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The Mississippi Program That’s Showing How Effective Direct Cash Transfers Can Be

Researchers say that programs like the Magnolia Mother’s Trust, which gives Black women $1,000 a month, could be crucial in reducing the racial wealth gap.

Photo illustration by Elizabeth Brown.

The Mississippi Program That’s Showing How Effective Direct Cash Transfers Can Be

Researchers say that programs like the Magnolia Mother’s Trust, which gives Black women $1,000 a month, could be crucial in reducing the racial wealth gap.

Since March, Ebony Beals has received $1,000 each month. A mother of three who works as a hairdresser, Beals said the payments have given her family a much-needed cushion during the COVID-19 pandemic. “The $1,000 just eases the burden,” she told The Appeal.

Beals receives the money from the Magnolia Mother’s Trust, a program launched in 2018 that guarantees monthly payments to a group of Black mothers living in public housing in Jackson, Mississippi, for one year. She is one of 110 women who have qualified for the program; the recipients are chosen by lottery, and there are no rules on how they can use the money.

Beals said the money helps with rent, her children’s schooling, and various other expenses.

“I don’t really want to say that it has changed my life drastically,” she said. “It just made life a little more comfortable because I know I have this set amount of money and if anything happens I can fall back on that.” 

Magnolia Mother’s Trust is one of several programs across the nation that guarantees payments to low-income families, which are disproportionately families of color. The Economic Security Project, a philanthropic organization, funds the money distributed by Magnolia Mother’s Trust as well as another program that pays 125 families in Stockton, California, $500 each month. (The Economic Security Project is a partner of The Justice Collaborative. The Appeal is an independent project of The Justice Collaborative.)

In 2016, the median wealth for Black families was $17,600 and $20,700 for Hispanic families, while the median wealth for white families was $171,000, according to the Federal Reserve’s most recent data. A 2017 study showed that if policy makers do not act to increase wealth among communities of color, the median wealth of Black Americans will fall to zero by 2053.

Currently, there are multiple bills in Congress that would guarantee income to most Americans, though none have made headway in the Republican-dominated Senate. In May, Senators Kamala Harris, Bernie Sanders, and Ed Markey proposed legislation that would send monthly checks of at least $2,000 to people and $2,000 per child if they have children for the duration of the pandemic.

Last year, Senator Cory Booker introduced a bill that would create “baby bonds”—savings accounts of $1,000 for every child at birth. The government would contribute funds to the accounts each year, with the amount depending on family income. A child in a family that makes less than $25,100 would get $2,000 per year until they turn 18. 

Researchers say that a combination of guaranteed income and savings accounts for children with annual deposits by the government are key to reducing the racial wealth gap. A report released in April by researchers at Brandeis University using data from 2016 found that if the government enacted monthly cash transfers of $1,000 paired with $250 per child in each household, the poverty rate would drop from 12 percent to 2 percent. 

The United States has recently seen powerful evidence of the effectiveness of cash transfers. The $1,200 each American received as part of the CARES Act, as well as the extra $600 the federal government provided for unemployment benefits, were key components to cutting the poverty rate from 10.9 percent in January and February to 8.6 percent in April and May, even as the economy suffered.

Natalie Foster, co-chairperson of the Economic Security Project, told The Appeal that the pandemic has made the introduction of guaranteed payments for low-income Americans “crucial.”

The labor market has been upended and it’s not safe for many people to go to work,” she said. “Keeping your families safe should not be only a choice to those with big bank accounts. It should be available to everyone.”

Data from the first year of the Magnolia Mother’s Trust showed the positive effect the regular payments had on families. Seventy-five percent of mothers reported they were able to prepare three meals per day for their families, compared to 32 percent before the payments began. Eighty-five percent said they completed a high school education by earning their GED, while just 63 percent had previously. And 100 percent of the mothers said they had the money to meet their basic needs. 

Individuals are using this as an opportunity to improve economic mobility for themselves and their families,” Aisha Nyandoro, the founder of the Magnolia Mother’s Trust, told The Appeal.

Though the payments have made her life more comfortable, Beals said there are some downsides. An increase of $12,000 a year to some women’s incomes could mean that they no longer qualify for food stamps or Medicaid. “In reality the caps are so low that the moment you get something like Magnolia Mother’s Trust, it makes all of those resources that sometimes are needed unavailable,” she said. 

Beals said she has not been hurt by the payments, but other women in the program have told her that it’s made their lives more difficult. “Some mentioned that they would rather not have the $1,000 because of the headache,” she said.

Nyandoro said there is a reduction in benefits for some mothers, averaging $300 to $400 each month, because of the “punitive aspect of the social safety net.”  

“With the net gain of $600 to $700 cash without strings, mothers still indicate that having the cash is a greater benefit,” she added. 

“I understand that you have to count it against us,” Beals said, “but if [lawmakers] could just look at it in a real life point of view they would understand that $1,000 doesnt make us rich, doesn’t make us where we can go out and afford luxury cars or whatever. It’s temporary like everything else. If you’re not planning for your future you’ll kind of be lost.”

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