By Diana Orozco

A basic income pilot in Stockton, California provided $500 monthly payments to 125 residents with no strings attached. From improved family wellbeing and financial stability to an increase in full-time employment, these positive impacts hold hope for the refundable Child Tax Credit (CTC). 

The CTC in the recently signed American Rescue Plan will provide periodic payments to nearly all families with children so they can use as they see fit. While currently this credit is only available for tax year 2021, the congressional sponsors hope that this will become a permanent provision. It provides families with $250 per child each month ($300 for children under 6).
While public policy has long focused on in-kind benefits such as health insurance or nutritional supports, mayors and advocates have grown increasingly interested in expanding direct cash support through a universal basic income (UBI). That is, a monthly basic income given to everyone regardless of work or income. It has been discussed as an anti-poverty measure to combat the rise of job loss due to automation as well as an anti-racist tool to address persistent racial wealth gaps that have kept families from meeting basic needs. Due to long-standing systemic inequities in employment and housing, Black and Latino workers disproportionately hold jobs in industries paying low wages that have been hit the hardest during the pandemic, affecting a household’s ability to pay for everyday needs.

The first-year results from Stockton’s Economic Empowerment Development (SEED) basic income pilot have shown that families have reduced financial scarcity and opened the door to new opportunities to prepare for the future. 

Highlighting that participants experienced less month-to-month income volatility, lower anxiety and improved mental and physical health, this allowed participants to improve their financial stability. For parents, it mitigated constant financial worry allowing them to engage more with their children. Research shows that households with children, particularly households of color, experience greater hardships, compared to those without children. These challenges stemming from the ability to afford enough food and spillover effects of parents’ stress about meeting financial needs. When support and resources to meet those financial needs are tied to complex requirements and administrative burdens, families carry the burden of lost time. The SEED report demonstrated that the $500 monthly support allowed participants to dedicate time to their relationships and activities that weren’t possible before.

Contrary to concerns that cash payments deter employment or job searching, the SEED project showed that there was an increase in full time employment for those that did receive the monthly payment, compared to those who did not. The results also confirmed that participants spent payments on food, home products, utilities and transportation – all everyday needs. Having basic needs met and newly found time, as the monthly income mitigated worries about making ends meet every month, helped reduce the barriers to searching for full time or improved employment opportunities. 

As more interest from mayors and advocates in UBI programs increases, the processes and design of the program, as much as the benefits, need to be recognized. The SEED report included recommendations to that end, such as the importance of building strong relationships and centering community voices throughout the whole process, emphasizing consistent communication through phone calls, text messages, and mail to reach everyone. Also reviewing consent and processes of the full program for all participants involved, allowing them to choose their level of involvement throughout the program duration. Trust was key. The pandemic has pushed all of us to reimagine our everyday routines; it’s time we apply that same approach to re-designing how we provide support for communities with low incomes.

We have a lot to build on from the SEED project and other UBI pilots such as the Magnolia Mother’s Trust in Jackson, Mississippi, supporting low-income African American families and Santa Clara’s first UBI pilot supporting youth aging out of foster care. Federal and state agencies should be creating less complex application and requirements and more simplified programs built on trust that families know how to best support their needs. As we move to implement the CTC expansion, we need to document the positive impacts consistent payments have on families, child poverty and make enrollment in the program as simple as possible. Policymakers and advocates should take advantage of the growing momentum of UBI programs to provide quick support to families, without reducing other resources and assets.