In his last years, Martin Luther King spoke out for a nationwide guaranteed income program to support lower income families and help eliminate economic inequity. Recently, a small group of people in Yellow Springs and Miami township received their first check of unconditional cash as part of a two-year pilot guaranteed income program.
Florence Randolph has helped many families in Yellow Springs living with poverty. She is the community outreach specialist for the police department. Here’s an example of what she sees: a family of six with just two beds. The mother loses her job, the father leaves, some of the children require medical appointments—all while she must find another job. The next job pays just enough that she now loses the food stamps.
Randolph says, “The mother is overwhelmed, and she shuts down. Even though all these things need to be taken care of, she cannot function. She just cannot.”
Covid worsened these problems. So the Yellow Springs Community Foundation provided money for rent and utilities to keep people in their homes. But that was just a stopgap during the pandemic and social justice protests. Local nonprofit leaders met around a fire to find a better way to help their neighbors in need and to build equity.
Angie Hsu is the project manager of the YS Equity Fund. She noted that, “Right away, people started to talk about direct payments, guaranteed income, basic income, people receiving cash payments to decide for themselves what they need since they are the best people to make those decisions.”
The YS Equity Fund will provide a guaranteed income of 300 dollars each month for 30 families in Yellow Springs and Miami Township for the next two years. The families are chosen by a weighted lottery run by the Center for Guaranteed Income Research at the University of Pennsylvania. The lottery favors single parents, lower incomes, and marginalized groups.
Hsu says most nonprofits and government” Hsu asksed, “Should we be buying them clothing? Should we be helping with housing? I think a lot of good intentions are there, but very quickly you run into a situation where you’re stripping away agency from that individual.”
Three hundred dollars may not seem like much. But it could be the tipping point that can reap major benefits, given the cost of living here. That’s based on UPenn’s research from 100 other pilot programs nationwide. Hsu said, “There’s increased employment, increased ability to find work that’s more stable, that has more mobility for them to move up in the workforce.”
Amy Castro, the codirector for UPenn’s Center for Guaranteed Income Research sees even more benefits. She notes that the guaranteed income programs “calm scarcity and calm anxiety and depression when it is not acute, which is why we see such strong health outcomes.”
Castro’s research also shows that cash meets more individualized needs that depend on region, seasons, and changing family situations when social programs cannot. “And so if we think about the fact that needs are dynamic, right? But most social programs are not, they’re very static. The only thing that matches the dynamic nature of American life is cash.”
Many free-market economists have concerns about costs but agree with Castro, to a degree. Rea Hederman is the Vice President of Policy at the Buckeye Institute. Hederman said that conservative economists have long argued for replacing the entire social welfare system with a regulated, time-restricted guaranteed income.
Hederman explained, “Because as you start making a certain amount of money, your support from the government would start going down. And that again is the challenge for policy makers because you don’t want a phase out that becomes too steep because that then creates a real disincentive for people to take a better job, to people to go back to school, so they can earn more money.”
The research at UPenn shows most poor families are budget conscious because they have to be. Castro says, What we see is incredibly rational action on behalf of people who are experiencing poverty in the ways that they move money, save money. There’s just not enough of it to save.”
This is the first village-size program in the U.S. With a much smaller population, the program can have a greater impact on the community than a small sample in a large city. The YS Equity Fund also plans an endowment so it can last into the future. That gives Angie Hsu hope. She believes, “We’re seeing one small light at the end of the tunnel, of one way to address this that is having phenomenal results.”