Can You Fight Poverty By Paying Kids to Go to School?
a year-long reported series from Politico Magazine, featuring innovative ideas--and how they spread--from cities across the United States at a time of unprecedented urban reinvention.
The series is presented by J. P. Morgan Chase & Company.
The writer makes an important point--to counter the "end welfare" obsession promoted by Bill Clinton. Poverty isn't the same thing as unwillingness to work. Memphis has a huge poverty rate. It does not have a huge unemployment rate. People living in poverty there are working fulltime.
I think the Bloomberg "patch the broken window" scheme which offers payment for student school attendance, grades, and so on has things backwards. It posits school behavior as the cause of poverty. I think the reverse is true: poverty causes school problems.
Our taxpayer dollars provide aid to farmers, to banks, to auto makers. We buy Mine-Resistant Ambush Protected vehicles for the military, and give the surplus to city police. I figure surplus Aegis Missile Cruisers will be next. (See As wars wind down, small-town police inherit armored vehicles So it baffles me that as a nation we can't decide to help people who are poor. No strings attached: just help them.
The non-partisan Congressional Research Service reports the Afghanistan and Iraq wars has cost us taxpayers more than a trillion dollars -- not counting the future health care bill for veterans or the enormous interest payments that'll be made on that debt, which will multiply the trillion-dollar outlay three-or-fourfold. The meter is still running, and that, of course, is only money. It does not take into account the human misery.
More and more, we seem to have a government that creates misery but refuses to alleviate it.
See Schools Matter post: Bloomberg's Impoverished Poverty Eradication Plan.
by Glenn Thrush, in Politico
MEMPHIS -- On one side of South Lauderdale Ave. sits the Foote Homes, among the last of the old federal housing projects that once proliferated in South Memphis, a low-slung, dun-bricked complex marked by stuffed animal memorials to dead teenagers, a place where two grown women recently pummeled each other silly while neighbors stood by laughing, smartphone cameras rolling for YouTube posterity.
On the other side of Lauderdale, not 150 feet away, sits the shiny, borderline-surreal Cleaborn Pointe at Heritage Landing, a manicured subdivision of semi-attached townhouses with 10-foot ceilings and white-railed front porches that seem to have been airlifted by aliens from a planet called Suburbia.
But behind those reassuring facades persist many of the same underlying problems found at the housing project across the street: single-mother households, substandard schools, lousy off-the-books jobs, a near-universal dependence on government support. Cleaborn looks a world apart, but in fact many of its residents are drawn from other projects around Memphis that have been demolished over the years under a massive federally subsidized effort to replace the city's crumbling housing stock that poured as much as a quarter-billion dollars into Memphis over the past decade--without conquering the city's endemic poverty.
"I had my first baby when I was 14 years old. You know, that's kind of the whole story right there," says Tamica Gordon-Cole, 35, sitting in her gleaming new kitchen table at Cleaborn, speaking above the clamor of the small army of kids who live with her in the four-bedroom rental.
About one of every three families in this river city of 655,000, one of the perennially poorest in the country, lives beneath the poverty line, and thousands more teeter just above it. Figuring out how to pull people like Gordon-Cole out of the permanent underclass has been one of the most vexing challenges the country has faced in the past half century, and it remains unfinished despite the billions spent on the effort. Gordon-Cole's house is located exactly one mile south of the Lorraine Hotel, where Martin Luther King Jr. was assassinated as he embarked on a never-finished Poor People's Campaign that was supposed to transform the civil rights movement into a quest for economic equality. Forty-six years later, the marchers are gone, the movement is mostly dormant and the national poverty rate is basically the same as it was when King made his final speech here.
But these are different times, and a new kind of anti-poverty push, less a movement than a technocrat's dream, is quietly being tested here, a modest experiment that could help redefine a static national conversation about how to deal with intractable poverty of the sort that not only has overwhelmed the old projects like Foote Holmes, but also afflicts even the shiny new places like Cleaborn Pointe. Three years ago, Gordon-Cole was one of 600 people (most of them single mothers) selected for the Memphis Family Rewards Program, a widely watched trial that provides cash incentives to poor parents and their high school-age children for completing tasks that seem, at first glance, absurdly second nature for middle-class families. A student who compiles an acceptable school attendance record gets $40 a month, showing up for an annual dental or medical check-up means a $100 check, grades are monetized ($30 for an A, $20 for B, $10 for a C) and taking a college entrance exam like the ACT gets you a $50 check. Parents are also rewarded: Adults get a $150 monthly bonus, up to $1,800 a year, simply for working full-time.
