A Program In Memphis TN Pays Families When Their Children Go To School: The Results May Surprise You

While most people have never heard of the program, the Memphis Family Rewards Program was founded several years ago with 613 families and 850 ninth and tenth grade students from Memphis, Tennessee. They were selected to participate in a project that allows them to earn money by engaging in certain tasks, such as working full-time as a parent and attending school as a child. Initiated by a New York-based social innovation fund, the grant allowed families to earn an average of $2,000 annually, or 10% of the family annual income, which is below the federal poverty level. The “conditional cash transfers” (CCTs) pays poor families to achieve goals that are aimed at eventually providing them a better life.

“I think it’s fair to give an incentive to do something,” said Memphis Mayor A.C. Wharton. “Get your job training. Participate in your child’s educational pursuits. For each grade they get you give them a little something. That’s part of the American fabric.”

Families Paid Upon Completion of Each Task

According to Politico reporter Glen Thrush, children are paid $40 a month for an acceptable school attendance record and grades are monetized in A=$30, B=$20, C=$10 and $50 for college entrance exams, such as the ACT. They are paid $100 for annual dental and medical check-ups. Parents are compensated a $150 bonus a month, up to $1,800 a year, for working a full-time job.

The CCTs are not unique to America, but modeled after other International successes found in Mexico, Brazil and Indonesia. These CCTs have gained international acclaim. Thrush noted that the World Bank acknowledged Mexico’s efforts, claiming they are “powerful proof that well-designed public programs can have significant effects on critical social indicators.”

The CCTs are not unique to America, but modeled after other International successes found in Mexico, Brazil and Indonesia. These CCTs have gained international acclaim. Thrush noted that the World Bank acknowledged Mexico’s efforts, claiming they are “powerful proof that well-designed public programs can have significant effects on critical social indicators.”

Program Development and Results

It was Michael Bloomberg who initiated the original Memphis project in 2007. According to Politico, Bloomberg flew to Mexico to interview officials who were using CCTs to induce impoverished mothers to vaccinate their children. Bloomberg solicited the help of his then deputy Mayor, Linda Gibbs, an expert on homelessness, and the two developed experimental programs in New York and Memphis. Bloomberg contributed millions of dollars of his own money to get the program started in New York and Memphis.

Originally launched in New York in 2007, this privately funded family rewards program was the first comprehensive CCT program in a developed country. The three year project involved 4,800 families and 11,000 children. Half received payments for achievements and the other half were part of a control group that did not receive payments.
James Riccio, Director of the Low-Wage Workers and Communities Policies at MDRC, a national non-profit research organization, was in charge of assessing the Memphis and New York programs that ended in 2010. The report showed mixed results. It reduced current poverty and material hardship, helped parents to save and reduced reliance on loans. It had little impact on family healthcare, though there was a substantial increase in preventative dental care. Unfortunately, it did not improve school outcomes for elementary or middle school students and little outcome for high school students. It substantially increased the number of high school graduates for students who entered high school as proficient readers. It increased self-reported full-time employment, but not earnings from jobs covered by unemployment insurance.

After determining that the disappointing educational outcomes were due to the types of rewards, a revised, but separate program is now being tested in Memphis, Tennessee and Bronx, New York.

U.S. Poverty Levels Support Future Efforts

Programs like CCTs are needed to help impoverished communities develop better lives. As Thrush points out, the national poverty rate is above 15% and has “a record 50 million Americans falling below the line during the economic crisis of 2008-2009. It has remained roughly that level during a nearly five-year recovery.”

American sentiment on poverty is low. “There is not an overarching vision, or even a widespread recognition, that we have a problem with poverty,” LaDonna Pavetti told Thrush. Pavetti is Vice President of Family Income Support at the Center for Policy and Budget Priorities and has studied poverty and welfare trends for a quarter of a century.

According to a Center for Policy and Budget Priorities Study, when the welfare system Aid to Families with Dependent Children (AFDC) was replaced with Temporary Assistance for Needy Families in the mid-90s, the welfare system change increased the number of children in deep poverty.

As Thrush points out, poverty concerns are on the rise on Capitol Hill. Senator Elizabeth Warren (D-MA) and Congressman Paul Ryan (R-WI) are among the frontrunners championing the cause. Senator Warren is supporting higher taxes on the wealthy, new entitlements such as universal pre-K for poor kids and a nationwide increase in the minimum wage. According to the Wisconsin State Journal, Ryan wants to let the states voluntarily try new approaches to helping the poor, with careful analysis of results of a third party.” The latter may provide support for increased CCTs.

Though initial results were disappointing, especially regarding education outcomes, Thrush noted an important point. “Researchers saw some concrete benefits they believed could guide the design of future programs.” The current Memphis revised program that has incorporated researchers’ recommendations will end in January. A careful analysis of the results will determine whether there is sufficient positive effect to move forward and perhaps expand the program. Riccio told Thrush that he doesn’t think CCTs will be the primary safety net program for the U.S., but “can be a major part of rethinking the whole system.”