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Economics in Brief: Chelsea Basic Income Experiment Hopes To Break the Cycle of Poverty

Also: Trump plan to cut food stamps struck down by Federal Judge and new survey shows the economic devastation wrought on immigrants by the pandemic.

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Chelsea Basic Income Experiment Hopes To Break the Cycle of Poverty

The city of Chelsea, Mass., is rolling out a new experimental pilot program that will give low-income residents “no strings attached” monthly checks, reports the Boston Globe.

Chelsea is one of the poorest cities in the state, and a coronavirus hotspot, which makes it a perfect guinea pig for the program, reports the Globe. Universal basic income experiments have been gaining momentum in the U.S., with Stockton, California as the exemplar. Andrew Yang also popularized the concept during his run as Democratic presidential candidate. The plan is an attempt to reimagine capitalism and break the cycle of poverty, while addressing the longstanding question of whether free handouts keep people in poverty or help them to escape it.

The impetus for the experiment was the devastating effects of the coronavirus on Chelsea, a majority Latino city of 40,000 where 82 percent of residents reported job and income loss, or a health emergency since the beginning of the pandemic. It’s also a practical attempt to remediate the long lines at food pantries as winter approaches, reports the Globe.

“What we would love to demonstrate in this program is if you can rely on it for a certain period of time, it could lift your head above water and help you with a plan to move forward,” Jill Shah, president of the Shah Family Foundation, which donated $1 million to the fund, told the Globe.

The experiment will begin in November, with 2,000 lottery-chosen families receiving $200 to $400 per month, for four months. The city is putting 1.5 million into the fund, and an additional $450,000 has been donated by United Way and Massachusetts General Hospital, reports the Globe.

“The strategy is independence. The strategy is dignity.” Bob Giannino, United Way chief executive told the Globe.

Researchers from Harvard Kennedy School will be working to measure the success of the experiment, using metrics to compare residents receiving the checks with those who are not, report the Globe.

Trump Plan to Cut SNAP Benefits is Blocked

A federal judge formally halted the Trump Administration’s attempts to cut off food stamp benefits for 700,000 unemployed Americans, reports the Washington Post.

In her Sunday ruling, Chief U.S. District Judge Beryl A. Howell wrote that the Department of Agriculture, which is responsible for administering the SNAP program, was “icily silent” regarding the number of people that would be affected by the plan, even though the food stamp roster had grown exponentially with over 6 million new enrollees since the beginning of the pandemic, reports the Post.

The rule was intended to be the first of three Trump proposals to reduce benefits, which, had it been implemented last year, would have ultimately resulted in a combined total of 3.7 million people cut off from SNAP in an average month, according to a study by the Urban Institute. The changes would have tightened the guidelines for when states can request waivers for a time limit if economic conditions make it harder for people to find jobs. Federal rules already require that adults lacking dependents or a disability are only eligible for SNAP for three months in a 36 month period, unless working at least 20 hours a week or enrolled in work training, according to the USDA.

New York Attorney General Letitia James called the decision “a win for common sense and basic human decency,” adding that the rule “would have not only made it harder for thousands to feed their families and risk them going hungry, but would have exacerbated the public health crisis we face and the economic recession we are still in the midst of under President Trump,” reports the Post.

New Survey Shows COVID-19 Economic Toll on Immigrant Families in the US

Many undocumented immigrants are working at the frontlines of the COVID-19 crisis, reports CNN, but are omitted from the financial safety nets that other residents have been afforded.

And, according to a new survey from Mission Asset Fund, nearly 3 out of 4 non-resident immigrant and mixed status households have lost income due to the pandemic.

Mission Asset Fund also found that 50 percent had paid bills partially or late, 32 percent had to sacrifice basic necessities such as meals and medical appointments to make ends meet, and 29 percent were forced to borrow money.

Mission Asset Fund surveyed 10,000 people who had received the organization’s direct cash assistance in response to the pandemic, primarily for the households left out of the CARES Act. Many were disqualified from receiving assistance for living with an undocumented family member, according to Mission Asset Fund’s website.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Claire Marie Porter was Next City’s INN/Columbia Journalism School intern for Fall 2020. She is a Pennsylvania-based journalist who writes about health, science, and environmental justice, and her work can be found in The Washington Post, Grid Magazine, WIRED and other publications.

Tags: covid-19universal basic incomefood stamps

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