The rewards system, modeled on similar programs in Mexico, Brazil and Indonesia principally aimed at the rural poor, is one of the few genuinely novel anti-poverty experiments to sprout up in the innovation desert that is post-1996 welfare reform in America. Enthusiasm for the programs, known as "conditional cash transfers" (CCTs), remains high internationally, and has been enthusiastically embraced by the Davos set. In a 2009 report, the World Bank hailed the success of CCTs in Mexico as "powerful proof that well-designed public programs can have significant effects on critical social indicators."
But paying poor people to perform quotidian tasks is a much harder sell in the up-from-the-bootstraps culture of the United States, and the cash transfers have been ridiculed or, at the very least, greeted with skepticism everywhere they've been tried in America. Even supporters admit they're a bit dubious, as when the caseworkers administering the program in Memphis pointedly asked me why they couldn't get a little extra cash for being responsible grown-ups. "No joke. I could use an extra $150 a month for showing up at work," one of them told me. "Do you really think our clients are that much worse off than we are?"
Even in liberal New York, billionaire Mayor Michael Bloomberg--a onetime engineering student who tends to view even the most complex social policy problems as design challenges--was forced to pay millions of dollars of his own money to fund an experiment in cash transfers in 2007 because he knew the city council would balk at using tax dollars. In Memphis, Mayor A.C. Wharton, a Bloomberg ally, has engaged in what amounts to a four-year running battle with his city council to pony up relatively modest sums (less than $1 million a year) to offset the roughly $6 million being invested by Bloomberg's philanthropy and federal grants.
It's not yet clear how effective the Memphis program and its sister project in the South Bronx will prove, but proponents say that, barring a massive new federal jobs program for the poor modeled on the New Deal, it's such smaller, targeted efforts that offer the best hope for those most in need of a push from poverty to the middle class, even if the political optics of paying a kid to get a C are awful.
"It's really the boldest alternative out there, especially at a moment when there isn't a taste for transferring more money to poor people," says James Riccio, who is in charge of assessing the Memphis and New York rewards program for the Manhattan-based social policy research group MDRC.
"Why should you pay people to do something that is decent and right?" asks Mayor Wharton, a former public defender who says he is willing to try "anything, anything at all" to reduce poverty in a city that struggles even to fund its bus lines, an economic necessity for hundreds of thousands of people too poor to drive to work. "My somewhat rural response is that in the South, we pay rich farmers to do nothing--we pay you not to farm your land to keep your prices up," he adds. "That's a part of the American fabric. It's accepted fact in the most conservative quarters that it's OK to pay somebody to sit on their porch and sip mint juleps and get a government check. It ought to be OK to reward some poor person for actually doing something."
The 20 or so participants and caseworkers I interviewed across the city liked the program--not necessarily because it altered their behavior ("Motivate me? I was already motivated... I did most of this stuff anyway," says program participant Sheena Lyons, a school cafeteria employee. "My problem is money, not work. I always work.") but because it rewards their day-to-day struggle and gives them another weapon in their ongoing battle to keep their kids off the streets.
For Gordon-Cole, she'll take any help she can get when it comes to parenting while poor. After having her first child in the 8th grade, Gordon-Cole gave birth to an additional child each year over the next three years--and dropped out of school before the 10th grade. These days she is surrounded by nine children--five of them are her own kids, and four are step-children. All told, 12 people subsist on her husband's modest paychecks from construction and restaurant jobs, her disability payments and a patchwork of federal subsidies. The $6,000 or so she has received from the rewards program hasn't been a game-changer--but it has instilled a small sense of middle-class normalcy that matches her faux-granite countertops. When a kid gets an A or a B, they go to Red Lobster or TGI Fridays, their pick.
"I struggled. I'm still struggling," she told me. "But I'm not going to let the same thing happen with my kids. I'm hard on them. I try to teach then the right way because of my mistakes. I refuse to just let them ruin their lives."
