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Direct cash programs are growing across America, offering a path out of poverty through economic mobility. During a two-week period in 2022, nearly a quarter of a million people in the Chicago area applied for the Cook County Promise Guaranteed Income Pilot, the nation's largest direct cash pilot, and ultimately 3,250 families were randomly selected to get $500 a month for two years.
I created the program in partnership with my colleagues at the Cook County Government Bureau of Economic Development. We don't have final data on the Promise Pilot yet, but similar direct cash initiatives have changed the physical, emotional, and economic lives of families that participate. Children are better cared for, and they excel in school. Adults experience improved health and stronger familial relationships. And crucially, when recipients have economic stability, they can plan and invest in their futures—many, for the first time in their lives.
The Stockton SEED project, which gave $500 a month for two years to 130 people, saw results that mirrored prior direct cash research. The program significantly improved financial and mental health outcomes and did not reduce employment. Families were much more likely to be able to withstand a $400 emergency expense, and saw improved mental and physical health when compared to the control group. Perhaps more interestingly, the study also found that the expansion of finances and the predictable, stable source of income brought by the program created "self-determination and capacity for risk-taking not present prior," meaning that when participants could predictably afford child care, transportation, and training programs they had the financial freedom to invest in their own futures.
I've gained an even deeper appreciation of how direct cash transforms lives by speaking to participants, an understanding that clearly backs up what research has found about how direct cash changes mindsets and why it helps people move toward their goals in a way that many current programs do not. First, people often tell me about the shame they feel; that despite their best efforts they cannot make ends meet. Most participants in these programs are working, and they are acutely aware of their failure to live up to this country's bootstraps narrative, even while holding two or three jobs. They spend less time thinking about the structural barriers around them—for instance, in most places a living wage for a single parent with a child is at least $20 per hour, while the federal minimum wage remains set at $7.25.
Many participants feel that public programs buy into this bootstraps narrative, assuming that the reason people face economic challenges in America is that they lack a solid work ethic and structuring aid with a condescending eye toward the people they're trying to serve. Those in need must navigate a difficult bureaucracy and must continually prove they are failing financially. Once on benefits, they must frequently reapply and explain why things aren't getting better for them. Even worse, if a recipient starts doing better financially, they are quickly removed from programs and can actually end up in a worse and more unstable financial situation, losing much more in benefits than they're making up in new wages.
By removing the red tape of bureaucracy and the uncertainty of restrictive traditional programs, direct cash also removes the shame and hopelessness people feel when coping with economic instability. With direct cash programs, they gain autonomy and financial freedom that not only allows them to meet their immediate needs, but also allows them to move toward a better future.
People have big ambitions, no matter the size of their bank account, and direct cash can unleash their potential. Many of the participants I've met want to become entrepreneurs.
One participant named Dolores was a successful small business owner but a few decades ago she left the workforce to raise her children. Now she is waiting tables at a diner, but she dreams of running a catering business. When we met, she felt it necessary to bring her ledger with her, full of receipts, to prove she was spending the money well. I told her it was unnecessary, but still she came, wanting to show how she has been using the money to re-establish herself.
Direct cash programs are different from our current approach to economic stability and mobility in America. Traditional benefits stop people from complete destitution, but as they are structured today, they can also keep people down. While they prevent the worst outcomes, they also set low limits on income and their hard cutoffs prevent people from moving up in the world. Direct cash programs recognize that most people want to be useful in their lives, and that they have ambitions for their future; these programs prioritize financial stability and predictability in order to foster economic mobility, and not just to prevent people from spiraling downward.
We should understand that for most Americans facing economic struggles, their chief problem is a lack of cash, and not a lack of character. When we stop looking down on others, good things follow. People gain stability, a sense of possibility, and the confidence to act.
Pete Subkoviak is a policy fellow at the Aspen Institute Financial Security Program and was formerly the director of Guaranteed Income and Economic Mobility at Cook County government.
The views expressed in this article are the writer's own.
