How Guaranteed Income Programs Can Help Close the Racial Wealth Divide
Since America’s founding, the notion of a “guaranteed income” — unconditional, monthly payments to people in a low-income bracket — has been an enticing and celebrated idea by all manner of political thinkers. Thomas Paine wrote of it in Agrarian Justice in 1797. Martin Luther King championed it in his 1967 book, Where Do We Go From Here: Chaos or Community? And from the 1960s to the 1980s, President Richard Nixon and economist Milton Friedman even put a guaranteed income experiment into practice in the form of the “negative income tax.”
And yet, despite all of the energy surrounding this policy solution, confusion persists concerning its practicality and application. SCG’s 2021 Virtual Conference, RISE UP: Closing the Wealth Divide, set out to explore this concept in greater depth with the Strategy Deep Dive, Guaranteed Income: A Solution for Poverty, and a Path to Closing the Racial Wealth Gap. This session brought together Alex Johnson (Interim Vice President of Programs, California Wellness Foundation), Supervisor Holly J. Mitchell (Los Angeles County Board of Supervisors, 2nd District), Sukhi Samra (Executive Director, Mayors for a Guaranteed Income), and Dr. Stacia West (Co-Founder and Director, Center for Guaranteed Income Research at the University of Pennsylvania). Together, they discussed the efficacy of a “guaranteed income” program, outlined many of its benefits, and explored some of the learnings from pilot programs active across the country. Below, you will find several takeaways from that conversation.
Recent experiments with guaranteed income reveal significant health, educational, and economic benefits
Since 2017, programs such as Magnolia Mother’s Trust in Jackson, Mississippi, and the Stockton Economic Empowerment Demonstration (SEED) in Stockton, California, have extended monthly payments of $500-$1,000 to low-income families with no strings attached. For advocates of guaranteed income, the results have been promising — among them, declines in hospitalization, stress, post-traumatic stress disorder (PTSD), high school dropout rates, and children’s psychiatric disorders.
Within the SEED experiment, specifically, after a year of guaranteed income, participants found themselves in a much better position to withstand an unexpected emergency expense, which is the type of expense that most often cascades many American families into financial ruin. Additionally, of the 125 SEED research participants, full-time employment shifted from 28% to 40% after one year of guaranteed income support. In contrast, the control group, which did not receive guaranteed income, only saw a 5% increase in full-time employment.
Funders can invest in and help reproduce L.A. County’s Guaranteed Income Program
The pandemic has had a devastating economic impact on our local communities. Among the more than 10 million residents of Los Angeles County, half are now ‘liquid asset poor’ and are just one paycheck — one unexpected emergency — away from a severe financial crisis. A new Los Angeles pilot program aims to address this dilemma head-on by deploying $1000 per month to a thousand L.A. residents for three years utilizing public funding.
One way philanthropy can support this initiative is by investing in the research needed to track the outcomes and impacts of this landmark program so that it can then be reported and reproduced by other cities. Such support would help measure the impact of cash payments to demographics that need it most and would track key proof points for the efficacy of the guaranteed income effort. With the support of California’s philanthropic leaders, what launches here in the Golden State could help fuel pilot programs on a much larger scale — and could accelerate effective policy solutions to combat poverty nationwide.
Framing and implementing guaranteed income is a multi-pronged effort, with narrative change at its core
Guaranteed-income efforts are becoming increasingly central to racial justice goals, specifically as a strategy to combat the economic insecurity that disproportionately impacts Black and brown communities. Advocates elevate the potential benefits of
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First, advocates champion cash-based policies — such as the Child Tax Credit and the Earned Income Tax Credit — that directly get money into the hands of working people without strings attached. While other poverty relief efforts are rooted in paternalism and discipline, advocates believe guaranteed income programs foster trust in individuals and community growth.
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Second, advocates of guaranteed-income efforts encourage cities to launch pilot programs, such as those emerging up and down the Golden State. They believe that these programs are critical in fostering mutual community understanding, especially with demographics that routinely distrust government reliability and aid.
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Third, proponents of guaranteed income believe that these programs can help shift narratives around poverty and its systemic causes. For too long, a myth has persisted that if someone is poor, it is primarily a result of personal failings. These assumptions have often stalled essential and purposeful policy solutions, as voters and politicians alike remain undereducated on poverty’s link to harmful systemic concerns that widen the wealth gap every day. Simultaneously, narratives surrounding the popularity of guaranteed income programs could be emphasized more: according to the Mayors for Guaranteed Income, strong bipartisan interest is roiling for just these sorts of economic solutions, with about 47% of independents, and about a third of Republicans, supporting the cause.
Guaranteed income is not a one-size-fits-all solution, but it is a promising start
One place where critics and champions of guaranteed income programs overlap is shared recognition that these solutions are hardly a cure-all. While guaranteed income efforts may offer financial relief for the most economically disenfranchised, they barely scratch the surface of challenges such as homelessness, gun violence, climate change impact, childcare affordability, and many others.
However, proponents of guaranteed-income programs understand that building an equitable future requires a wide range of coordinated actions and policies. Alongside guaranteed income efforts, advocates encourage funders and community leaders to continue using narrative change strategies to change hearts and minds around the systemic challenges America faces, to tell authentic stories of the families most impacted by poverty, and to shape a host of policy solutions that can, collectively, work to address our long-term systemic challenges. These areas and more are where philanthropists can direct their skills and investments by financing research, narrative storytelling, and pilot program implementation that reshape and rebalance the future of the American economy and save lives in the present.