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Monthly Payments for Families with Children are Coming, Guaranteed Income Pilots Can Tell Us What to Expect

In May, the Biden Administration announced families with children will begin to receive monthly payments of up to $300 per child starting on July 15. This change, a historic expansion of the Child Tax Credit (CTC) passed in March as part of the American Rescue Plan, will provide families with children—including families with little or no income—with monthly checks to help them cover the cost of raising children for the rest of 2021.

This expansion is much more than a simple tweak to the tax code; the unrestricted and unconditional cash benefit represents a revolutionary change in how the federal government assists families with children. Up until now, federal assistance for families has been heavily restricted; to receive benefits, families have been subject to government oversight, often in the form of work requirements and limitations on how benefits are used and where.

Government oversight is present throughout  federal anti-poverty programs. The Supplemental Nutrition Assistance Program (SNAP) and Housing Choice Vouchers (HCV) help millions of people access food and safely house their families, but those programs don’t provide cash to buy diapers and pay the rent—rather they retain control over how those benefits can be used. The old CTC and the Earned Income Tax Credit (EITC) provide families with cash they can spend however they choose, but families can only get that cash if they work and meet a minimum earnings requirement.

The restrictions built into existing anti-poverty programs are rooted in anti-Black racism and policy makers’ flawed idea of who is “deserving.”

All these restrictions on benefits are rooted in a long-history of anti-Black racism and the capitalist notion that paid labor defines a person’s worth or “deservingness.” For decades, policymakers manufactured and used pernicious, racist ideas about families experiencing poverty to justify cuts to anti-poverty programs all while imposing work requirements and restricting benefits. 

Of course, these explicitly racist policies have disproportionately harmed families of color, particlularly Black families, because work requirements are rooted in anti-Black racism dating back to slavery and because, today, Black families are more likely to experience employment discrimination, live in states with stricter policies, and be penalized by caseworkers. 

Fortunately, the expanded CTC moves away from restrictions and work requirements, instead giving families freedom and flexibility. 

The expanded CTC is unconditional and unrestricted, which means families will get the benefit regardless of whether they work or meet any other behavioral requirements. This type of cash benefit gives families freedom and flexibility to use the money as they see fit. It will be the first large scale social program that provides recurring, unconditional cash payments to families with children.

The prospect of such a massive policy shift obviously raises a lot of questions. How will families benefit from unconditional cash? What will it mean for a child’s healthy development? What will it mean for parents and caregivers? We don’t know for sure because it’s never been tried on a large scale, but there’s a lot we can learn from the recently-published results of a Universal Basic Income (UBI) pilot program in Stockton, CA. 

The Stockton SEED Guaranteed Income offers some insight into how the expanded CTC will improve families’ lives.

The Stockton Economic Empowerment Demonstration (SEED), launched in February 2019, gave 125 families below the city’s median income $500 per month for 24 months. Roughly half of the families who participated had children, and the cash was unconditional—no restrictions on spending, no work requirements. The goal of the program was to model a new, more equitable system of public assistance that allows families to make their own decisions and, in doing so, begins to undo decades of harm inflicted by racist policy.

The preliminary results were remarkable. Families that received the cash benefit experienced significantly less income volatility from month-to-month. Before the program began, only about a quarter of these families reported having enough cash to cover an unexpected expense; a year into the program, that number had more than doubled to 52 percent. This flexibility is especially important for families with children, who are more likely to experience sudden financial shocks and are more likely to face dire consequences like eviction and hunger.

Recipients also reported that the cash influx gave them “freedom from constant preoccupation with scarcity spending” that changed how recipients spent their time and related to their loved ones. Parents said this newfound time and freedom allowed them “to engage with their children in small, but normal rites of passage that generated dignity and quality of life” like simply sitting down to watch TV or doing homework together. 

Families that received the cash benefit were able to take more risks, had the freedom to change jobs and follow their dreams, and felt healthier, both physically and mentally. The benefits of unconditional cash even flowed to families who weren’t part of the pilot program; in many cases, basic income recipients were able to pass along part of their benefit to help their friends and families cover their expenses. 

In short, freedom from scarcity spending led participants to feel better, spend more time with their families, strengthen their communities, and even—contrary to the deeply-held, racist, conservative belief that helping meet people’s basic needs will discourage work—find jobs. Unconditional cash also gave many recipients the resources they needed to find full-time employment.

The results of the Stockton demonstration contain a valuable lesson: the benefits of unconditional cash go far beyond the ability to meet basic needs. 

In short, unconditional, generous, and broad cash helps the lives of families and children and the Stockton experiment should be a guide as we study the effects of the expanded CTC and work to build this expansion into a permanent, universal child allowance. The work is far from over, but in July, when families begin to receive their first checks, the power of unconditional cash will be felt across the country.

2021-06-08T16:23:33-05:00June 8th, 2021|