Tommy Andrade, in his mid-20s, was weary of working dead-end jobs, realizing that a high school diploma was not enough to provide for his young family. Upon learning about an advanced manufacturing program at a Texas community college, he became interested in the prospect of obtaining a degree that could potentially lead to a six-figure salary, allowing him to achieve financial security in a rapidly expanding city such as Austin.
However, before embarking on this program, he would have to sign up for a 14-week internship that paid less than his previous positions as a bookkeeper and salesperson. This raised concerns about accommodating their apartment rental, bills, and after-school care for his child. Fortunately, the Austin Community College announced a guaranteed income program for student parents, providing them with $500 per month for two years, given they enrolled in nine credits each semester and attended monthly meetings with other individuals in the same situation.
Feeling buoyed by the additional financial assistance, Andrade signed up for the program, recognizing that $500 may not be sufficient to live off of, but it would make a significant difference in mitigating the financial burden. After a year, he was on track to graduate and secured a full-time job as a contractor for a prominent technology firm in Seattle, where he now lives with his son and partner.
Andrade’s experience highlights the promise of guaranteed-income programs. These initiatives offer consistent financial support to participants, and their popularity surged during the Covid-19 pandemic, with more than 48 programs launched across the United States in cities, states, colleges, and philanthropic organizations. Advocates argue that guaranteed-income programs hold long-term potential as an anti-poverty strategy, particularly for families with young children.
Research indicates that cash transfer programs can significantly impact young children’s well-being by providing stability in their formative years. Parents in these programs report increased participation in their children’s lives and better adequacy in providing for them. Furthermore, financial support for parents can lead to changes in infant brain activity associated with learning and thinking development.
In conclusion, guaranteed-income programs offer a promising approach to support struggling families and children, empowering parents to parent effectively and providing them with the resources they need. By providing consistent financial assistance, we can reduce parental stress and ensure that children’s basic needs are met, setting them up for success in the future.
In numerous European nations, a family allowance is a regular form of a guaranteed income. Denmark, Norway, and Sweden, for instance, distribute funds at periodic intervals to help defray the cost of raising children. In Canada, low-income families also receive money for every child under six years of age.
When low-income individuals have funds, they pay for food and rent.
On a temporary basis, the United States experimented with providing a guaranteed income to families through the expanded child tax credit during the pandemic. For six months beginning in spring 2021, eligible families received monthly tax refunds, earning up to $300 for each child under six years of age. The cash assistance had a positive effect: recipients reported better nutrition, decreased reliance on credit cards, and increased investments in education such as child care and private tutors, without reducing their employment.
However, with the end of this aid, many families are struggling once again to meet their financial needs. Raising kids in America has become exceptionally expensive, far beyond the reach of most households. Soaring inflation, high gasoline costs, and astronomical housing prices have stretched family budgets to the limit. During the pandemic, the cost of child care increased by 41%, but it has been taking up a significant portion of family incomes for years. Furthermore, though the cost of raising children has been steadily increasing, the federal minimum wage in America has stagnated at $7.25 an hour since 2009, reaching its lowest value in 66 years this year.
Andrea Coleman, a single mother of three residing in St. Paul, received $500 per month from the city’s program after the birth of her youngest child, which offered her immense solace. With the money, she bought her kids winter coats, shoes, and Christmas presents. She had her car’s brake system fixed and oil changed, which was essential for her job as a private nurse.
Coleman could also defer returning to work, enabling her to bond with her infant daughter, something she couldn’t do with her middle child. Coleman expressed her gratitude, saying, "That was simply me not being able to provide for my family," adding that the additional income allowed for keeping "the stress level at a minimum".
Andrade, who participated in the guaranteed income program at Austin Community College, benefited from monthly funds that covered bills, car payments, and insurance, as well as private tutors, clothes, and extracurricular activities for his eight-year-old son. Having the extra money meant he didn’t have to take on additional jobs to make ends meet and could invest more time in his son and studies.
He could also afford to take risks, such as agreeing to a pay cut in the short term, knowing that he would eventually earn more money. In May, after receiving his associate degrees in engineering technology and construction management, he was hired by a Seattle-based company that designs vehicle crash test systems. Andrade and his partner relocated along with their son and settled into a two-bedroom apartment in West Seattle. Andrade enrolled in online classes to complete his studies. Two months later, he landed an even better opportunity as an independent contractor earning 150% of his previous salary.
This mobility is what the founders of ACC’s guaranteed income program hoped to foster when they launched the experiment in fall 2021 as part of a larger initiative to support student parents. United Way for Greater Austin partnered with ACC to fund the pilot program, which is still ongoing thanks to the Annie E. Casey Foundation, the Dallas Fed, and federal pandemic relief dollars from Austin. The program aims to assist student-parents as they pursue a degree, frequently while managing a job and parenting. According to Becca Bice, the director of family pathways at United Way for Greater Austin, "They (student-parents) have more responsibility than other students."
Experts are pointing out the various challenges involved in running these programs, emphasizing the need for a larger, more sustainable approach to boosting the income of families. One plausible solution could be the expansion of existing schemes, such as the child tax credit. This is something that President Joe Biden is advocating as part of his nationwide strategy to reduce child poverty and hunger. If implemented as tax policy, this could prevent program participants from being disadvantaged vis-a-vis other benefits.
For Andrade, such programs do not represent a handout, but an opportunity to help those who are starting from a disadvantaged position. He sees this interim support as a means to a long-term end, whereby individuals can achieve independence and prosperity. As Andrade remarked, "We now have a chance to make a difference, without the burden of struggling. If I can create the best opportunities for my child, then I have achieved my goal."
This feature on income guarantee programs is a product of The Hechinger Report, an independent nonprofit news platform that highlights issues of inequality and innovation.
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