US cities try new way to help the poor: give them cash

Spurred by the coronavirus pandemic, dozens of US cities are deploying a new tool in their war on poverty: cash.

At least 16 cities and counties are handing out no-strings-attached payments to some low-income residents, a Reuters tally found. At least 31 other local governments plan to do so in the months ahead.

That’s a departure from most U.S. anti-poverty programs, which provide benefits for specific needs like groceries or rent and require recipients to hold a job or look for work.

Advocates say the people receiving the aid, not bureaucrats, know best how to spend their money.

“It’s a complete rejection of the notion that we need to Big Brother people to a way out of poverty,” said Michael Tubbs, who set up the nation’s first “basic income” program in 2019 while he was mayor of Stockton, California.

Jonathan Pedro, 37, said he has been able to pay down debt and buy hockey equipment for his 11-year-old son thanks to the $500 monthly checks he gets through a Cambridge, Massachusetts program aimed at single parents.

“I’ve been trying really hard to bounce back and this check makes it so much easier,” he said.

Cash payments were a pillar of the U.S. safety net for much of the 20th century but fell out of favor amid criticism that they discouraged people from working. Democratic President Bill Clinton scaled them back, made them temporary and added a work requirement in 1996. Fewer than one in four poor families now get those benefits.

In recent years, the notion of a universal basic income has gained currency in the face of worries that automation will lead to widespread layoffs, and a belief among racial-justice advocates that the current system is inadequate and demeaning. Andrew Yang made it the centerpiece of his long-shot bid for the 2020 Democratic presidential nomination.

The federal government provided a proof of concept over the past two years, sending more than $800 billion to households in three COVID-19 aid packages. Washington delivered another $93 billion to 36 million families this year through an expanded child tax credit.

Those relief packages included $500 billion to state and local governments, and at least 16 local governments are using the money to set up Stockton-style basic income programs for low-income residents, records show.

Others are drawing on funds provided by Mayors for a Guaranteed Income, an advocacy group formed by Tubbs, or private philanthropy.

“We’re 60 years into the war on poverty, and the notion of giving money to poor people still feels profoundly new. Maybe that’s the problem,” said Melvin Carter, the mayor of St. Paul, Minnesota, which launched a basic income program last year.

Unlike Yang’s proposal, which would have covered everybody, the new city-based programs are small in scale, typically serving several hundred families, and are aimed only at low-income people.

Some cities invite people to apply and then do a random drawing. Others focus on specific populations: St. Paul targets families with newborn children, while Pittsburgh says half of its 200 participants will be Black women.

Durham, North Carolina, will provide checks to people getting out of prison. A program in Jackson, Mississippi, focuses on Black mothers in public housing.

Advocates hope these efforts will ultimately convince Washington to set up a national basic income program.

They point to a sheaf of studies that show positive results. Participants in Stockton’s program were more likely to be working full-time, while participants in Jackson were more likely to pay their bills on time. One survey found that recipients spent less on alcohol and tobacco than they did before.

‘ALTERNATIVE OPTIONS’

With many U.S. businesses struggling to hire workers, some say it would be better to expand existing programs.

“If the goal is more work, then we have alternative options,” said Kevin Corinth, who served as a top White House economist in the Trump administration and is now at the University of Chicago’s Harris School of Public Policy.

A national program also would be expensive. One proposal to keep every American above the poverty line, set at $26,500 for a family of four in 2021, would cost $876 billion, more than doubling U.S. anti-poverty spending. Another would cost more than twice that amount.

Advocates say their first step is to shore up the expanded child tax credit, which is due to expire at the end of this year. Cost concerns prompted Democrats to cut a permanent expansion from President Joe Biden’s imperiled $1.75 trillion “Build Back Better” spending proposal.

In the meantime, low-income participants like Andrea Coleman, 40, are finding it a little easier to make ends meet. The mother of three, who works as a home nurse, said she plans to buy a proper pair of shoes to replace the foam sandals that serve as her only footwear in St. Paul, Minnesota, where the temperature is expected to dip to 7 degrees Fahrenheit (-13.9° Celsius) this week.

“It’s that extra money that helps get over that little hump, helps get that burden off your back,” she said. “It gives me a free heart.”