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Stockton’s basic-income experiment pays off

Annie Lowrey writes:

Two years ago, the city of Stockton, California, did something remarkable: It brought back welfare.

Using donated funds, the industrial city on the edge of the Bay Area tech economy launched a small demonstration program, sending payments of $500 a month to 125 randomly selected individuals living in neighborhoods with average incomes lower than the city median of $46,000 a year. The recipients were allowed to spend the money however they saw fit, and they were not obligated to complete any drug tests, interviews, means or asset tests, or work requirements. They just got the money, no strings attached.

These kinds of cash transfers are a common, highly effective method of poverty alleviation used all over the world, in low-income and high-income countries, in rural areas and cities, and particularly for households with children. But not in the United States. The U.S. spends less of its GDP on what are known as “family benefits” than any other country in the Organization for Economic Cooperation and Development, save Turkey. The Temporary Assistance for Needy Families (TANF) program spends less than one-fifth of its budget on direct cash aid, and its funding has been stuck at the same dollar amount since 1996—when the Clinton administration teamed up with congressional Republicans to turn it into a compulsory-work program. Those changes sliced into the safety net, allowing millions of people to fall through.

Most adults without children have no program to help them keep gas in the car and a roof over their head, no matter how poor they are. Most families with kids don’t have one either. In the United States, poverty is used as a cudgel to get people to work. We got rid of welfare for poor families’ and poor individuals’ own good, the argument goes. Give people money, and they stop working. They become dependent on welfare. They never sort out the problems in their life. The best route out of poverty is a hand up, not a handout.

Stockton has now proved this false. An exclusive new analysis of data from the demonstration project shows that a lack of resources is its own miserable trap. The best way to get people out of poverty is just to get them out of poverty; the best way to offer families more resources is just to offer them more resources. [Continue reading…]

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