Stimulus Update: Is Your City One of the 98 Considering Permanent Stimulus?

Giving a little can save a lot.

As stimulus checks appear to be a thing of the past, 98 U.S. cities are stepping in to help low-income households by providing universal basic income (UBI). The following cities either have a pilot program underway or in the planning phase:

What is universal basic income?

UBI is a government program in which every eligible resident receives a monthly payment. According to the Stanford Basic Income Lab, UBI programs have these five characteristics in common:

1. Periodic payments. Rather than receive a one-time payment, eligible recipients receive regular payments. More often than not, payments are made once a month.
2. Cash payments. Recipients are sent a check rather than provided with a benefit card or voucher. They can cash the check, deposit it into their bank account, and otherwise use it in a way that best meets their needs.
3. Checks are universal. The pilot programs currently underway have limited the number of recipients. However, on a larger scale, checks are not targeted to a specific population.
4. Individual payments. Payments are made to every adult citizen, not just every household.
5. Unconditional payments. Payments are made with the belief that recipients are in the best position to know what they need. Checks arrive with no strings attached.

In short, UBI is designed to lift those in need out of poverty. The goal is twofold: Offer dignity to an often overlooked segment of society, and save taxpayer dollars.

How UBI can save money

Based on 2021 U.S. Census Bureau figures, Scientific American points out that 37.9 million people live in poverty in the U.S. That’s 11.6% of us living at or under the poverty line. Offering those folks UBI would save billions of dollars by reducing the social costs of poverty, including the negative outcomes associated with childhood poverty.

Won’t people quit their jobs?

One argument used by those who are against UBI in any form is that “free money” will disincentivize work. In other words, once people have a few extra dollars they will quit their jobs. Scientific American pointed to three pieces of evidence that put that fear to rest.

1. In 2021, the Biden administration decided that it wanted to expand the Child Tax Credit. Not only was the maximum credit raised, but parents could opt to receive a portion of that credit each month by check or direct deposit. Although Republican lawmakers put an end to the program in December 2021, the expanded Child Tax Credit lifted 3.7 million children out of poverty for a time. In addition, parents’ work participation was not significantly reduced.
2. Alaska’s Permanent Fund Dividend sends an annual cash payment of around $1,600. While it contributes to poverty reduction, there has been no negative impact on Alaskan’s willingness to work.
3. A recent analysis of a UBI pilot program in the Canadian province of Manitoba found that few people stop working while receiving a guaranteed income. Those who do quit, do so for good reasons. For example, some leave work to take care of young children, while others leave to finish their high school education.

UBI programs do not provide recipients with enough money to play the stock market or retire. Instead, they’re intended to make life a little less difficult for those who struggle financially.