One State’s Considering Giving People $9,000

As a nationwide conversation over the merits of a universal basic income ensues, Minnesota might be the first state to adopt a monthly check for residents.

The $100 million pilot program was proposed by lawmakers who would like to give up to 10,000 a monthly check of $500. Over the span of 18 months, the basic income would amount to $9,000.

To qualify, Minnesotans would need to earn public benefits or have a household income at or below 300 percent of the federal poverty level. For a family of four, that amount is $93,600.

After the pandemic sparked several rounds of no-strings-attached stimulus payments, some politicians and citizens have been calling for additional free money from the federal government under a universal income program.

Already in Minnesota, the city of St. Paul and various nonprofits have created their own guaranteed income pilots. Residents have also benefited from rebate checks and the highest child tax credit in the country. Under the state’s guidance, hundreds of thousands of families earn $1,750 per child.

While the current $100 million proposal is unlikely to get passed this year, lawmakers could potentially update the program details to make it more enticing to Republican lawmakers.

Guaranteed income programs have long been considered within America, with Thomas Paine being the originator of the idea during the Revolutionary War and Martin Luther King Jr. also advocating for the notion.

Stanford University’s Basic Income Lab has counted more than 150 guaranteed income programs within U.S. history, and most took place within the past five years.

Others, like Stockton, California’s program offer similar benefits, giving families $500 monthly over a period of two years. Successful pilots have shown people enrolled in the program were more likely to find full-time jobs and improve their health after starting the program.

Still, some lawmakers remain against the idea of the Minnesota program and others like it, saying free money only enables those living in poverty and could fund negative habits like drugs and alcohol.

“There’s no guardrails to this, no antifraud or integrity measures,” said Representative Ben Davis, as reported by The Star Tribune.

“My philosophy has always been: get government out of the way, give people the opportunity to work hard with their own hands and to provide for themselves,” he added.

Michael Ryan, a finance expert and the founder of michaelryanmoney.com, said the evidence suggests that a well-designed basic income program would have significant benefits for low-income households, though. Programs like this are regularly associated with greater financial stability and food security, he said.

“There has been little to no evidence that the payments reduced employment,” Ryan told Newsweek.

While he acknowledges valid concerns over the costs and the potential impact on the labor force, he said ultimately a basic income can be an effective tool for “improving the financial wellbeing of vulnerable residents.”

“Personally, I’m encouraged by the early successes of these pilot programs,” Ryan said. “As someone who has spent decades helping families achieve financial security, I believe programs that provide a reliable income floor can make a meaningful difference, especially for parents struggling with the rising costs of living.”

Drew Powers, the founder of Powers Financial Group, and a registered investment advisor in Naperville, Illinois, echoed this sentiment.

“One may think ‘free money’ would lead to higher unemployment or frivolous spending, but the opposite seems to be true,” Powers told Newsweek. “Time and time again these programs lead to higher levels of employment, and the bulk of the money tends to go to living expenses.”

Still, Powers questions the likelihood of the program getting passed as “the money has to come from somewhere.”

“Higher earners are taxed and the money is reallocated and that’s not always a popular idea,” Powers said. “Another argument against these programs is the risk of fraud, the risk that funds go to someone who is not deserving. But that risk exists in every program and is not in itself a reason to vote down this program.”

The no-strings-attached nature of the guaranteed income is also likely to trouble many voters in Minnesota, said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin.

“The reality is even if such payments can lift some out of poverty, the idea of giving money with little pre-conditions on how to spend it worries voters and those who represent them,” Beene told Newsweek.