Can Monthly Cash Payments Make Our Economy More Equitable?

Can Guaranteed Incomes Benefit Low-Income Women and Children of Color?

Buoyed by the success of the Stockton experiment, guaranteed income projects, like the one Gardner is part of, are cropping up in major cities around the country. With the understanding that systemic economic racism results in disproportionate poverty within Black, Brown, and Indigenous communities, many projects are specifically targeting low-income people of color, and primarily women and mothers.

Megha Agarwal, the executive director of The Bridge Project and of The Monarch Foundation, which funds the program, explains that it “was formed out of our desire to support the babies and mothers in New York and beyond who are suffering devastating effects from poverty.” According to Agarwal, of the 100 mothers currently enrolled in the program, 74% identify as Hispanic or Latino, and 40% identify as Black; 20% are undocumented. “Guaranteed income has long been on the list of demands to receive racial and economic liberation,” she says.

A similar program, run by the Georgia Resilience and Opportunity Fund, also focuses on women of color—specifically Black women—in Atlanta. Hope Wollensack, the executive director of the GRO Fund and co-director of the In Her Hands Guaranteed Income Initiative based in Atlanta’s Old 4th Ward, says it is “the largest program focusing on Black women in the country.”

“Centering Black women is really important,” Wollensack explains, because “they are one of the groups experiencing the most acute and sharpest impacts of economic insecurity that exists.”

“He’s already very smart,” says Gardner of her son Garrett, beaming with pride. “I’m thinking, like, ‘Let’s buy some flash cards, let’s buy sensory toys.’” Now that she has a modest but steady flow of cash, Gardner has the freedom and means to focus on her son’s development—something that may be an unaffordable luxury for children born into low-income households.

“I do think that his brain development is higher than those who might not have access to the funds to be able to buy things for their children,” says Gardner.

Underscoring the importance of such monthly payments, neuroscientists recently concluded in a study published in the Proceedings of the National Academy of Sciences that cash aid to low-income mothers improves the cognitive functioning of their newborn babies. Agarwal, whose program gives exclusively to mothers, says The Bridge Project is premised on the fact that “the first 1,000 days of a child’s life are really a crucial period of development physically, mentally, and cognitively.”

The Dignity Afforded by Money With No Strings Attached

Aside from helping to foster the cognitive development of newborns, cash aid to mothers affords them basic necessities. When Gardner was about to have her baby, she realized that something as simple as doing laundry was going to be a problem. Although her apartment building has a common laundry room for residents, it presented a serious challenge for a mother living alone with a newborn during a pandemic. “My thoughts were like, ‘I can’t go to the laundry room with my baby,’” she explains. “I can wear a mask, but my baby doesn’t even have shots. I have no help with him. It’s just me.”

It was a conundrum that neither she nor a caseworker at a welfare office were likely to have anticipated until the need arose. But with discretionary cash on hand, Gardner had the freedom to solve her problem when it cropped up without having to prove her need to an aid officer, fill out paperwork, or track receipts. She simply purchased a compact $500 washing machine for her apartment so she and her newborn could remain safe. “Buying the washing machine had me feeling a sense of relief,” she says.

For Agarwal, it is crucial that such projects guarantee incomes “with dignity, respect, and trust. That’s something that you don’t see with a lot of our welfare system right now.”

Wollensack agrees that giving cash without any requirements is critical, saying, “We really think it’s important that folks have the choice and agency to make decisions about their lives and what they need.”

Existing government welfare programs—increasingly dubbed “entitlement programs” by conservatives seeking to cast them in a negative light—whether at a local, state, or federal level, require onerous amounts of paperwork to prove recipients are deserving of aid. Those receiving food stamps can only spend them on specific items. Additionally, many programs now have work requirements and may require drug testing. Guaranteed income projects, in contrast, impose no requirements on how the money can be spent and no judgments on what recipients choose to spend on.

“In the United States, we’ve been trained to believe that the only reason people are on welfare is because there’s something wrong with their character,” says Agarwal. “That’s just not true.”

According to Sarah Moran, the U.S. country director at GiveDirectly, which funds the In Her Hands program in Atlanta, “We don’t trust people who are living in poverty in the United States. That is the way our social safety net is built, and we’re trying to flip the script on that.”

Gardner concurs, referring to her own experience: “It’s a great feeling to feel freedom in the way that I spend it.”

Can the Government Guarantee Incomes?

“While we’re excited about the scope and scale of this project, we know it’s not enough,” says Wollensack of the Atlanta-based In Her Hands project. The guaranteed income projects in Atlanta, New York, and Stockton are all privately funded experiments aimed at generating real-world data for social scientists to analyze and at informing broader government-funded programs in the future.

In the last years of his life, Dr. Martin Luther King Jr. became a proponent of the idea that the government ought to ensure all people had access to a basic income. In his 1967 speech Where Do We Go From Here, he said, “We must develop progress, or rather, a program … that will drive the nation to a guaranteed annual income.” Dr. King added, “The dignity of the individual will flourish when the decisions concerning his life are in his own hands, when he has the assurance that his income is stable and certain.”

Now, the city of Los Angeles has launched the nation’s largest government-funded guaranteed income pilot project, giving $1,000 a month to 3,000 families for a year. The Basic Income Guaranteed: Los Angeles Economic Assistance Pilot, whose acronym is fittingly BIG:LEAP, accepted applicants in 2021 whose household income fell below the poverty line and is slated to begin payments soon. The cash will not replace existing government assistance but will instead supplement it.

Chicago is planning a similarly sized project with a larger pool of people receiving smaller monthly payments. And momentum is building for publicly funded programs in cities across the country as leaders organize under the network Mayors for a Guaranteed Income.

The closest the federal government recently came to a guaranteed income project was the monthly child tax credit program that sent payments to low-income parents as part of the American Rescue Plan Act of 2021. But amid claims that such payments could disincentivize employment, Congress chose to let that program expire in 2022.

Do Cash Transfers Work?

Wollensack dismisses the naysayers, saying, “If $850 a month is compelling enough against labor market wages that people are no longer incentivized to work, I think that’s more of an indictment on [how] current wages [compare] to the cost of living than it is about our program.”

Moran says, “Empirically, there is just no evidence that cash transfer programs discourage work.” According to her organization’s website, GiveDirectly “is currently running the largest universal basic income experiment in history,” and has “conducted more than 10 randomized control trials.”

In addition to labor concerns, critics of government aid say it causes inflation. “If large swaths of Americans have to live in poverty so that inflation stays below 2%, then something fundamentally about our economy isn’t working,” contends Wollensack.

Over the brief six-month duration of the child tax credit program, the modest monthly payments of a few hundred dollars cut child poverty by almost 30%. According to the Center on Budget and Policy Priorities, more than 90% of low-income families receiving the payments used the money “for the most basic household expenses—food, clothing, shelter, and utilities—or education.”

“Our national social safety net is predicated on the idea that poverty is a personal choice and not structural or a policy choice,” says Moran.

In reality, Agarwal says the choice to maintain poverty is an external one—made by our government. Through the child tax credit, “We were able to alleviate poverty at massive scales.” In letting the program expire, she adds, “We’ve said it’s OK to let those people fall back into poverty.”

For women like Gardner, a modest amount of available cash is making a world of difference. “I don’t know what I would be doing if I didn’t have it,” she says.

Sonali Kolhatkar is currently the racial justice editor at YES! Media and a writing fellow with Independent Media Institute. She can be reached at sonalikolhatkar.com.