Guaranteed cash payments for new moms are having a big impact: Here's what the latest data shows

"Mothers are using [money] on the necessities, like diapers, food, formula, and electricity."

Rachel Gagnon | Twenty20

Giving low-income mothers cash payments for the first year of their baby's life appears to increase the baby's brain activity, according a new study. The activity is associated with developing stronger cognitive skills.

The study analyzes data from the project Baby's First Years, a program that gives unconditional cash payments to low-income mothers in four cities: New York City, New Orleans, Omaha, Nebraska, and Minneapolis-St. Paul, Minnesota. The average annual salary of participants was just more than $20,000 the year before they gave birth and cash gifts were between $20 and $333 per month. All infants were healthy at birth, as well.

The findings of the study aren't surprising, says physician-turned-financial-advisor Carolyn McClanahan, a CFP and the founder of Life Planning Partners in Jacksonville, Florida.

"Our most important brain development occurs in the first few years of life," she says. "A developing brain needs good nutrition and good stimulation. A poor mother is struggling to provide good nutrition and, with the stress of being poor, it is really difficult to also provide the healthy stimulation a baby needs for brain development."

The first 1,000 days are the 'crux of development'

Other universal basic income or guaranteed income programs have focused on aiding new, low-income mothers.

In Jackson, Mississippi, for example, the Magnolia Mother's Trust distributes $1,000 per month for one year to low-income, Black mothers. The first year it assisted 20 mothers, the second it assisted 110, and in 2021 it assisted 100.

The Bridge Project in New York City is offering new mothers cash aid. The program is distributing money in a couple different ways. One group of 100 new moms are receiving either $500 or $1,000 per month for three years. The average annual income of mothers participating in the program is $14,500.

A second group, which is currently being recruited, will consist of 500 moms who will each receive $1,000 monthly for 18 months, then $500 monthly for 18 months.

"There is a lot of literature out there that points to the prenatal period and the first 1,000 days being the crux of development," says Megha Agarwal, executive director of the program.

What is universal basic income, according to an expert

Video by Stephen Parkhurst

The findings about increased brain activity were released not long after the expansion of the Child Tax Credit expired in December, which was expected to increase childhood poverty from 12% to 17% in January, according to research by the Center on Poverty and Social Policy at Columbia University.

"I think up to 4 million children across the nation are going to be slipping back into poverty just as a result of halting payments," Agarwal says of the CTC expiring. "We do have the ability alleviate child poverty in this nation, and we are just choosing not to."

'Mothers are using [money] on the necessities'

Participants in The Bridge Project are using the money given to them on necessary goods, housing, and school, Agarwal says. Many also try to put some funds away for a rainy day.

"Mothers are using it on the necessities like diapers, food, formula, and electricity," she says. "Then you see mothers who are saving it. One mother is putting aside half of the payment every month to afford a better apartment in the future. We have a mother who was able to leave her previous job and go back to nursing school."

Data gathered from other guaranteed income programs show similar findings.

In the Magnolia Mother's Trust, for example, mothers who were able to pay bills without additional support jumped from 37% to 80% and the percentage of mothers who were able to cook homemade meals increased, according to a study by the Economic Security Project analyzing the program's data.

In the Stockton Economic Empowerment Demonstration, which distributed $500 per month to 125 Stockton, California, residents for two years, the typical recipient spent 37% on food and over 22% on "sales and merchandise," which includes purchases at stores like Walmart. None of the money was spent on drugs and alcohol, and less than 1% was spent on recreational activities.

In Germany, the company My Basic Income gave 650 people 1,000 euros per month for a year. Most of the money, according to the company founder, was put into savings or used for education.

'A little bit of breathing room' can make a big difference to parents

Along with increased brain activity in the baby and less financial stress on the mother, psychologically this money puts mothers in a healthier headspace, Agarwal says.

"When you are given a little bit of breathing room, it has mounds of difference in how you can approach your life," she says. "Mothers were living meal-to-meal and not sure if their child would have a meal the next day. Knowing you can provide for yourself and your baby is monumental."

Knowing you can provide for yourself and your baby is monumental.
Megha Agarwal
executive director at The Bridge Project

She's hoping the program alters the way some Americans view those who are low-income.

"The way this country treats people who are in poverty is we mistrust them," she says. "We ask them to prove again and again why they are deserving of help. We make them jump through hoops to get help, and when they have a little bit of success, we pull out our support."

Guaranteed, unconditional cash payments show mothers that they are trusted to make smart decisions and gives them the opportunity to reciprocate that trust. A lot of mothers, Agarwal says, thought the program was fake when they first applied. Now they have more confidence in the The Bridge Project and themselves.

"Mothers are trusting of me, trusting the social program, trusting of the social worker," she says. "It goes to show what kind of reaction and impact you can have if you put trust in others."

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