Cash Transfer Programs Gain Momentum - Metropolitan Planning Council

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Cash Transfer Programs Gain Momentum

Speakers Ebony Scott (left), Lauren Burns-Coady (middle), and Ameya Pawar (right) discuss cash transfer programs to a sold-out crowd at MPC's Think and Drink on June 19, 2019.

The idea of the government giving people cash to combat poverty is not a new one. Dr. Martin Luther King Jr. advocated for a guaranteed income program during the Civil Rights Era. Economist Milton Friedman introduced the idea of a negative income tax in his 1962 book “Capitalism and Freedom.” The state of Alaska currently gives each of its adult residents an annual dividend payment, no-strings attached. Despite these trends, the United States does not fund a cash transfer program at the federal level. The City of Chicago doesn’t fund it at the local level either. As this political idea gains momentum, many questions are being raised: Have cash transfer payments been successful in the past? How would the economy react? Can Chicago afford such a program?

On June 19, 2019, as part of MPC’s Equity in Action series, Ebony Scott of the Family Independence Initiative (FII), Lauren Burns-Coady of the Jain Family Institute (JFI), and Former Chicago Alderman Ameya Pawar discussed, debated, and answered the many questions surrounding direct cash transfer programs—in front of a sold-out crowd.

Lauren Burns-Coady started the discussion by first addressing a “myth” that low income families usually waste their money in cash transfer programs. She argued that these families typically spend the money on meaningful, important items like food, housing, and education. In her view, the idea that these individuals spend the money on unnecessary, “temptation” goods is a biased myth. “There’s a bias that people without money don’t know what to do with money. But people with money don’t know what to do without money,” said Burns-Coady. Ebony Scott, Chicago Site Director of FII, supported this point, stating that records show that families have addressed crucial, urgent needs with the money they received in her program.

The accelerating rise of technology represents a large cause for the attention on cash transfer programs. Ameya Pawar emphasized the alarming number of jobs becoming automated by technology. As the number of families living below the poverty line continues to increase, Pawar fears that people are running out of options. “We often talk about how 68% of Americans don’t have $1,000 in the bank to cover an emergency. And we’re also hearing how the economy is going gangbusters. How can we help people quit living paycheck to paycheck?” All three speakers agreed that the proposed cash transfer programs offer a realistic solution to job automation and a tangible path out of poverty.

When the discussion shifted to a Q&A session, one guest voiced concern over the economic effect that a cash program would have on the productivity of an area. Would people stop working if they began receiving money from a cash program? Ebony Scott countered with an anecdote about a family in her program. She explained how a man purchased a used truck and snowplow with the money he received from the FII program. During the past winter, he worked long hours to clear off snow from many driveways and neighborhoods, making nearly $6000 from those jobs. Scott believed that this example demonstrates the power in investing directly into people. Pawar strongly agreed with this point, emphasizing that “cash will create new entrepreneurs.”

The night ended with a loud applause to the speakers for a fruitful and meaningful discussion. While many questions remain about this complex proposal, this Think & Drink event represented a step forward in the implementation process. Building a better, bolder, and more joyful future for everyone relies upon discussions like this, and MPC plans to keep searching for further equitable solutions as we continue the Equity in Action series this summer.

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