Low-income Philadelphians to receive no-strings-attached cash in antipoverty experiments

The City of Philadelphia will be introducing two programs that will distribute money to low-income residents with no strings attached. The goal of the programs is to understand the impact of cash infusions on household stability and economic well-being.

City officials are releasing few details about the initiatives, which, they say, are still being developed, with one scheduled to start in the spring.

Described as experimental pilot programs, one is being conducted by the Philadelphia Housing Development Corporation with the University of Pennsylvania, while the other is under the auspices of the city’s Office of Community Empowerment and Opportunity, according to various people familiar with the work.

The CEO pilot will draw participants from JEVS Human Services, a nonprofit that contracts with the office to provide the services of the WorkReady program, which helps people who receive TANF money (formerly called welfare) move toward self-sufficiency.

The PHDC pilot, which is closer to being launched, will focus on housing, people familiar with the work said. Those who will be in the pilot will be selected from “public housing lists,” said a city spokesperson without elaboration.

“Housing is a specific outcome of interest that we want to understand,” said Vincent Reina, a professor of city and regional planning at Penn. But he added, “Households will be given the ability to choose how to use the funds.”

In 2020, Reina and colleagues wrote that rent is traditionally considered unaffordable when it consumes more than 30% of a household’s monthly income. In Philadelphia, he wrote, 80,000 households spend more than 50% of income on rent. He added that “most rent-burdened households include Black Philadelphians who are three times more likely to live below the poverty line than whites.”

Reina said he’s involved in designing and evaluating the PHDC program, which will run for two to three years.

Reina declined to offer key elements of the pilot, such as the number of participants and its cost. He said that it will be paid for with a mix of public and philanthropic money and that it could start within the next two months.

Pilots like these have been conducted in more than 40 places throughout the United States over the last few years, said LaDonna Pavetti, a vice president at the Center on Budget and Policy Priorities in Washington.

At least three have been completed: in Stockton, Calif., where 125 people each received $500 a month for two years beginning in 2019; in Jackson, Miss., where 100 mothers each got $1,000 per month for a year in 2018; and in Chelsea, Mass., where each of 2,000 low-income families were given up to $400 a month for six months in 2020.

People reported buying food, furthering their education, and paying off debts with the cash, Pavetti said.

“The money gives breathing room and flexibility to allow people to do the things they need to do, reducing hardships.”

Social-work professor Stacia West, cofounder and director of the Center for Guaranteed Income Research at Penn, was the co-principal investigator of the Stockton pilot.

West emphasized that giving people $500 or $1,000 month “cannot correct every social problem in this country.” She added that guaranteed income should complement, not replace, existing safety-net programs meant to help Americans, such as SNAP benefits (formerly called food stamps).

Initially, the concept of giving people money was considered pie-in-the-sky silliness, academics said.

“But I think for the first time, it’s not seen as fantasy,” said Temple University sociologist Judith Levine, director of the school’s Public Policy Lab.

She said Americans have grown used to the idea thanks in part to the popularity of Andrew Yang, who ran for president in 2020 on a platform that endorsed giving $1,000 a month to every American over 18.

The idea of the government paying Americans is not a new one, although there’s a distinction between guaranteed income and a related concept known as Universal Basic Income (UBI). That’s defined as consistent, unconditional payments distributed by the government to ensure a basic standard of living for every member of a community.

Guaranteed income programs target only specific populations in a community, chosen by the government.

As far back as 1797, Thomas Paine wrote that citizens should be paid a “ground rent” to offset poverty.

Republican President Richard Nixon and economist Milton Friedman (who advised conservatives Ronald Reagan and Margaret Thatcher) endorsed different aspects of UBI.

So have entrepreneurs such as Tesla’s Elon Musk and Meta’s Mark Zuckerberg, as Silicon Valley technology eats up traditional jobs.

Guaranteed income is expensive. Giving more than 300 million Americans $10,000 to $12,000 a year would cost more than $3 trillion to $4 trillion annually, according to varying estimates.

Many ask whether money would come from taxes. That can seem like a nonstarter, especially to conservatives who say the government safety net is already too generous.

But, Levine pointed out that Americans said the same thing about Social Security when it was created in 1935: “Everyone in the labor market gets retirement benefits?” Levine said. “People thought it was crazy.”

Conservatives are also against guaranteed income because, they’ve said, people will stop working.

But, citing a widely respected Columbia University study, liberals counter that the pandemic showed that when the child tax credit was expanded during the pandemic, it didn’t reduce the work ethic. And in previous pilots of guaranteed income programs, researchers noted that recipients often left part-time jobs in favor of steadier, more lucrative full-time work.

Assuming people won’t work if given a guaranteed income smacks of “structural racism and paternalism,” West said, long a criticism of rules guiding welfare programs.

Mariana Chilton, director of the Center for Hunger-Free Communities at Drexel University’s Dornsife School of Public Health, invoked the Rev. Dr. Martin Luther King Jr., who championed guaranteed income to abolish poverty. She said that UBI is worth the expense because it “helps people stay healthy and in school or on the job, it reduces mental health problems, and has no impact on employment rates.”

While she supports guaranteed income, St. Joseph’s University sociologist Maria Kefalas wondered why anyone is going through the expense of proving its value.

“I just don’t know why we need the city and Penn to evaluate that poor people do better when they have money,” she said. “We just ran what amounted to a national study with the expansion of the child tax credit, during which President Biden showed that giving parents extra money reduced poverty.

“It was awesome. And when Social Security was invented, it eliminated poverty among the elderly. It’s not like we haven’t done this before. We learned that, as far as poverty goes, if we redistribute the wealth, it stops the patient from hemorrhaging.”