pandemic through mitigation rather than preemption.
An alternative method to alleviate individuals financial instability and reduce poverty is to implement a universal basic income (UBI) model. Universal, meaning it’s for everyone, regardless of socio-economic, housing and employment status. The crucial difference between UBI and stimulus bills is that UBI models provide direct payments to individuals for an extended, if not unlimited, period of time, where stimulus checks are sporadic. Pilot UBI models are popping up across the country and around the world, yielding provoking data.
For example, a recent article from The Atlantic analyzed a basic income case study from Stockton, California. Two years ago, $500 monthly payments were sent to 125 random individuals living below the city’s median income of $45,000 for one year. “The recipients were allowed to spend the money however they saw fit, and they were not obligated to complete any drug tests, interviews, means or asset tests, or work requirements. They just got the money, no strings attached.” the author, Annie Lowrey emphasized (Lowrey, 2021).
The results were impactful. Researchers Stacia Martin-West of the University of Tennessee and Amy Castro Baker of the University of Pennsylvania collected data from both the individuals receiving the monthly payments and compared them to individuals who did not (Lowrey, 2021). Data indicated that household income volatility decreased by 22% for those receiving payments, and that the $500 was being used to purchase essential items such as food, clothing and utilities (Lowrey, 2021). Another critical finding, the cash payments did not dissuade individuals from looking for work (Lowrey, 2021). Rather, because folks were in more stable financial situations, they had more access to resources and had more time to spend looking for sustainable work.
Of course, the concept of a universal basic income draws a lot of heat from republicans and democrats alike. Some of the major critiques being that 1) it will disincentivize people from working, and 2) the cost will outweigh the benefit.
The Stockton case study challenges both arguments. For one, as noted before, the cash payments didn’t dissuade people from working, but rather allowed them to find suitable jobs while engaging in their communities. “...The share of participants with a full-time job rose 12 percentage points, versus five percentage points in the control group.” Lowrey adds (Lowrey, 2021). For two, the cost of lifting people out of poverty alleviates the economy in other areas, for example healthcare. Toxic stress related to finances is pervasive, and expensive, for the individual and the system at large (Lowrey, 2021).
Former Stockton Mayor, Michael Tubbs, emphasized this point, “So many of the illnesses we see in our community are a result of toxic stress and elevated cortisol levels and anxiety, directly attributed to income volatility and not having enough to cover your basic necessities. That’s true in the public-health crisis we’re in now.” (Lowrey, 2021).
Financially stable communities have the ability to become healthy, vibrant communities.
This month, Chicago representatives have introduced an initiative to implement a UBI pilot program in the city. Ald. Gilbert Villegas (36th), Ald. Maria Hadden (49th) and Ald. Sophia King (4th) are advocating for Mayor Lori Lightfoot to allocate a portion of the stimulus bill funding towards tackling poverty in the city (Laurence, 2021).
“It allows us an opportunity to discuss a pilot and then if we want to expand and make it permanent, and demonstrate to the corporations and philanthropic folks in the city that we’ve got skin in the game, I think that would allow for the program to become permanent,” Ald. Gilbert Villegas (36th) said (Laurence, 2021).
A universal basic income in Chicago would be a significant step towards addressing poverty in the Second City. While the approach may seem radical, the process is rather logical. Necessities, including food, shelter and clothing are basic human rights — all of which UBI advocates argue become more accessible when folks have long-term financial support to obtain them. Regardless of the method, we cannot expect to live in a thriving society when we can’t ensure individual’s most basic needs are met.