The New York Times is running a vivid portrait of life as a homeless kid in New York City. The subject of the profile is Dasani an 11-year-old girl; this paragraph about her parents’ finances caught my attention:
Suddenly, Supreme leaps into the air. His monthly benefits have arrived, announced by a recording on his prepaid welfare phone. He sets off to reclaim his gold teeth from the pawnshop and buy new boots for the children at Cookie’s, a favored discount store in Fulton Mall. The money will be gone by week’s end.
Supreme and Chanel have been scolded about their lack of financial discipline in countless meetings with the city agencies that monitor the family.
It’s understandably hard to plan out an entire month’s budget, especially when each need seems so pressing (as I’m sure it does given Dasani’s family’s situation). Scholars have found that monthly lump sum payments lead to detrimental side effects for the recipients. Further, in some areas of the country these monthly payments create an unfortunate economic cycle:
In Hale County, Alabama, nearly 1 in 4 working-age adults is on disability. On the day government checks come in every month, banks stay open late, Main Street fills up with cars, and anybody looking to unload an old TV or armchair has a yard sale.
In this modern era of electronic transfer, we should throw out the old model of monthly benefits. The government should give recipients the option of receiving their benefits weekly, perhaps even making this option the default distribution frequency. Individuals and businesses would both benefit. I’m sure monthly physical checks made sense in the 20th Century, but they don’t anymore.