Does Giving People Money Make For Good Policy?
Across the country, an unprecedented combination of stimulus checks and tax credits is helping families to weather the longstanding impacts of the Covid-19 crisis. Families are using these funds, which are being deposited directly into their bank accounts, to pay rent, utilities, medical bills, and to go to grocery stores instead of food pantries.
Locally, the City of Chelsea is giving its most vulnerable residents another form of “no strings attached” assistance. Through a partnership led by the Shah Family Foundation, United Way of Massachusetts Bay and Merrimack Valley, and Massachusetts General Hospital, 2,000 families are receiving $200–$400 per month in the Chelsea Eats “guaranteed income” pilot to help pay for their essential needs.
The heart of both efforts is the same – in the context of crisis, both are addressing the essential needs of vulnerable people not typically served by our social safety net and doing so in ways that keep funds spent in the local economy where they will benefit small businesses.
“Something had to change”
Even before the pandemic, more than 60% of Chelsea residents were food insecure and nearly 1 in 5 were living in poverty. At the onset of the crisis in March 2020, the City of Chelsea began distributing 800-900 pounds of food per day to 10,000 residents.
But as he looked out at the lines for food and ahead to the cold winter months, Chelsea City Manager Tom Ambrosino knew something had to change.
“This was an undignified way for people to meet their needs,” Ambrosino said. “To see lines wrapped around the building, to see frail, elderly people waiting outside just to be handed a heavy box of food to carry home, we thought, there has to be a more humane way to meet this need.”
The Shah Foundation, City of Chelsea, United Way and Massachusetts General Hospital seeded Chelsea Eats. More than 3,600 eligible Chelsea residents applied for the program, and 2,000 were selected by lottery to receive a pre-paid debit card with $200-$400 per month. The Shah Foundation also partnered with Jeff Liebman of the Harvard Kennedy School to conduct the research and evaluation of the project.
Can cash assistance reduce poverty and improve food insecurity?
The short answer is yes.
During a recent CommonWealth Town Hall co-hosted by United Way, the Cambridge Community Foundation and the Shah Family Foundation and moderated by CommonWealth Editor Bruce Mohl, Liebman shared his research and findings to date:
- In September 2020, 89% of those participating in Chelsea Eats reported they had lost their job or had their hours reduced.
- Over 50 percent of the Chelsea Eats participants reported sometimes or often not having enough food to eat, compared to 7 percent statewide.
“The job loss carried right over into food insecurity, Liebman said. “I have never seen a US population before with this level of food insecurity.”
- When the participants were surveyed again in December 2020, the number of residents who reported sometimes or often not having enough to eat dropped from over 50 percent to 26 percent.
- The transactions were also reviewed as part of the research and evaluation. Overall, more than 75 percent of the money was spent on food; more than half of that was spent locally in Chelsea-based markets, while another 17% in neighboring communities of Revere and Everett.
“The issue isn’t that people don’t know how to manage money, the issue is that they do not have money to manage,” said Michael Tubbs, founder of Mayors for Guaranteed Income.
Can $400 a month change lives?
Sarah Arnan works at GreenRoots, one of United Way’s partners in Chelsea. Arnan helped to identify eligible families to participate in Chelsea Eats, and says giving people cash can change lives.
“It is empowering,” Arnan said. “It is an investment in community members, in trust and in agency. It is saying to them that we trust you are making the right decisions for you and your family. We know that you ultimately know what is best for yourselves.”
“People don’t realize how far people in need can make $400 a month stretch,” added Bob Giannino, President and CEO at United Way of Massachusetts Bay and Merrimack Valley. “It can be a lifeline, and lifesaving, to help meet needs that are unexpected.”
Liebman will continue his research throughout the summer to determine whether residents who receive the food debit card end up better off financially than those who do not over the course of the pilot. If yes, the study will also look to quantify by how much – and in what ways – the card recipients are better off than the control group of non-recipients.
The study will also capture how residents’ lives are impacted by the additional money over time. It will focus on measuring outcomes in food access; nutrition, saving; spending behavior, impact on work (flexibility to choose a safer job, better hours, better commute), debt, family support, and increased time with children.
“It’s a simple concept.”
“The way we have been administering public assistance for 50 years since we launched the War on Poverty is not working,” said United Way’s Giannino. “We’ve lost the war, and now it is time to rethink how the safety net and benefits are deployed.”
United Way is particularly committed to this work because it builds on the deep involvement United Way has led with the City of Chelsea and community-based organizations since last April through the One Chelsea Fund. To date, the One Chelsea Fund has raised more than $1.3 million and has provided financial assistance to more than 4,100 households in Chelsea.
The City of Cambridge also recently announced it will pilot a guaranteed income program in partnership with the Cambridge Community Foundation for 120 single caregivers beginning in August.
“Our mission is to amass a body of evidence to demonstrate that guaranteed income is the best investment you can make in human potential,” said Cambridge Mayor Sumbul Siddiqui. “Poverty is a policy failure, not a personal failure.”
Covid-19 has illuminated and widened existing cracks in our human services safety net and education system like no other point in time in our history. But it is also a once-in-a-generation opportunity to reimagine how we meet the needs of our most vulnerable residents and empower our communities to emerge stronger, equitable and more prepared for the future.
“This is one of those moments, one of those opportunities,” said Giannino.
“What’s so appealing about guaranteed income is that it is not a patchwork of programs wrapped in bureaucracy, each tailored to meet a specific need with government restrictions,” said Jill Shah, President at the Shah Family Foundation.
“It’s a simple concept,” Shah added. “It is administered with virtually no red tape or administrative costs. It gets money directly to people who need it most and empowers them to spend it in ways that best meet their needs. It also may be the single most effective way to stimulate local economies at a time when that is more important than ever.”
Learn more by watching the full CommonWealth Town Hall: Does Giving People Money Make for Good Policy? Assessing the Impact of Guaranteed Income, cohosted by United Way, or read Commonwealth Magazine’s coverage of the event.