Covid Opens the Door to Welfare Experiments

In cities across the country, low-income residents are now eligible for monthly cash payments with no strings attached — thanks to the trillions of dollars of Covid relief funds.Guaranteed basic income pilot programs are popping up in cities such as Chicago, Richmond, Phoenix, San Antonio, Baltimore, St. Paul, Los Angeles, and San Francisco. Increasingly, cities are electing to try out such programs, which distribute taxpayer dollars to participants as a basic income without requiring employment. The idea gained traction during the 2020 election when a Democratic presidential candidate, Andrew Yang, championed a “universal basic income” of $1,000 for all Americans. Dozens of small-scale experiments with the idea now exist in municipalities across the country, and leaders have been joining together in a consortium known as Mayors for a Basic Income. The number of cities and counties allocating funds to do so has soared since the start of the pandemic in 2020. Since then, Congress has allocated more than $3 trillion in Covid relief funds — more than $200 million of which is going to guaranteed income pilots.“Now that we have American Rescue Plan funding, that’s been a catapult in the programs,” the founder of the Universal Basic Income Center, Max Ghenis, says. “There’s just been a real surge in them in the past few years.”Guaranteed income programs have come under fire for their laissez-faire attitude toward recipients. Unlike welfare programs, such as food stamps or subsidized housing, government agencies have no control or oversight when it comes to the spending of funds. Advocates of guaranteed income programs like Mr. Ghenis, however, argue that they are more effective than traditional welfare programs. “There’s a lot more research that people use cash pretty wisely,” Mr. Ghenis says. “And it’s not only a burden for them to not have those kinds of options [e.g. Section 8, food stamps, etc.] to have those purchase requirements in different programs, it costs the government a lot to administer these types of assets.”In Cook County, Illinois, which includes the city of Chicago, the basic income program — funded by the American Rescue Plan Act — will launch this winter. About 3,200 low-income residents of the county will be chosen via lottery for monthly payment of $500.The president of the Cook County commission, Toni Preckwinkle, estimates that more than a third of county residents would qualify for the program. The city of Chicago itself launched a similar program using American Rescue Plan funds for a separate pilot program in 2021.In most of these cities, the pilot programs are funded in part by Covid relief dollars and part by philanthropic dollars — and administered by nonprofits rather than the state. Chicago’s program was administered by GiveDirectly, a nonprofit that allows donors to send money directly to impoverished persons.The recent programs are still collecting data, so it’s difficult to evaluate outcomes, Mr. Ghenis says. He points to a 2019 pilot at Stockton, California which saw improvements in nutrition, mental well-being, and educational outcomes.Opponents, however, say the costly programs risk undermining the 1996 Welfare Reform Act, which lowered the child poverty rate and sought to promote work and marriage among low-income Americans.“We had very good outcomes for marriage and for children when work requirements were added to welfare programs in the 1990s,” a scholar at the Heritage Fund, Jamie Hall, told the Sun. He is skeptical about the effectiveness of guaranteed income programs, especially in the current economic climate.“It’s astonishing how our taxpayer dollars are being spent, especially during a time when inflation is as high as it’s been in at least 40 years — and we want to add to that more money.”

Covid Opens the Door to Welfare Experiments

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