Memphis clings to the extreme western edge of Tennessee, but it's really the capital of the Delta--the Mississippi state line is five miles to the south, and the city perches atop plantation-and-sharecropper country like the star on a Christmas tree. The vast majority of the city's black population (61 percent of the city is African-American) traces its roots there, to the Delta's economically poor and culturally rich settlements, names made famous through the blues like Clarksdale and Rosedale, Indianola, Greenwood.
Like any crossroads town, Memphis has been shaped by outside forces: war, disease, the vicissitudes of river commerce--and, in recent years, the ebb and flow of Washington's political and policy battles over what to do about urban poverty of the sort that is Memphis's unwanted legacy.
When Bill Clinton became president in 1993, the caseload for Aid to Families with Dependent Children--at that time, the country's dominant and dysfunctional welfare program--was hitting an historic high of about 5 million people. But public sentiment against public handouts had reached a curdling point, and even liberal state governments were agitating for entitlement cuts and stricter time limits on their programs. Congress, under Democratic control but being pushed to the right, had gradually squeezed benefits, reducing the average monthly family stipend from its early 1970s high of about $250 a month (in 2012 dollars) to about $180.
Into this anti-welfare environment stepped a protean governor from Arkansas, intent on redefining what it meant to be a Democrat. Clinton staked his political future on defusing an issue that Republicans had used to great effect as proof of their argument that Democrats were too weak--or corrupt--to confront their inner-city base. (Ronald Reagan was particularly adept at invoking the largely mythological image of the "Welfare Queen." He never used that racially loaded term himself. But as early as 1976, he made welfare a central attack issue in his campaigns, and he did not hesitate to cite cherry-picked anecdotes of abuse, like the one AFDC mother in Chicago who allegedly used dozens of aliases to collect $150,000 tax free per year in food stamps, Medicaid and welfare.)
By the time he has secured the Democratic nomination in 1992, Clinton knew he had to preempt a new generation of Republican governors who were scoring big political points by campaigning against welfare, like Wisconsin's Tommy Thompson, and demanding waivers from the federal government to enact tough new programs that compelled welfare recipients to work for their checks. In a nod to their increasing clout, President Clinton approved many of the GOP state-level requests. But it was a little-known centrist speechwriter on his staff--Bruce Reed--who lit the rhetorical brushfire by coining one of the most influential slogans in modern politics, Clinton's pledge to "end welfare as we have come to know it."
After a protracted legislative fight in 1995 and 1996, Clinton agreed to a new system that scrapped AFDC's open-ended checks for the poor, replacing them with a program called Temporary Assistance for Needy Families, whose two main features were a lifetime five-year limit on welfare benefits (food stamps, housing assistance and Medicaid still have no time limits) and a mandate that states prove recipients are working, looking for a job or undergoing training for one. Most liberals viewed the whole thing as a sell-out--a few even resigned from Clinton's administration, and Hillary Clinton reportedly gave her husband grief for not holding out for a nationwide child-care subsidy to help single mothers seek work.
But Clinton won on the politics. And he had a back-door plan for replacing some of the lost benefits, doubling eligibility for the more politically palatable Earned Income Tax Credit, a program for the working poor first proposed by Republicans in the mid-1970s. The EITC is now, arguably, the most important anti-poverty program in the country, pumping as much as $6,000 into the pockets of working families with three or more children. It also constitutes the single biggest job incentive initiative currently in effect, a $63 billion entitlement in the form of a tax break, prodding parents to seek low-wage jobs that would not be worth the hassle otherwise. "Tax day is Christmas," says Sheena Lyons, who defers most of her kids' holiday presents to the spring, when the EITC check arrives.
The impact of Clinton's reform law was immediate and, for a time, overwhelmingly positive. Welfare rolls over the next five years dropped by more than half, to just under 2 million, aided by the economic boom of the late 1990s. It's an accomplishment Clinton often uses to define a checkered presidency, as he demonstrated in a 2006 New York Times op-ed with the quintessentially Clintonian headline "How We Ended Welfare, Together." In it, he celebrated gains in the poverty fight he assumed would endure in perpetuity: A poverty rate that plummeted to 11.3 percent in 2000, from 15 percent in 1993. "[W]e passed a bill that worked and stood the test of time," he concluded.
