What can you afford on $7.25 per hour?
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Dear Leading Ladies,
Let’s start with this staggering statistic: A couple working full time and earning $7.25 per hour cannot afford a two-bedroom apartment anywhere in the country without spending more than the recommended 30 percent of their income, according to Nicholas D. Kristof and Sheryl WuDunn in Tightrope.
That leads us to a discussion about Universal Guaranteed Income (UGI) and Guaranteed Basic Income (GBI). What are they and how do they differ?
UGI and GBI are also sometimes referred to as citizen’s income, guaranteed minimum income, or basic income. “The intention behind the payment is to provide enough to cover the basic cost of living and provide financial security,” writes Kimberly Amadeo in thebalance.com. “The concept is also seen as a way to offset job losses caused by technology.” The supplements are not envisioned to provide enough money to live on, only to add enough to pull people out of poverty.
The difference between UGI and GBI is that UGI calls for every citizen to receive a guaranteed supplement, while GBI targets only those who need financial supplements to afford the basic needs of food, shelter, clothing, and transportation.
“The intention behind the payment is to provide enough to cover the basic cost of living and provide financial security…”
A mural in downtown Stockton, California, celebrates the guaranteed income project there. PHOTOGRAPHER: ANDRI TAMBUNAN FOR BLOOMBERG BUSINESSWEEK
An idea from the Renaissance
But first, a little history from our friends at MIT.
“First proposed by philosophers in the 16th century, the idea of an income delivered directly by the state has been seen in many quarters as a balm for all kinds of social ills. Progressives argue that a guaranteed minimum income has the potential to lift communities out of poverty. Some conservatives and libertarians, meanwhile, see universal basic income as a cost-effective alternative to existing social welfare systems.
“In the United States, proponents of guaranteed income as a matter of economic justice have included the Black Panthers and Martin Luther King Jr., while the libertarian economist Milton Friedman advocated it as a form of negative income tax. Even President Richard Nixon proposed providing cash directly to families, without conditions. His plan—produced after 1,000 economists urged it in an open letter—twice passed the House, but got rejected by the Senate.”
Who should get the money?
Some critics of UGI fear that the policy could release employers from paying fair salaries and absolve them from tackling issues of income inequality. COVID-19 and the gig economy with its on-demand and short-term workers clearly have made guaranteed income a more critical consideration for all income groups, according to experts. (USA Today). And that, along with the prospect of more jobs being taken over by artificial intelligence and robotics, could argue for a nationwide guaranteed income program such as the pilot project in Stockton, California, that gave recipients $500 monthly to 125 residents for two years. It succeeded in lifting many, some of whom had incomes above the poverty level, out of debt and freed them of overwhelming anxiety.
At the same time, proponents of GBI herald it as the more efficient way to fight racial and gender wealth inequality by targeting only those most in dire need. They point to the Magnolia Mother’s Trust (MMT) program in Mississippi, which gave $1,000 a month (funded by philanthropists) to Black women living in extreme poverty. Black women were identified as the recipients of the aid because they are the most harmed by poverty in this country, according to Aisha Nyandoro, of Springboard to Opportunity, the nonprofit behind MMT.
“Compared with a control group, the pilot participants were 40% less likely to incur debt for emergency expenses and 27% more likely to visit a doctor. On average, they were able to set aside $150 each month for food and household expenses,” the MIT Technology Review reported. And Nyandoro believes those economic results are only part of the success. The “dignity and agency” the program returned to these women was at least as important.
An excuse to stop working?
For those who worry that giving guaranteed income checks will cause people to stop working, the evidence to the contrary is in. “In the models that have cropped up in cities across the country, mayors are testing sending regular checks to those under a certain income level without making them give up anything,” according to Bryce Covert writing in the New York Times. “The idea is that the money can take the edge off poverty. In Stockton, Calif., a rigorous analysis found that it reduced income volatility, allowed people to afford basic essentials, and increased mental well-being.” Furthermore, “in the Stockton study, recipients of guaranteed income were actually more than twice as likely to obtain full-time employment over the two-year experiment.” Turns out people feel fulfilled by work, especially when they are freed from the anxiety caused by the inability to pay for childcare or rent.
As with most ideas and innovations, the devil is in the details. Who should receive the benefits? Both UGI and GBI call for cash payments to meet basic needs. With the pandemic making clear the disadvantages suffered by people of color in our country – for example, Blacks and Latinos make up 44.1 percent of the U.S. workers who would benefit from a raise in the federal minimum wage to $15 per hour by 2025 – it is easy to suggest that the focus should be primarily on those groups as we reckon with centuries of inequality.
Who is going to pay?
The next pressing question is how would this get paid for? Some have suggested that the tech companies pay since their employees – or former employees, or contract workers – could be a considerable slice of the recipients, but that sounds like a pipe dream. So we are left with the bill being picked up by the government and that won’t happen without increasing the national deficit by more than a trillion dollars annually, according to thebalance.com. That, in itself, will make it a hard sell for at least some of the American electorate and the Congress, where getting a minimum wage bill passed still faces obstacles.
It is interesting to note that Canada is experimenting with a three-year guaranteed income plan, and that Hawaii and Alaska have plans in place. For more about these programs and those of other countries, click here.
In the meantime, people like Nyandoro will find philanthropists willing to fund small projects making large differences in the lives of some. And, perhaps, some of us may decide to help women change their lives and those of their children through Magnolia Mother’s Trust. Or even start a similar project closer to home.
This week, we recommend you watch
Aisha Nyandoro on PBS speak about the Magnolia Trust program supporting low income women in Mississippi.
Stay safe, hug a vaccinated friend, spread the joy of hope.
Therese Melden
Judy Klein
Mary Barthelmes
Beth Forbes
Leading Ladies Executive Team
ladies@leadingladiesvote.org
leadingladiesvote.org