- Low-income residents of the District of Columbia who received $5,500 in direct cash payments through a program run by four community-based nonprofit organizations reported improved mental health and decreased food insecurity relative to other low-income people locally and nationally, a new report from the Urban Institute has found.
- The THRIVE East of the River program distributed the money either as a lump sum or in five monthly installments between July 2020 and January 2022 to 590 residents living in neighborhoods that have experienced disproportionately negative economic impacts during the COVID pandemic -19, says the report.
- The report’s findings highlight how assistance programs that distribute cash payments without restrictions or barriers to accessing support can help stabilize families in crisis and suggest that such relief could effectively reduce disparities and advance economic mobility, said Mary Bogle, senior research associate at the Urban Institute and the report’s lead author.
Overview of the dive:
Moving away from government assistance programs that often have strict requirements or confusing application processes, a growing number of cities and government leaders have adopted policies that provide cash support to families with no strings attached.
Last year, the child poverty rate in the United States fell nearly 30% after the US bailout expanded the federal child tax credit, distributing monthly payments to millions of families with children . Since the expiration of the expanded credit in early 2022, the child poverty rate has increased significantly.
At the local level, mayors from more than 60 U.S. cities, including Atlanta, Los Angeles, Seattle, New Orleans, Philadelphia, Pittsburgh, and Saint Paul, Minnesota, have joined a coalition advocating for direct cash payment policies that provide a guaranteed basic income.
Several cities have launched or are in the process of piloting cash payment programs. Chicago plans to distribute monthly payments of $500 to 5,000 participants facing economic hardship. Atlanta is partnering with the Urban League of Greater Atlanta to distribute monthly payments of $500 to 300 residents as part of a 12-month pilot project. And Shreveport, Louisiana, recently began accepting applications for its $660-a-month guaranteed income program, which will serve 110 low-income single-parent families.
Unlike those programs, DC’s effort was privately funded and managed by the four community organizations, which raised more than $4 million in donations, Bogle said.
More than half of recipients reported using a significant portion of their payment for housing. Like many cities, DC faces a housing crisis, with a shortage of affordable housing and an increase in homelessness. Food was the second most common expense category. About 40% of recipients said they used at least a small portion of the funds to make progress in repaying their debts.
In addition to receiving the $5,500 cash payment, program beneficiaries were offered weekly groceries, monthly household items such as food storage containers and towels, and assistance in obtaining other resources, such as pandemic stimulus payments, unemployment insurance, mental health support, and workforce training. , says the report. A large number of participants chose not to take the groceries from the program due to difficulties in picking them up. Yet the proportion of participants who said they sometimes or often did not have enough to eat fell from 34% to 19% after receiving the cash payments.
The number of participants who would have dipped into their personal savings to meet household needs fell from 60% to 50% after receiving the payments, the report said. The number of people who borrowed from friends or family also fell slightly after receiving the funds, while the number of people who relied on credit cards or loans increased slightly.
Fewer recipients also reported not having enough to eat and worrying about the emotional state of their children after receiving the payments than before. Of the small business owners who received the cash support, 71% said it helped them “invest in their businesses in ways that help them deal with threats to their livelihoods,” according to the report.
Bogle said the program resulted in better mental health outcomes for beneficiaries because it trusted their spending choices, providing dignity and respect in a way that other social safety net programs do. not. Existing programs are based on the assumption that people who receive the benefits will spend their money on temptations, Bogle said, when in reality low-income people don’t spend more of their money on temptations. than the general American population. Is. She called the requirements governments have put in place for residents to get benefits “structural racism.”
“People in poverty, people on low incomes, often experience much higher levels of stress than the average person due to things like not being able to pay rent, not being able to make ends meet,” said Bugle.
Direct cash payments are more efficient than in-kind benefits or those that limit recipients to using the cash for one thing only, such as food or housing, because it allows them to spend it on what they need per compared to a “one size fits all”. approach,” said Angela Rachidi, principal researcher at the American Institute of Enterprise.
But there are compromises, especially when it comes to government-funded programs, Rachidi said. Since you’re dealing with taxpayers’ money, you want to make sure people are using the money as intended, she said, and the benefits could deter people from looking for jobs.
“In general, I think direct money programs can really be more beneficial, but there’s always the job concern,” she said.
Bogle says, however, that the current social safety net actually hinders upward mobility in many cases. Many people receive public benefits and work in low-paying jobs, she said. They sometimes make rational decisions not to pursue higher income jobs because once they do, they will begin to lose benefits and hit a financial cliff where their income will suddenly fall below their expenses, a she declared.
Rachidi agreed that guaranteed income programs, or the removal of means-testing that are part of other existing programs, could alleviate this problem, but such proposals would also become very costly.
The idea of a guaranteed income was once championed by Martin Luther King Jr. and, in recent years, popularized by former Democratic presidential candidate and New York City mayoral candidate Andrew Yang. Others, including New York City Mayor Eric Adams, have criticized these policies.
The “THRIVE results have much to contribute to the growing body of guaranteed income research,” the report says. The program provided “measurable short-term relief” to its participants, he said. “One of the things that we’ve seen very clearly with THRIVE is that people have made these really thoughtful, dynamic choices,” Bogle said. “But that involves trusting people to make good decisions, and our safety net is designed with a lack of trust in mind.”