But while Clinton may have ended welfare as we knew it, poverty as we know it is alive and well. In 2008, two years after Clinton published his op-ed, the Great Recession hit and the national rate quickly climbed back above 15 percent, with a record 50 million Americans falling below the line during the economic crisis of 2008 and 2009. It has remained at roughly that level during a nearly five-year recovery--a depressing fact often lost in the larger debate over middle-class job creation.
"There is not an overarching vision, or even a widespread recognition, that we have a problem with poverty," says LaDonna Pavetti, a researcher with the liberal Center for Policy and Budget Priorities who has studied poverty and welfare trends for a quarter century.
Lately, the issue seems to be returning to the national political radar. The movement to address income inequality, a political wave that swept to power liberal populist Democrats like New York City Mayor Bill de Blasio and Massachusetts Sen. Elizabeth Warren, has powered new campaigns for higher taxes on the wealthy, new entitlements like universal pre-K for poor kids and, most strikingly, a nationwide movement to increase the minimum wage in cities like Seattle.
The issue has even broken through the thick partisan firewall that typically defines the debate. Former GOP vice presidential candidate Paul Ryan, for one, has made it a personal mission to put poverty back on his party's agenda by offering a plan that would encourage innovation at the state level and expand the EITC to single adults, an idea borrowed from think tanks and subject of a new Bloomberg-funded trial in New York. "We can restore America as the party of equal opportunity to show how these ideas can prevail," the Wisconsin congressman told an audience of Republicans in Iowa last fall.
But ideas--or the lack of good ones, actually--are at the heart of the problem. There simply aren't programs that offer the kind of instant effectiveness that policymakers in the United States demand, and fewer still with widespread political appeal.
That explains why many of the most interesting recent war-on-poverty ideas are, for the most part, foreign imports. The cash-for-good-behavior concept was basically smuggled into the country on Mike Bloomberg's private jet.
In mid-2007, at the advice of his top aides, Bloomberg flew down to Mexico to interview officials who were using cash transfers to coax impoverished mothers into vaccinating their young children in the much-emulated Oportunidades program. Bloomberg, who had antagonized liberals by refusing to hike taxes on Wall St. to deal with city cash shortfalls, was in the market for a big, bold, progressive idea: he'd already exhibited a propensity for transplanting policies (most notably bike lanes) from other countries, so the notion of tackling urban America's most difficult problem held deep appeal.
Bloomberg's deputy mayor Linda Gibbs, an expert on homelessness who had the billionaire's ear, came back from the Mexico trip energized but sober. In Mexico, the program worked best when it was rewarding simple behaviors like showing up for a doctor's appointment; getting New Yorkers, jaded by years in the welfare system, to change their behavior for a few extra bucks would prove a far tougher task. "I think there was a lot of intellectual curiosity about it, and we really wanted to do something that would have an impact on poverty, not something that was around the edges," Gibbs told me.
The mayor, she said, was eager to get it going, despite the doubts, and authorized her to move forward a few weeks after they got back to New York. "Why not? Let's try it out," he told her. "The worst thing that can happen is it won't work and we'll have to try something else."
At the center of the effort was the principle of "conditional cash transfers"--CCTs in development-speak--entitlement payments that were pegged to measurable changes in a recipient's behavior patterns. The concept itself wasn't new; EITC and workfare are founded on a cash-for-compliance regimen. But CCTs represent a much fuller flowering of the concept--governments could use them to incentivize all kinds of desired behaviors and outcomes, and make adjustments based on which strategies are the most effective.
Brazil's Bolsa Escola incentivizes vaccinations and school attendance, Indonesia's is the first stage of an as-yet undeveloped national anti-poverty initiative, Peru's Juntos initiative targets mothers in extreme poverty. Oportunidades was the most ambitious of them all, replacing an inefficient central welfare system in Mexico, earning solid reviews from the World Bank and other development groups, and turning its creators, Santiago Levy and Julio Frenk, into international celebrities.
