Opinion
The COVID pandemic launched stimulus checks for millions of Americans who were struggling under the unprecedented actions of governments across the country. Families and individuals whose jobs were put on hold or flat out disappeared due to the pandemic received government payments to mitigate wages lost.
Once the pandemic ended, many communities across the nation wondered if families would find themselves in financial trouble when the stimulus payments stopped. Taking a page from former presidential candidate Andrew Yang, many cities and states launched universal income-related programs.
However, the decision of one D.C. mother of three to spend the majority of taxpayer money she received as part of one of these programs on vacation-related expenses has many critics questioning the benefits of free money programs. Let’s take a look at what the struggling mother decided to spend her free money on.
I wanted to blow it
A D.C. mother of three spent over half of a $10,800 lump sum payment she received from the city on a luxury Miami holiday for herself, her kids, and their father. The money came from a D.C. pilot program called Strong Families, Strong Future.
Individuals under the poverty line selected for the program could receive approximately $900 monthly or a lump sum payment of just over $10,000. The program has no strings attached, meaning the recipients can spend the money however they see fit.
In this case, Canethia Miller spent the money on a seven-day vacation to Miami for her family, which included new clothes, a boat trip to see the mansions of Miami and a makeover. Ms. Miller explained that she spent the money on the boat trip so that her children could see that if they worked hard, someday, they could live in a mansion similar to what they saw.
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The $180 she spent on a makeover that included hair and nails was so that she:
“…didn’t have to look like a working, stressed mom.”
She went on to admit that when she received the money, she:
“…wanted to blow it. I wanted to have fun.”
In addition to the vacation and everything that came with it, she did use some of the leftover money on a used car and bills.
Help or hurt?
Guaranteed income programs like the one in D.C. that Ms. Miller participated in have spread nationwide. The total value of the programs is estimated at over $125 million, with some providing up to $36,000 to families.
Both Los Angeles and New York City have programs that offer up to $1,000 a month for up to three years for certain qualifying residents. While agreeing that these programs can and indeed often do offer temporary relief for many people, the long-term harm they cause isn’t worth it, according to Oren Cass, the American Compass think tank executive director.
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Oren Cass cautions that expanding such programs nationwide would undermine the adult responsibilities levied on citizens:
“A permanent and society-wide system to provide for everyone would destroy fundamental elements of the social contract and create the wrong incentives for people as they make choices about their life’s course.”
When asked why programs like the one in D.C. are helpful and why individuals like herself are struggling with finances, Ms. Miller said:
“A lot of communities in my area don’t know the financial gain of credit or saving for your kids; that’s why we’re broke. That’s why we don’t have nothing to pass down or no house to give down.”
The question is, does receiving no-string-attached money help with that financial literacy gap?
Teach a man to fish
Data suggests that Ms. Miller is correct in her analysis of what plagues communities like her own. America at large is also struggling with the same principles.
According to a study by the Financial Industry Regulatory Authority, overall financial literacy for all Americans is declining. In 2021, the average American could only answer 2.6 out of five questions related to basic financial literacy.
These questions focused on personal finance, budgeting, and investing. The trend is going in the wrong direction for the nation compared to 2008 when the average American could answer three out of five questions correctly.
Additionally, the study found that Hispanic and black Americans scored worse on average than Asian and white Americans.
Traditionally, sources of financial literacy have come from the following constructs:
- family
- high school
- College
- employers
- military
If financial literacy is declining generationally, one can assume that families aren’t as capable of passing down quality financial advice as they were for generations prior. Additionally, the percentage of high school-age Americans who have jobs that can provide hands-on experience with finances has declined from 51.7% in 2000 to 36.6% in 2021.
Is it best to provide young Americans and families with guaranteed income or pathways to employment in high school and quality financial literacy programs before they find themselves in financial distress?
Now is the time to support and share the sources you trust.
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