You may be familiar with the saying, “It’s expensive to be poor.” Meaning that when a family or individual falls below the poverty line, expenses accumulate and it becomes increasingly difficult to gain their footing as bills pile up and they struggle to make ends meet. For example, if you can’t afford to go to the dentist for regular cleanings now, you will probably end up paying more down the line to fill cavities or have root canals.
1 in 3 OC families struggles to meet their most basic needs. Guaranteed Income can help.
Many Orange County residents work multiple jobs and still don’t earn enough income to push them above the poverty line. Previous studies have shown that guaranteed income can help give vulnerable families a stronger foundation in order to reduce stress, improve mental and physical health, obtain a better paying job, pay down debt, and utilize childcare.
Some key potential benefits of guaranteed income:
- Promoting child development
- Improved mental health (perhaps from decreased financial stress)
- Unlocking creativity (money gives you the ability to not think about money)
The Advanced Child Tax Credit showed us that when struggling families received money each month (in 2021), it lifted them out of poverty in real time and the impact was seen immediately. Over a six month period, it cut child poverty by 30 percent (Economic Security Project). While this tax credit program isn’t exactly the same as guaranteed income, it does show us how beneficial this type of assistance is in helping our vulnerable families gain financial stability.
Income can help you get your feet on the ground. That’s important in finding and keeping a job. —David Neumark, Distinguished Professor of Economics and Co-Director, Center for Population, Inequality, and Policy, University of California, Irvine
With this knowledge, Orange County United Way is raising funds to conduct a Guaranteed Income Experiment with the goal of helping Orange County’s underserved residents as well as assessing evidence to learn how we can best support vulnerable families in achieving long-term financial stability. The proposed guaranteed income experiment would focus on a population ineligible for many (if not all) income-support and safety-net programs. To this end, we can gather data on how this program would function as a standalone program compared to existing financial assistance programs.
Core elements of our guaranteed income experiment:
- Regular cash payments to participants
- Data collection on outcomes of interest:
- Work, income, education, training, health, nutrition, etc.
- Qualitative component to hear about participants’ experiences so we can understand the thought process of how they spend, share, and invest
- Collect evidence that speaks to potential longer-run outcomes (education, training, economics, self-sufficiency), including the effects on the next generation
- Comparison (“control”) group from which data is also collected
Additionally, participants will have gone through our SparkPoint OC financial wellness program, which promotes financial empowerment through free one-on-one coaching to increase income, manage credit, and build assets through savings and planning. The program helps participants address immediate needs, establish long-term goals, and ultimately gain financial stability. As a result, United Way sees a guaranteed income experiment as the logical next step to the programs we already provide.
Cash is the simplest and most powerful way to support people because it gives them flexibility to cover their most pressing needs, whether that’s food, housing, paying down debt, childcare, soccer cleats, pizza night, etc. It’s a very efficient and effective way to achieve an immediate drop in poverty and food insecurity. —Teri Olle, California Campaign Director, Economic Security Project
Will this incentivize people to stop working?
What we’ve seen from previous studies is that vulnerable families use this money for essentials. The payments are not enough for them to live off of alone, but rather enough to help them meet their basic needs. In one instance, it enabled a father to find a better job so he could quit one of his three jobs, but continued to work two. In most cases, people are saving it, using it to put their health first, going to school and, consequently, building human capital.
How will the experiment results be used?
The hope is to produce evidence that will help provide policy ideas and proposals that are actionable because they have appeal across the political spectrum.
[The idea is to] give enough to create stability over time. The cumulative effect of that stability can be really powerful in enabling people to get out from underneath [poverty]. —Teri Olle
We strongly believe that this guaranteed income experiment will shed light on how we can best support our vulnerable families and how this would help to create a thriving economy for all. But, to effectively conduct the study, funding is required. If you’re interested in learning more about this program or others like it, we encourage you to check out our United for Financial Security℠ initiative, which is empowering Orange County families to get on the path from surviving to thriving. Because we believe in stepping up and saying yes when there is a need, in being inclusive and kind, and we trust in our capacity to solve the tough problems, touch local lives, and make lasting change, together. Because that’s the OC Way.
Want to get involved or learn more about our programs?
If you would like to support our financial stability programs, we encourage you to:
To learn more about the Guaranteed Income research study and how to support this work, please contact Ann Truxaw Ramirez at AnnR@UnitedWayOC.org