More Cities Are Handing People Cash With No Strings Attached. Here's Why
The idea of giving Americans cash without conditions once seemed radical. But the pandemic has changed that.
The spotlight on income inequality has pushed the concept of a guaranteed income into the mainstream. In recent months, nearly two dozen American cities have signed on. Los Angeles may soon become the largest U.S. city to try it. It's considering a plan to provide $1,000 a month to at least 1,000 households.
The pandemic hit America's lowest-wage workers hard: people working in restaurants, hotels and shops. A recent study shows poverty has risen sharply.
"Unfortunately, without COVID and without the pandemic and the economic downturn, I don't know if we would be having the conversations with the intensity that we are regarding guaranteed income," said Aisha Nyandoro, executive director of Springboard to Opportunities, home to a guaranteed income project in Jackson, Miss. "But we are. So we'll take it."
Nyandoro's program started in 2018, way before the pandemic. It targeted moms like Tia Cunningham, who got a call from Springboard to Opportunities' Magnolia Mother's Trust three years ago offering her "a late Christmas present."
Cunningham says she was surprised and happy when she was selected to receive $1,000 each month for a year — cash payments with no strings attached. The mother of three says the money got her out of subsidized housing and helped her save for a down payment on a house, which she moved into in 2019. When the pandemic hit, she had some security.
"I put it to good use. I did a whole lot," Cunningham said.
The Jackson, Miss., project started with just 20 moms. Others that have followed are larger but have similarly been funded by philanthropists. The project in Los Angeles stands out because it would use public money.
But advocates have even more ambitious plans. They want this fringe concept to go universal in the form of a guaranteed payment to every American family. Andrew Yang, a Democratic candidate for New York City mayor, made it the centerpiece of his last campaign — for president.
"I want to give every American $1,000 a month," he said at a Democratic primary debate last February.
Many credit Yang with helping bring the idea into the mainstream.
"He did a really good job of getting the idea out there and getting people very interested in it," said Isabel Sawhill, a senior fellow in economic studies at The Brookings Institution.
In the mid-1990s, Sawhill served on President Bill Clinton's welfare task force. She sees this current push for guaranteed income as a reaction to policies that largely ended welfare under Clinton. Those policies cut off cash payments to people who didn't have jobs, no matter how poor they were, with the idea of incentivizing work.
As a task force member, Sawhill traveled the country to meet with recipients.
"One of the things that surprised me is that a lot of welfare moms really don't like welfare," Sawhill said. "It's not their first choice. They'd much rather be working."
For years before the welfare reform of 1996, critics stigmatized the people who received it, according to Jesse Rothstein, a professor of public policy at UC Berkeley and economics faculty director at the California Policy Lab.
"Much of the motivation for welfare reform was a sense that there were a lot of people who could work but weren't working because they preferred to stay on welfare," Rothstein said.
One of the enduring examples has been the so-called "welfare queen" trope, popularized by conservatives.
"In Chicago, they found a woman who holds the record," Ronald Reagan said in a radio address in 1976, four years before he ascended to the White House. "She used 80 names, 30 addresses, 15 telephone numbers to collect food stamps, Social Security, veterans benefits for four, nonexistent, deceased veterans' husbands, as well as welfare. Her tax-free cash income alone has been running $150,000 a year."
More than four decades later, poverty has endured. Mayors from Richmond, Va., to Oakland, Calif., see guaranteed income projects as a way to address it. A recent project in Stockton, Calif., challenged the belief that free money discouraged work. After a year, it showed full-time employment rose 12 percentage points among recipients. A lot of it went toward paying for food and bills, a study by the project's organizers found.
"I think these experiments are great because they're giving money to people who are often quite poor and need the money," said Rothstein. But he adds that pilot projects around the country have been relatively small in scope. Stockton's pilot included 125 people and ran for two years.
"I think that they're really limited in what we can learn from them," Rothstein said.
Conservative critics agree.
"The kinds of concerns that most conservatives have about the impact on work are not going to typically show up one year into the experiment," said Scott Winship, resident scholar and director of poverty studies at the American Enterprise Institute. "They're going to show up five years into the experiment, 10 years into the experiment."
Whether detractors like it or not, elements of the universal basic income concept may already be shaping federal policy. President Biden has set out an ambitious agenda of cradle-to-grave support for a wider group of people. These include more generous tax credits for parents, free community college, guaranteed child care and home health care for the elderly. In short: a big expansion of the safety net that would come with a giant price tag — and no work requirements.
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