In February 2019, backed by a $1 million grant from the Economic Security Project, the city of Stockton, California, began giving people in need what they needed most: cash. They built their program, SEED (the Stockton Economic Empowerment Demonstration) on a simple but radical premise: “Poverty results from a lack of cash, not character.”
A team led by Amy Castro Baker of the University of Pennsylvania and Stacia Martin-West of the University of Tennessee sought to find out what happens when 125 people who live in low-income census tracts are given a monthly $500 cash card. And unlike many anti-poverty programs, no restrictions were placed on how the funds could be spent. The only mandate was that the project’s research team could gather the data needed to understand the benefits or harms of just giving people cash.
The program was designed to gather data that would allow researchers to answer two basic questions: What do people do with the money? And how do their decisions influence other outcomes?
When NPQ reported on this effort in its beginning months, we were concerned that finding the right approach would be critical because of how heated debates about cash assistance and welfare have been. Earlier this month, SEED published its initial findings, which show that cash assistance was powerfully effective.
A major shibboleth of opponents to “welfare,” relief checks, and other guaranteed income programs is that they will cause people to drop out of the labor market and become dependent on “the dole.” SEED found the opposite to occur: “In February 2019, 28 percent of recipients had full-time employment. One year later, 40 percent of recipients were employed full-time.”
Guaranteed, steady income appears to give individuals the ability to shift their focus from immediate struggles of paying rent or buying food to searching for work. In the study’s words:
Living with constant financial strain creates forced vulnerability, dependence, and trust in people you may not want to engage with or in systems that invite unwanted surveillance into your household. As one mom put it, “Poverty means lack of choice. You’re forced in ways you don’t want to be.”
Five hundred dollars a month were enough to provide support to risk moving forward. Twelve months of cash assistance reduced “month-over-month income volatility” as compared to a control group of similar households. Households receiving cash cards “were better positioned over time to cover a $400 unexpected expense.”
At the start of the program, only 25 percent of recipients would pay for an unexpected expense with cash or a cash equivalent. One year in, 52 percent of those in the treatment group would pay for an unexpected expense with cash or a cash equivalent.
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The increased financial health had a ripple effect, improving overall quality of life: “One year after receiving the guaranteed income, the treatment group showed statistically significant differences in emotional health.” One participant noted, “I had panic attacks and anxiety. I was at the point where I had to take a pill for it. And I haven’t even touched them in a while. I used to carry them on me all the time.”
However, SEED’s example also illustrates ways that cash alone is insufficient. The specific program design emerged from the guidance of the community rather than alleged experts. SEED used activities like town halls, public data releases, and program transparency to ensure residents “knew that research was being conducted in tandem with, rather than on, the community.”
SEED also recognized the need to overcome the cynicism of people who have learned from hard experience that social programs are not to be trusted. To build that crucial rapport, “SEED maintained constant communication and put a premium on establishing relationships between staff and recipients.” They also “practiced ongoing consent with recipients across all aspects of the program, and recipients were, at any point, allowed to leave the program.”
SEED’s impact is being felt across the nation. Last week, a Chicago aldermanic committee heard from several members of Mayors for a Guaranteed Income (MGI), a group which formed as SEED was launched. According to Block Club Chicago’s reporting upon this session, mayors in many cities are considering or implementing new programs: “In St. Paul, checks would be directed toward people who faced specific COVID-19-related income loss. In Los Angeles, a pending program is aimed at single-parent households. In Providence, unlike other programs in the country, recipients would be income-eligible up to 200 percent of the federal poverty level.”
In Chicago, three members (alders) of the city council proposed combining public and private funds to commit $50 million toward creating a program to serve 5,000 Chicagoans. According to Michael Tubbs, who was Stockton’s mayor when SEED was created, a Chicago program would be “special.”
Folks often times look to Chicago for inspiration, and we also know conservatives look to Chicago as a punching bag; the pilot represents an opportunity to illustrate that the issue with poverty isn’t the people in poverty. The issue with poverty is the structures in place and the policies and lack of opportunities that creates poverty.
Using a $500,000 grant from MGI, the city of Gary, Indiana, announced it was launching another pilot program, the Guaranteed Income Validation Effort, which will be able to provide $550 a month to 125 individuals with incomes below $35,000 a year.
After three rounds of relief checks, twelve months of direct support for children contained in the coronavirus relief bill, and a growing number of local programs, is our nation ready to recognize that our concern that giving money makes poverty worse and fosters personal and societal irresponsibility was ill-informed and ill-advised? Have we learned, as Annie Lowrey put it in the Atlantic, that a guaranteed income will result in “more work, less destitution, more family stability, less strained social networks, less stress, fewer incidences of homelessness, fewer skipped meals”?
In coming months, we will see if the success of demonstration programs, like the one in Stockton, can overcome those who believe the only way out of poverty is by individual effort. It will test whether we have, as Nobel Prize-winning economist Paul Krugman recently observed, come to “a philosophical break with the past few decades, and in particular with the obsessive fear that poor people might take advantage of government aid by choosing not to work.” It will also test whether the interests of most Americans can finally come before those with power and money. The data suggest we know what works. Now we need to see if we have, as a nation, the will to act.