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Funded by TANF, this experiment will guarantee participants $500. Credit: Kylie Cooper

Philadelphia will begin distributing cash payments to selected low-income individuals as part of a guaranteed income experiment. 

As part of the initiative — in an effort to increase economic mobility — up to 60 people in need will receive $500 per month for at least a year starting as early as March 2022, WHYY reported

The participants will be chosen from a pool of 1,100 people who have received financial assistance via the Temporary Assistance for Needy Families program, which will fund the experiment. 

The guaranteed income experiment will give these individuals $500 with no expectations of repayment and no extra conditions, and has been endorsed by Philadelphia Mayor Jim Kenney, a member of Mayors for a Guaranteed Income

The monthly cash payments will be distributed through prepaid bank cards or direct deposits administered by the UpTogether platform. 

This economic mobility pilot is one of many guaranteed income programs implemented across the United States in recent years. Though critics of such initiatives argue that unrestricted cash can disincentivize workers from seeking employment, some research has found that unrestricted cash payments may be more likely to lift people out of poverty than traditional programs.

For example, a study conducted by Amy Castro Baker, assistant professor at Penn’s School of Social Policy & Practice, found that monthly cash payments can improve the recipients’ mental health and chances of full-time employment. The study showed that the majority of these payments are spent on basic needs and that the payments have no concrete effect on whether people choose to work or not. 

Castro Baker is a founding director of the Center for Guaranteed Income Research at Penn, which was launched in 2020 to study the effects of direct cash payments.

“The Center’s launch was inspired by an urgent need to match the gap between public momentum for cash transfers and some unanswered questions about how guaranteed income functions in our current economy,” Castro Baker wrote in a statement to The Daily Pennsylvanian when the Center was launched. 

While traditional welfare programs like TANF also seek to assist low-income families, they have strict eligibility requirements and conditions. Social safety net programs like food stamps require recipients to use funds for specific items, and because aid decreases as income increases, people may be disincentivized from employment opportunities that could improve their standard of living, Castro Baker told WHYY. 

Researchers will study the impact of this economic mobility pilot in Philadelphia — planning to compare the outcomes for the 60 individuals receiving $500 per month with a control group that receives the same coaching and counseling assistance, but not the cash, according to WHYY. One measure of the program's success will be the number of people who find full-time employment and cease using TANF by the end of the year.

“When you invest directly into the individual, those individuals are more likely to succeed,” Nikia Owens Philadelphia’s deputy executive director of family supports & basic needs, told WHYY.