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Guaranteed-Income Programs Pick Up Steam

Dozens of cities are running pilot programs to show that direct cash assistance is an effective way to address poverty. Critics warn that offering money without work requirements or any strings attached will backfire.

St. Paul Mayor Melvin Carter gestures during his annual budget address.
Melvin Carter, the mayor of St. Paul, Minn., which is one among dozens of cities running guaranteed income pilot programs.
John Autey/TNS
In Brief:
  • Guaranteed income has been considered as a potential solution for poverty for almost 60 years.

  • Many guaranteed income pilots focus on families with young children or people who are homeless.

  • Critics are concerned that recipients will stop working and spend their money on things they don’t need, but supporters argue they’ll continue to contribute to the economy.

  • In 2020, St. Paul, Minn., decided to try a new approach to addressing poverty. It launched a guaranteed income program that provided cash — or rather, prepaid debit cards loaded with $500 per month — to 150 low-income families with newborn children.

    Governments have spent untold billions providing poor people with access to food, shelter and education, says St. Paul Mayor Melvin Carter. He believes that offering cash is a better way to change the circumstances of poor people. "All the things that we correlate with poverty in America, we can address by making sure that Americans have money in their pocket," Carter says.

    Last month, researchers at the University of Pennsylvania released a report suggesting St. Paul's experiment had worked as intended. They found that 7 percent of the households had managed to move to "better quality homes," while the number of people in those households who were employed increased from 49 percent at the start of the program to 63 percent, six months after its conclusion.

    “I think this is more than just about guaranteed income,” Mayor Carter says. “What we're talking about is the power of trust, of building policies based on trust in the people who we intend to benefit from those policies.”

    It would be a mistake to draw broad conclusions from any program that involved 150 households. But the St. Paul experiment is being replicated all around the country. There's nothing new about guaranteed-income programs — the idea has been around for more than half a century — but it's gained significant momentum in recent years.

    Stockton, Calif., drew considerable national attention with a two-year program that launched in 2019. Former Stockton Mayor Michael Tubbs founded Mayors for a Guaranteed Income, which has helped promote the idea around the country. But what really jump-started the campaign was the pandemic. Local governments had additional federal funds they could deploy, just at the time when offering assistance to struggling families had taken on additional urgency.

    A counselor with the Georgia GRO Fund explains cash assistance.
    A member of the community outreach team at the Georgia Resilience and Opportunity Fund outlines the group's "In Her Hands" cash assistance program.

    Doubts About This Approach

    Of course, federal dollars from the pandemic-era CARES Act and the American Rescue Plan Act (ARPA) are running dry. And, regardless of the availability of funding, the idea of handing residents cash as any kind of permanent solution to poverty certainly has its critics.

    “What we're realizing is that people are poor because they don't have enough money, and if we make sure that people have money in their pocket, then by definition, they cannot be poor,” says Mayor Carter, one of the mayors behind Mayors for a Guaranteed Income.

    Last month, the St. Louis school board voted to end its participation in a program that offered kindergarten students money toward college savings accounts. The program had been a signature effort of Mayor Tishaura O. Jones when she was the city treasurer. The board concluded it wasn't making a positive difference in the lives of participating kids.

    "The guaranteed-income experiment has been tried many times before. It has always led to less work among low-income Americans, weaker families and more poverty," Leslie Ford, an adjunct fellow at the American Enterprise Institute, a conservative think tank, wrote last month. The pilots are too small scale and limited in timespan to demonstrate their true potential harm, Ford argues.

    But the idea has gained considerable currency among mayors who argue that their programs are simply empowering people to make the right choices and giving them the resources to do that.

    “One other challenge has been running into the same old, tired tropes about what people use guaranteed income for,” says Mayor Sumbul Siddiqui of Cambridge, Mass., which is using $22 million of ARPA money to offer $500 per month to low-income families. “The data does show that guaranteed income is spent on the basics, and that people are still working.”

    A recent pilot program in the Los Angeles and San Francisco areas offered $750 a month for a year to 100 homeless individuals. They spent most of that money on necessities including food, housing, closing and transportation, with only 2 percent spent on alcohol, cigarettes or other drugs.

    With dozens of communities running experiments, there will be more data to demonstrate whether guaranteed income is an idea whose time has come, or whether the idea of addressing poverty by handing out cash turns out to be misguided.
    Zina Hutton is a staff writer for Governing. She has been a freelance culture writer, researcher and copywriter since 2015. In 2021, she started writing for Teen Vogue. Now, at Governing, Zina focuses on state and local finance, workforce, education and management and administration news.
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