Guaranteed Income is Needed Now More Than Ever
As the cost-of-living crisis wears on, there is a need for "universal basic income" to ensure that families are weathering economic shocks in the short term while building wealth for the long term
Rami Najjar | a Prosperity Now feature
As low- and moderate-income families continue to shoulder the burden of rising prices, it is clearer than ever that U.S. households are in need of financial support to deal with the ongoing affordability crisis. Skyrocketing housing costs, stagnant wage growth, and increasingly volatile incomes have led to a situation in which 58 percent of Americans are living paycheck to paycheck, and nearly 45 percent of those earning under $50,000 a year cannot afford all of their basic necessities.
Building lasting wealth is impossible without financial stability, and the fallout of the COVID-19 pandemic has only increased economic insecurity and financial hardship.
In response to these challenges, advocates and legislators at the federal, state, and local levels have called for the establishment of a federal guaranteed income program. Some call it “universal basic income.” A federal guaranteed income program would entail recurring, unconditional cash payments for individuals at the lower and middle levels of the income spectrum. Such a program could help ensure financial stability for the average household by setting an income floor that will allow them to weather temporary financial hardship and begin to invest in their—and their children’s—future.
Our current, targeted social safety net system has many gaps. Means testing excludes many struggling families from accessing crucial benefits, and work requirements prevent money from reaching those who need it most. A guaranteed income program could supplement existing programs by ensuring that all low- and moderate-income individuals and households receive financial support. In addition, the unconditional and unrestricted nature of the program would give families the flexibility to use the funds to best address their immediate needs.
A guaranteed income program targeted toward low- and moderate-income households could also play a critical role in addressing historic inequalities by providing much needed economic relief to marginalized communities. Black communities endure notably higher levels of economic insecurity than the average American, and would therefore disproportionately benefit from a guaranteed income program. Guaranteed income would also give entrepreneurs of color a financial safety net that would enable them to secure safe loans to start businesses, while helping families accrue savings that can be used in retirement or invested in their children’s futures. Action to address the racial wealth gap is long overdue, and a targeted guaranteed income program would ensure a base level of financial security for BIPOC communities, creating a foundation households can build on to generate lasting wealth.
Recent guaranteed income programs of different kinds have proven effective at all levels of government at easing the economic burdens faced by families. Local pilot programs such as the People’s Prosperity Pilot in St. Paul, Minnesota and the SEED program in Stockton, California positively impacted the financial stability and mental health of participating families and allowed households to take advantage of new opportunities to build wealth. The temporary Child Tax Credit expansion in the American Rescue Plan—which is, like guaranteed income, targeted and unrestricted—cut child poverty in half and helped millions of households afford necessities such as food and electricity during times of economic hardship.
The COVID-19 pandemic has highlighted the many inequities within our economy, and it’s time legislators take action to support financial stability and invest in economic opportunities for the millions of families that have been left behind in recent decades. We cannot have shared prosperity until all families have economic stability, making a federal guaranteed income program a crucial step towards building back for justice.