With the holiday season now upon us, we should take a moment to reflect on how hard the holidays are for those with low incomes. During the holidays, most people expect that there will be feasting and gifts. This expectation forces those with low incomes to make a choice between spending nothing and excluding themselves from the social mainstream or spending beyond their means and dealing with the financial troubles that result from that.
Many people are aware of this tragic situation, which is why there are a variety of charitable efforts to save some families from holiday hunger and to save some children from a holiday without presents. But, as with most charitable efforts to plug gaping economic holes, these are inadequate to the task at hand.
There is an easy policy solution to this problem: have the federal government pay out a universal holiday bonus. Just as the government sent out checks equal to $1,200 per adult and $500 per child earlier this year, it could also send out checks equal to, say, $200 per person every November.
This modest sum of money would ensure that everyone could participate in holiday traditions without breaking the bank.
There are actually countries that do something like this, a policy that generically goes by the name “thirteenth salary.” In those countries, companies are legally mandated to provide a bonus payment (generally equal to one month’s salary) in November or December. In other countries, the thirteenth salary is not legally required but is customarily done.
The problem with these employer-based approaches is that they exclude people who are not currently employed, including seniors and disabled people. The employer payments also do not vary based on the number of dependents a worker has, even though that’s a key variable for determining how much money is necessary to fully participate in holiday traditions.
A universal holiday bonus administered by the government would solve these problems while also steering us slightly away from our current model of overwhelmingly relying on labor income to meet our income distribution goals.