The goal, ultimately, was to instill middle-class patterns that would pull people out of poverty--while changing perceptions about payouts to the poor. "Guess what? Just giving cash to poor people has all kinds of positive benefits--such as them buying food!" says Charles Kenny, a senior fellow at the Washington-based Center for Global Development who has studied the impact of anti-poverty programs. "The rewards are a good idea. There's nothing wrong with it. ... But to some extent, the real reason [for it] is to sell the idea of a safety net to rich people."
In New York, Bloomberg green-lit a big three-year trial--ffering as many as 2,400 poor families in the five boroughs educational, vocational and health care incentives that, when added together, offered the possibility of adding thousands of dollars to their annual income. To avoid a nasty political battle, Bloomberg solicited contributions exclusively from private and non-profit donors and friendly foundations, like Rockefeller and Robin Hood, eventually bankrolling as much as $20 million of the $50 million program himself, through the Bloomberg Family Foundation.
"We quickly realized this was something we couldn't spend taxpayer money on. It was too experimental, and we would get our asses handed to us," said a former Bloomberg aide.
If the program succeeded, a chipper Bloomberg told reporters during the June 2007 announcement, he would eventually seek city funding.
It never got that far. The program was no bust, but it suffered from several design flaws that became increasingly obvious as time went on. The first, and worst, were the incentives themselves. "There were just too many of them," Gibbs concedes--22 in all.
A bigger problem was that the rewards were poorly targeted--in part because the designers wanted to experiment with a wide range of rewards. Bloomberg and Co. wanted to prove that the payments could actually alter long-term behavior, so they created a set of incentives pegged to big achievements, far-off benchmarks that elicit dramatic, demonstrable results. The academic rewards--the centerpiece of the whole plan--were especially flawed because they offered large, intermittent payouts for big achievements instead of more frequent rewards for smaller achievements that would give families a greater sense of forward progress.
Students could earn $300 to $350--big money for a family earning $25,000 a year--for passing their standardized assessment tests in the fourth and eighth grades, or a whopping $600 for annual subject-based high school tests known as Regents Exams. But as incentives go, they were too big, too delayed. In real life, parents paid far more attention to less lofty and distant benchmarks--like quarterly report cards--and weren't especially motivated to force their kids to cram for tests which required a lot of effort with no guarantee of return. Other mistakes seem obvious in retrospect; offering a kid $50 for obtaining a library card doesn't mean they'll use it take out a book--especially if they are already reading below grade level.
By 2010, MDRC, which exhaustively studied the program, reported results that were far too modest to justify asking the New York City Council to pay for an expensive program with heavy administrative overhead. Work participation rates for adults were generally no higher than for a control group of New Yorkers outside the program, the participants were no more likely to seek health care than other poor people, and, most disappointing of all, education incentives "had few effects" on the academic performance of school-age children who received the cash, according to MDRC's 2013 report
Opponents pounced. Heather MacDonald, a fellow at the conservative Manhattan Institute, declared "bribery strikes out" and ridiculed Bloomberg for thinking a system designed to pull corn farmers in Chiapas out of poverty would work in the Brooklyn projects. "[M]ultigenerational urban poverty in America is far different from Third World rural poverty," MacDonald wrote. "[T]he lives of America's underclass are characterized by a degree of disorganization that is rarely grasped or acknowledged. The implications of this revelation will be difficult, if not impossible, for the welfare industry to accept."
Despite the criticism, the trial wasn't a total wash, and researchers saw some concrete benefits they believed could guide the design of future programs. The rewards had little effect on the performance of elementary school students, but eighth graders who entered high school as proficient readers had much higher graduation rates than their peers who entered the program at a lower level. This confirmed the hunch that the program worked best as a boost for students already moving in the right direction, rather than a lever for digging the poorest of the poor out of their deep hole.
But the biggest positive impact was also the most easily overlooked: From 2007 to 2010, families in the program earned, on average, $8,700 for performing verified actions deemed necessary to pull them out of poverty--and the cash they received "reduced current poverty and material hardship," according to MDRC, and some even began putting aside small amounts of cash into savings and college tuition accounts.
Riccio concluded that the three-year span of the trial itself limited the extent of its impact: "Families knew it was going to end," he told me. "You are asking people to plan for the long term, to overcome years of habituated behavior, and then you tell them three years and you're out."
