Rethinking Welfare: The Case for No-Strings-Attached Support
Examining the Success and Challenges of Guaranteed Income Programs Across the Country
Guaranteed income programs are becoming a thing for local governments. Bloomberg CityLab reports nearly 60 municipalities across the United States have run pilot programs. Today’s TL;dr takes a look at how these programs — which provide direct financial support to struggling residents without the bureaucratic hurdles typically associated with government assistance — are being implemented. Let’s jump in.
Governments Across the U.S. Are Handing Residents Cash—No Strings Attached
A March 9 article by Andrew Restuccia in the Wall Street Journal explains the why of these programs through the experience of Bobbie Hines, an 83-year-old resident of Houston, who is battling to afford groceries and medical expenses on her meager Social Security benefits after her husband passed away last month. Harris County is using $20.5 million from federal coronavirus relief funds to pay for the program, which will last for 18 months. Up to 1,900 low-income residents will receive $500 per month. Here’s three interesting takeaways:
A Brief History of Direct Payment Programs: Over the last 50 years, U.S. policymakers’ views on direct payment programs have shifted significantly. Initially explored in the late 1960s and 1970s, such as Richard Nixon’s proposed welfare plan and experiments with negative income taxes, the concept lost favor due to criticisms of welfare dependency. Boomers will recall Ronald Reagan’s electioneering account of “welfare queens.” However, recent years have seen a resurgence in support for guaranteed income, propelled by tech entrepreneurs (such as 2020 Democratic presidential candidate Andrew Yang, who made $1,000 monthly universal basic income the centerpiece of his campaign) and the immediate financial relief efforts during the Covid-19 pandemic.
Evidence Supports the Effectiveness of Direct Payments: Studies and pilot programs suggest recipients predominantly use the financial support for essential expenses, such as groceries and housing, debunking myths of widespread misuse. “An analysis of dozens of U.S.-based guaranteed-income pilot programs by Stanford University’s Basic Income Lab found that participants spent most of the money on groceries and retail sales, which includes shopping at big box stores such as Walmart,” Restuccia writes. “About 3% of the participants’ expenditures were used for travel, leisure and entertainment.”
Political Controversy and Opposition: The Harris County program was enacted by Democrats, so of course Republicans in the state legislature are challenging it. “Texas state Sen. Paul Bettencourt, a Republican, argues that (the county) doesn’t have the authority to enact a guaranteed-income program without approval from the state,” Restuccia writes. “He also contends that the program violates the Texas constitution’s gift provisions. ‘It’s wide-open, no-strings-attached lottery socialism,’” Bettencourt said. The senator has asked the state Attorney General, also a Republican, to issue an opinion on the program’s constitutionality.
Cash Isn't Only Thing Guaranteed Income Programs Can Deliver
An April 2 article in Route Fifty by Kaitlyn Levinson looks at the results of initiatives taken in San Antonio and St. Paul, Minnesota. In San Antonio, participants received an initial payment of $1,908, followed by eight quarterly installments for a total of $5,180. In St. Paul, the program provided 150 residents with monthly $500 payments via prepaid debit cards. The city leveraged funds from the Coronavirus Aid, Relief and Economic Security Act. Key takeaways:
Positive Impact on Employment and Housing Stability: Data show an increase in employment rates and improvements in housing stability among participants. For instance, the St. Paul program observed an increase in employment from 49% to 63% following the pilot, indicating the financial leeway provided by these programs enables individuals to seek better, more stable jobs.
Addresses Individual and Family Needs Directly: Unrestricted cash payments allow families to meet specific needs in a way traditional welfare programs cannot. St. Paul Mayor Melvin Carter, whose family used to be enrolled in a federal food assistance program, said he could only purchase certain types of milk, eggs or peanut butter, for example, but his daughter had allergies to those foods. Flexibility is crucial for catering to unique circumstances, underscoring the argument that families know best what they need to improve their situation, he said.
Shift in Perspective on Financial Assistance: The success of these programs challenges the stereotype of financial assistance as merely a handout and showcases it as a viable investment in people’s futures. By providing direct support, these programs create opportunities for recipients to make significant life changes, pursue educational or employment opportunities, and engage more fully with their communities and families. “If you remove those stereotypes, it’s really about people and what happens when we invest in people,” says Jesús Gerena, CEO of UpTogether, a partner in the San Antonio program. “The truth is, what [cash assistance] does is create the space for people to start making new decisions about their lives.”
The Mayor Fighting Poverty In An Expensive NYC Suburb
A March 28 article in Bloomberg explores a guaranteed income pilot program in Mount Vernon, N.Y. It highlights the city’s unique challenges due to its location in a New York City suburb with a high cost of living but average wages. The program provided 200 Mount Vernon families $500 monthly in unrestricted cash. Three points of note:
Pushing Back Against Critics: Mayor Shawyn Patterson-Howard has a ready response for those who say the city should give folks a hand up rather than a handout. “People were saying, ‘Why would you take this money and give it to families?’ We’ve bailed out banks, we’ve bailed out the automobile industry, we’ve bailed out all kinds of industries,” she said. “This is not a bailout, it’s assistance — $500 a month for 12 months, $6,000 a year.”
Positive Impacts of the Pilot Program: Program data indicated recipients spent the funds on essentials like food, transportation, and childcare. She adds direct cash assistance offers some respect to low-income families, especially compared to safety net programs with criteria such as work requirements. “Oftentimes when we are providing assistance to people, you almost take away their dignity and make them tell their poverty story over and over again,” she said.
Future Directions and Challenges: Mount Vernon lacks the financial resources to continue the program independently — it was paid for with federal American Rescue Plan Act funds. Patterson-Howard will seek support from county, state, and federal levels as well as philanthropic organizations for future rounds. The mayor’s broader vision includes creating a “dignity economy” through initiatives like a financial empowerment center, focusing on long-term solutions to increase residents’ earning capacity and reduce reliance on government support. “You’ll never be able to create enough housing or programs just to take care of people who are poor, but you can create programs and services that will expand their capacity to and empower them to take care of themselves,” she said. “We’re really trying to create that ecosystem.”
In Other’s Words
I thought about Mayor Patterson-Howard’s quote above when I came across this quote from American writer and activist James Baldwin, who grew up in poverty in Harlem.
Not everything that is faced can be changed, but nothing can be changed until it is faced.
Author and Princeton professor Allen Guelzo, author of Our Ancient Faith: Lincoln, Democracy, and the American Experiment,1 shared the following insight on The Remnant podcast. Host Jonah Goldberg asked Guelzo how he would “counsel people” who worry about a looming crisis in our democracy. The history scholar recounted various fraught times, most notably the Civil War but also hotly contested and polarizing presidential elections, and how and why democracies survive.
We have survived them. And why? Not because Americans are inherently superior to other people, or wiser or juster, but because there is, in democracy itself, a combination of what I’ll call humility and resilience. Democracy fundamentally is a humble system of government, because democracy says we have to listen to other people, even if we’re the majority. We don’t put the minority up against a barn wall and shoot it, because the minority might turn out to have been right, and we need to listen that way. So democracy has a certain strange humility to it. Not everyone is right all the time.
Onward and Upward.
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