Stimulus Update: Cities Step in With Fresh Stimulus Payments

Cities appear better able to target residents most in need of assistance.

According to the U.S. Census Bureau, nearly 12% of Americans live in poverty. In most corners of society, these 38 million people are practically invisible. For them, stimulus checks from the federal government meant the difference between missing meals and putting food on the table. It allowed them to buy new shoes for their children, visit a doctor, or pick up much-needed prescriptions.

Most Americans received three stimulus checks between April 2020 and March 2021. While some may not have needed the extra funds to get by, we know that at least 38 million did. When direct stimulus payments dried up and the expanded Child Tax Credit expired, these people felt it most keenly. Unlike some, they used the money to pay for everyday necessities rather than tucking it away in a savings account.

Considering that more than 1 in 10 Americans barely scrape by, it makes sense that more cities have stepped into the gap to provide assistance in the way of guaranteed income.

What is guaranteed income?

Shriver Center on Poverty Law describes guaranteed income as a program that quickly provides assistance to families in need with little bureaucracy to slow the system down. Guaranteed income fills the gaps left by existing social safety net programs. Payments are made monthly, with no strings attached. Families are trusted to determine their own needs and where the money should go.

Typically, participants in the program are sent a specific amount of money for a set period of time. For example, in Alexandria, Virginia, 170 households are set to receive $500 a month for the next two years.

A growing number of cities across the country have implemented pilot guaranteed income programs. The hope is to help those who critically need assistance.

It's tough out there

If the notion of giving people money hits you the wrong way, consider this: 20 state legislatures refuse to raise the minimum wage above $7.25 an hour. Let's say a parent with a young child lives in Tennessee and works 40 hours per week. They earn minimum wage and have a gross weekly income of $290. After taxes, they bring home around $250 per week.

The average cost of daycare in Tennessee is $8,732 annually or $167 per week. Unless a parent earning minimum wage can find less expensive childcare -- which may or may not be safe -- that full-time worker is left with $83 per week to cover other expenses.

These are the types of households guaranteed income programs are designed to assist.

The beginning of a trend?

More than 48 cities have implemented guaranteed income programs since 2020, reports the New York Times. Here's a sampling of cities testing guaranteed income programs:

• Los Angeles, California
• Oakland, California
• Atlanta, Georgia
• Chicago, Illinois
• Louisville, Kentucky
• New Orleans, Louisiana
• Chelsea, Massachusetts
• Minneapolis, Minnesota
• Jackson, Mississippi
• New York, New York
• Durham, North Carolina
• Philadelphia, Pennsylvania
• Columbia, South Carolina

What's the point?

The Jain Family Institute, a nonprofit research organization, says that cash transfers increase human capital investment, food security, and durable good consumption.

Guaranteed income is a tightly targeted version of the stimulus programs we've come to know. As more cities sign on we'll have a better idea of how much such programs help both families and communities.