Bloomberg, by contrast, was disappointed by the results and lost interest in the idea. But Gibbs, who would go on to join a consulting firm the mayor established to tackle urban problems after he left office in 2013, lost little of her fervor and convinced him to help fund a second, multi-city trial that would incorporate lessons learned.
So Bloomberg signed off on two new projects that together would cost about $25 million in federal and private funding. One of them would be in the predominantly Latino South Bronx. The other one was in Memphis, a city whose working poor traced generations of troubles back to slavery and sharecropping days in the Delta.
Other troubled American cities offer gray moonscape expanses, but not Memphis. Even its poorest neighborhoods are beautiful in their own way, saturated in magnolia greens, mud-puddle browns, peeled-paint reds and blues of every hue--a vision of poverty that feels oddly familiar, like a colorized live-motion Walker Evans photograph from the Depression era. Outside the gussied-up downtown set high on river bluffs, it's a city of tar-patched boulevards, street corner churches, block after block of stately and decaying Craftsman houses with roofs, peeled up or rotted down, open to the elements. If there's a defining institution in the neighborhoods of Memphis, it's the mini-mart, encased in its metal gratings, plastered in Miller High Life posters, where mothers buy overpriced groceries and groups of men and boys convene in circles, as if it were a 1920s country store in the Delta.
South Memphis, one of the most iconic black neighborhoods in the country, is a social, buzzing, eye-contact place, with a rich artistic and musical heritage, the cradle of American soul music, of Stax Records, Aretha Franklin, Booker T. and MGs, Al Green, Isaac Hayes and Otis Redding. When you stop at a streetlight, the old lady crossing in front of your car says "good morning." A minute later, a woman in her mid-30s walks over from the median to politely ask for $5 to help bury her nephew. "They rolled up on him and just shot him..."
Every modern welfare reform effort, including the Memphis Family Rewards Program, is predicated on the assumption that poor people need to be jolted out of the "cycle of poverty" and instilled with the motivation to work. But nearly every person you meet in South Memphis-- which is after all home to some of the country's highest poverty and infant mortality rates--seems to be occupied with the day-to-day business of survival.
The numbers back up that perception: A lot of people are already working, albeit in low-paying, no-insurance and off-the-books jobs. Nearly half of black Memphians live below the federal poverty level--the poverty rate for the city as a whole is a sky-high 28.3 percent, twice the national average, and just below Detroit's 33 percent. But poverty isn't the same thing as unwillingness to work.[emphasis added] The unemployment rate in the city is currently at 7.9 percent, well below its Great Recession spike of 13 percent, a stark reminder than many of the city's poor are, contrary to caricature, the working poor.
And that statistic doesn't capture the beehive environment of improvisational commerce in the neighborhoods. Sitting in her office on the city's north side one recent day, Gwendolyn Price, a veteran social worker and foster care specialist, listed all the (legal) off-the-books jobs her clients undertake to make ends meet: "Obviously, people don't tell us everything they do. . . . They don't want to lose their benefits," she said with a smile. "Okay. We've got hair-braiding is big, nails too, child care, cleaning other people's house, mowing lawns, home repairs, car work, oh, and candy."
I didn't know what Price meant by "candy"--until I found myself in one of her client's houses a few days later and witnessed her 14-year-old son offer a Twix bar, bought in a bulk at a big-box warehouse store, to another child for 75 cents.
The city's mayor, A.C. Wharton, is a soft-spoken former Ole Miss law professor who has been immersed in these problems since the 1970s, first as young legal services attorney who defended welfare recipients whose benefits were being constantly challenged by white politicians from other parts of the state who saw Memphis as a mecca for cheats. Early on in his career, one of his highest-profile cases was suing the state welfare commissioner over his practice of staging "round-ups" of welfare recipients, most of them single mothers, forcing them to take buses down to the cavernous Memphis Coliseum and justify their checks. His suit failed, and he quickly realized that whatever job he took--eventually he was elected to head the Shelby County public defender's office--quickly devolved into a discussion about how the person charged with a crime had given up trying to find a decent-paying job.
"I had this one woman, she got arrested for shoplifting from one of the chain stores," he recalled in his sprawling office overlooking the Mississippi River on the high bluffs that give the city its nickname--and the general sense of a place barely holding back the deluge. "She had toothpaste, baloney and some bread on the day she was arrested. ... She wasn't stealing a six-pack of beer, she literally has to feed her children and wanted them to brush their teeth. That's what you are dealing with around here."
