With winter upon us, families in Charlotte, and across the country, are struggling to make ends meet. After nearly a year of inflation rates above seven percent, combined with the expiration of Covid-era safety net benefits enacted by the American Rescue Plan (such as the expanded Child Tax Credit), 63% of Americans now live paycheck-to-paycheck. Inflation growth has outpaced wage growth, resulting in a three percent decline in real hourly earnings. Everything is more expensive, and people are earning less.
Here at Crisis Assistance Ministry, we see the effects of this every day. People are working harder than ever but still falling behind on rent and utilities. The amount of their past due bills is increasing but their paychecks are not.
Put simply, a lot of people need more money. Not because of poor individual choices, but because of systemic macroeconomic trends and policy choices. So, why not use policy to get more money into the hands of those who need it most?
Guaranteed Basic Income
One such policy is guaranteed basic income. This involves issuing unconditional, recurring cash payments to individuals for them to spend however they see fit. There are no restrictions on how the benefit is used. It can be used for groceries, gas, outstanding debts, or even a business venture. The idea is that people know how best to spend their money – it’s just a matter of getting the money they need into their hands.
Guaranteed basic income has not been widely implemented in the United States, but recent pilot programs offer extremely promising initial results.
The Stockton Study
In Stockton, California, the Stockton Economic Empowerment Demonstration (SEED) was founded by then-mayor Michael Tubbs in February 2019. The program, which was funded by private donors and managed through a non-profit, randomly selected 125 residents who lived in census tracts at or below Stockton’s median income to receive $500 a month for two years, no strings attached A study of the program’s first year produced some incredible results that go against the main arguments critics of basic income tend to make.
- Recipients spent the majority of the money on basic needs. Many critics of guaranteed income argue that, if given money with no restrictions, people will be wasteful of that money or spend it on drugs. This was not the case. 37% of the income received went towards food; 22% went towards home goods, clothes and shoes; 11% went towards utilities; 10% went towards auto costs. Most importantly, less than 1% of the income was spent on alcohol or tobacco.
- Recipients had increased rates of full-time employment. Critics of guaranteed income also argue that if we give out free money, the incentive to work will decrease. This was not the case in Stockton; quite the opposite, in fact. Recipients moved from part-time employment to full-time employment at a rate of 12%; this was more than twice the rate of the control group participants who did not receive the guaranteed income checks.
- Recipients had increased health and well-being, as well as decreased feelings of anxiety and depression. Self-reported measures of well-being were much more positive among the recipients of the guaranteed income than those who did not receive income. The additional income allowed recipients to pay off debts and take care of surprise expenses, while also allowing them to pursue goals that financial constraints had not allowed them to pursue.
In response to this program’s results and other research on guaranteed income showing similar data, several other similar pilot programs have sprouted up across the United States. Research on these programs has shown similar results: most of the money is being spent on basic needs.
A Guaranteed Income For Charlotteans?
People struggling with limited financial resources, including those served at Crisis Assistance Ministry, know how to spend their money wisely and prioritize where their resources go. The vast majority of families who seek assistance with their rent and utility bills are not here because of poor individual choices but rather systemic forces beyond their control. What if we could flip this dynamic using policies like guaranteed income to help those who are struggling the most?
Perhaps the time has come for the city of Charlotte to consider structuring a guaranteed income pilot program. Our city, with its wealth of resources and talent, could set an example that would add to existing research and help build the case for such a policy within the state of North Carolina as a whole. That could bring us one step closer to the day when Crisis Assistance Ministry attains its goal of putting itself out of business because Charlotte-Mecklenburg is finally a community where every family has the means to meet its basic needs.