Cash is King: Why Cash is the Best Way to End Poverty
Photo by Nathan Dumlao
My mom’s the hardest working person I know. She had a stable job and benefits, but that didn’t save us from homelessness.
For years, we bounced between shelters, churches, motel rooms, and apartments. Benefits programs helped us make ends meet, as they do for tens of millions of Americans. But I can’t help imagining how different my childhood would’ve been if my mom simply had access to more cash.
Most benefits programs provide one kind of aid and require you to jump through hoops to get it. For example, the Housing Choice Voucher Program (or “Section 8”) pays landlords to house low-income tenants who can’t otherwise afford the rent. But getting that help requires extensive documentation and months or even years of waiting for approval.
Many families facing housing instability also grapple with medical costs, cell phone and internet bills, transportation, basic household needs, and so on. With over 70 percent of low-income renter households spending more than half their income on rent, any of these costs can be the straw that breaks the camel’s back.
Fortunately, other programs help cover these other needs, like food. SNAP and WIC feed tens of millions of Americans. But even if you’re approved, there are frequent renewals and updates you have to make to maintain your benefits.
Any mistake in the paperwork could result in delays or loss of benefits. Then you’re turned away at the grocery store because your EBT card is declined or you have to put items back because they aren’t covered by WIC. The shame you feel from all the eyes on you at the checkout line is enough to make you give up right then.
For families like mine, who’ve been forced to juggle multiple jobs and childcare, navigating all of this feels like a full-time job in itself. It’s exhausting and dehumanizing.
What families need when we’re in a crisis is direct cash assistance. Cash empowers us to make the choices that best fit our unique circumstances. When families in crisis are simply given cash without restrictions, it’s been proven to reduce food insecurity, improve mental health, keep families housed, and drastically reduce poverty.
For example, the Stockton Economic Empowerment Demonstration in Stockton, California gave 125 families an unconditional cash stipend. Results showed participants had better financial stability, increased full-time employment, reduced reliance on payday loans and other predatory financial services, and improved mental health.
Elsewhere, the Rx Kids program provides unrestricted monthly cash payments to every pregnant mom and baby in Flint, Michigan. The program has reduced financial strain for new mothers, contributing to healthier pregnancies and early child development.
These local examples are promising. But don’t forget we just had a large, stunningly successful national example too. In 2021, the expanded Child Tax Credit provided unrestricted monthly payments of up to $300 per child to nearly every family in the country. This tax credit alone cut the child poverty rate nearly in half, lifting 3.7 million children out of poverty before lawmakers allowed it to expire.
Guaranteed income programs are simpler than traditional welfare programs. They can be designed with broader eligibility criteria and without narrow restrictions on spending. And cash reduces administrative costs, because the payments can be provided without the need for frequent paperwork renewals.
Most importantly, cash payments can be deployed faster and more efficiently to address emergencies families face in real-time.
No family should have to struggle to meet basic needs. Families deserve programs and policies that promote fair opportunities and reduce inequity to help them thrive and break the cycle of poverty. With expanded tax credits or a cash assistance program, we put the power back in the hands of those who need it most.
It’s clear the most effective tool we have to combat poverty is cash.
Lakeisha McVey is a social justice advocate and engages volunteers with lived experience of poverty at RESULTS.
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