Wharton is increasingly unpopular within the Memphis city limits (owing to his plan to force cops and firefighters to pay higher benefit premiums to deal with a $300 million to $600 million structural deficit) but he's held in greater esteem in national circles, a diligent networker who has forged relationships with policymakers in the Obama administration and wealthy foundation supporters in New York and California. For the last several years, Wharton has been among a group of reform-minded mayors whose counsel was sought by Bloomberg and his urban-reform team, so when the billionaire's advisers suggested transplanting family rewards to Memphis in 2010, Wharton leapt at the chance even though he would have to sell his skeptical city council on it.
He was able to get the council to approve a $1 million outlay for the rewards program in 2011, even though local politicians complained costs were too high. But the next year, as the city's budget woes worsened, the city council's chairman, Jim Strickland, stripped funding, arguing that the programs the city couldn't afford an iffy social engineering project during its worst budget crunch in decades. "It's not a core government service to pay people to take their kids to the doctor," Strickland, a Democrat, told the council.
Thanks to Bloomberg's largesse, the program proceeded anyway, but Wharton has given up on trying to extract public dollars, and is focused on private fundraising to cover the gap. And the fight has convinced him that the biggest challenge of implementing a conditional cash transfer in the United States isn't logistical, but political. "Poverty, welfare, they're just toxic issues," he told me.
Wharton is close to the White House but like an increasing number of liberals and black Democrats, he's disappointed--and faults Obama for not consolidating the current disparate mix of anti-poverty measures into a more coherent national mobilization that might warm the political climate. He's willing to play small ball, but resents that his party's leader isn't swinging for the fences.
"If you look at the component parts of what he has done" Wharton says, listing off an array of Obama initiatives from funding for community colleges to a new program aimed at young black men called My Brother's Keeper, "all of those things are good -- but what ties it all together?
"These efforts don't have a home, they are largely itinerant and in America no matter how noble your goals, the first storm that comes along blows all of your efforts away because since you are, basically, just adrift."
The national ambivalence about poverty trickles down to poor neighborhoods, where generations in to a failed war on poverty everyone knows that any positive attention to problems will be fleeting, and that if something seems too good to be true it probably is. When workers at the two non-profits administering the Memphis program were recruiting clients (pulling names randomly from a list of food stamp and TANF lists), they encountered up-front resistance. And this was to hand out money.
"We couldn't get people to apply because they thought it was a scam," says Coasy Hale, who oversees 311 of the families in the program for Memphis HOPE, one of two organizations picked to counsel clients and deliver program materials. "They were like 'Who is really going to pay us to do stuff we should already be doing anyway?'"
The other problem was more predictable, and harder to attack. There was, according to Hale and other front-line workers, a huge gap between the behavior of participants: One segment of parents was highly motivated to earn rewards and pushed their kids in school, and an equally large group tuned in and out, and did just the bare minimum to get a few checks.
In Mexico, the rural population was even worse off but had received far fewer benefits from the government--there was novelty, even gratitude about help when it finally came, according to analysis of the results by the World Bank. But in Memphis, most poor people have parents, grandparents, even great-grandparents who received some form of government assistance and they tended to view the new rewards system as just another entitlement that would come and go. "People don't really have to worry about food or housing. They go from crisis to crisis but they basically can survive," says Gwen Price, whose staff at Porter-Leath oversees the other 300 Memphis families in the program. "They figure my mother got by, and I'll get by, so why change?"
One of the major improvements incorporated in the Memphis program was the addition of periodic family counseling sessions, which seemed to help the lowest-income families improve their planning and time management skills. But it's been a slog: That's why many of the people involved in these first American experiments with cash transfers see it less as a magic-bullet solution to deep, intractable poverty than a booster shot that can be used to make other programs more effective.
Price, for one, thinks it can be especially useful if used to spur on foster kids, who are among the lowest-performing students and most likely to succumb to teenage pregnancy, gangs, drugs and violence. "They bounce from place to place," she says. "Imagine if they could be rewarded... it would add an element of consistency to their lives."
It also seems to be especially effective at helping the hardest-working poor, according to James Riccio, who has been closely studying the program. The Memphis project will be shuttered this coming January--which will give analysts like Riccio an opportunity to determine its impact--and whether or not the "good" behaviors rewarded by cash linger after the checks stop coming (the analysis of the first New York trial showed mixed results). "I don't think anyone is suggesting at this point that CCTs will be the dominant safety net program in this country, but it can be a major part of rethinking the whole system," Riccio tells me.
He may be an optimist: It's not even clear what next steps are after Memphis. No one knows whether Bloomberg will ante up more to continue the experiments, and Mayor Wharton told me he was convinced that his own city would not continue to pay for anything on its own. "A lot will depend on how well the numbers on Memphis look," one of the program's architects told me. "If it shows more progress than the first one, I think you'll see other groups getting into it."
So will the cash-for-good-behavior program come to be seen as one of the many policy cul-de-sacs where good ideas have foundered when colliding with American realities? Or, a decade from now, will we view Memphis and the South Bronx as forerunners of a whole new way of thinking about targeted assistance to those who need it?
Just about the only people who are unabashed in their enthusiasm for the program are the parents themselves, who told me they felt they were finally being recognized for their daily struggles. "It's hard here in Memphis, trying to get something, trying to climb up, so it's nice to have someone say you're doing something right," says Ivory Ott, a 51-year-old single mother who has raised her 17-year-old son on a $10-an-hour school custodial and lunchroom worker's salary.
Ott had to take four buses over three hours to commute to her last low-paying job -- and earned only about $2,500 from the rewards program over the years -- in part because she could never get her work hours up to the 40 required for the monthly $150 bonus. But it was a key part of her budget and her sense of forward momentum. The cash helped her buy a beat-up but operational 2001 Mitsubishi last year--and now she drives a half-hour to work. "It makes a big difference," she tells me. "It's running okay. But if it breaks down, who knows..."
Tracey Townes, who lives across town from her in a single-story house not far from Elvis Presley's Graceland, is more skeptical of the program--she thinks a fair percentage of participants are freeloaders--but she'll be sorry to see it disappear at year's end.
Like so many in Memphis, her history is one of toil and trouble. Townes, 39, was reared in an abusive foster home in Louisiana that lacked heat and air-conditioning; she was a pregnant drop-out by the sixth grade. But in almost every other respect, she defies the faceless, sit-on-the-couch, cash-the-check stereotype of the black single mother stuck in the safety net. She earns $9.70 an hour at a dead-end data entry job (37 hours a week, just short of the 40 required to provide health insurance). There's not much food in the fridge but there are plenty of books around, the TV is tiny, set low volume on the Nightly News with Brian Williams, and the computer sits a few feet away so she can watch the kids do their homework. She likes, doesn't love Obama.
Right after he was elected, she dashed off a letter to the White House (thus far unanswered) urging him "not to give all of these people who are just sitting around just doing nothing, free money," and has no problems with the increasingly stringent time limits on welfare imposed on poor people by Tennessee's conservative Republican legislature.
"A person isn't going to get up and do something if they don't have to. They watch their mama sitting there, not working and collecting welfare, and think this is normal," she tells me.
Yet for all her independence, Townes has relied on government assistance to survive over the years, a fact she regards as a necessary embarrassment. She has received many of the legacy benefits that define the dependency she so deplores: the Earned Income Tax Credit, Medicaid and $100 in food stamps a month, and she briefly collected public assistance when her kids were younger.
In her three years on the rewards program, Townes has collected about $5,000 in benefits, nearly maxing out the report-card incentives. "My kids were straight A's before and they are straight A's now," she says.
But the cash helped, especially the $150 a month for cobbling together a 40-hour week, and left her with a hunger for a better job that would ease her month-to-month struggles to pay a modest mortgage and keep her often-empty cupboard stocked.
And there's one more benefit Townes plans to take advantage of: the $400 payment for finally getting her GED.
"I aced all the practice tests, and, yeah, the money does motivate me to finally take it," she says. "I think that could get me, I don't know, two or three more dollars an hour at another job. And after that, who knows, maybe I can take a college class. . . ."
Glenn Thrush is senior staff writer at Politico Magazine.
Glenn Thrush with comments by Ohanian and Horn
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