Making Sense of Emergency Cash

Emergency cash is about getting money in the hands of people who need it, when they need it. We're working to give this idea for workers a chance to succeed.

A lot of folks are trying to make sense of emergency cash right now. For those interested in distributing emergency cash, the questions are largely about how. For those in an emergency and interested in getting cash, the questions are largely about where and how fast. Wherever you fall on this spectrum, the one thing that’s for sure is the value of emergency cash, which provides relief for the person who receives it. Relief not only solves an immediate financial need. It also makes more room for hope -- and hope allows us to keep going.

The Workers Lab has been making sense of emergency cash for a few years now. Our purpose is to give new ideas for workers a chance to succeed and flourish, and this idea needed a chance.  

Emergency cash is about getting money into the hands of people who need it, when they need it. A large and growing portion of the U.S. workforce lives paycheck to paycheck, which means many workers are one broken down car, one medical emergency, or one bad day away from missing a rent payment or not being able to meet their basic needs. This is why having a way for workers to draw down on cash in an emergency matters. 

So for the last few years, we’ve been trying with our friends and partners to give this new and helpful idea for workers a chance to succeed and flourish. We wrote this blog and an accompanying case study to tell you about what we’re learning and how we are making sense of emergency cash. 

1. Emergency Cash is Important Because Wages are Low and our Current Safety Net is Insufficient

Far too many people are working for a minimum wage that doesn’t meet the cost of living, and many of the traditional ways for workers to access financial benefits and protections aren’t available to ALL workers. The United States’ social safety net is a patchy network of federal, state, and local programs meant to help Americans from experiencing poverty and hardship through things like unemployment, and other social programs. Today’s social safety net is a chaotic, often inaccessible system that shifts the burden of providing benefits and protections for certain workers away from employers and governments and onto the workers themselves. Even if these programs were more consistently and equally available, they still fail to address the realities of day-to-day life, where car problems, medical emergencies, and other unexpected events can interrupt a workers’ ability to meet their financial commitments. 

Today’s workers need short-term solutions to help them address unexpected emergencies. Philanthropy stepped in during the pandemic to meet this need, but that’s not a long-term answer. We need to think big and create a scalable solution that addresses the outdated systems that marginalize workers. Emergency cash grants should be embedded into the social safety net — employers and the government, not philanthropy, should be offering workers this support as part of a regular benefit package. While that system doesn’t exist on a large scale yet, we’ve been able to experiment and learn from creating an emergency cash grant system the last few years. We’ve identified that most often these funds do not need to be tens of thousands of dollars to help a worker address their emergency—in fact, grants as small as $1,000 can provide the lift a worker might need to stay on track.  

2. Emergency Cash Keeps Workers on the Job

One primary goal behind an emergency cash grant is to get workers back to work.

From 2017 - 2020 The Workers Lab led a Design Sprint to get emergency cash to gig workers. We partnered with thought leaders across the fields of financial inclusion, product innovation, and labor and employment policy to design and test an emergency cash delivery pilot. We wanted to make the process simple for workers so we partnered with Commonwealth and developed a website where workers could apply for a grant by indicating the amount of the request and the emergency for which it would be used (no documentation of the emergency was required). Approval occurred within two business days. Once a worker’s fund request was approved, they could receive their funds by PayPal or ACH transfer.

We called this effort The Workers Strength Fund (WSF), www.workersstrengthfund.org, and delivered $350,000 in emergency cash over the course of the project. Our methodology and findings from this experiment are available in a report and recorded briefing.

The grants we made through the WSF played an important role in helping recipients continue working and earning income: 61% of surveyed recipients reported having been unable to work because of their cited emergency, and 75% of those who had been unable to work said they returned to work as a direct result of receiving funds. This impact was felt quickly, with 69% of workers returning to work within a week of receiving the funds; 86% of recipients were back to work within two weeks.

3. The Need for Emergency Cash is Felt Exponentially by Workers During a National Crisis

Because of this prior work on emergency cash, when the COVID-19 pandemic hit, we were able to respond quickly. We used the learnings and infrastructure from The Workers Strength Fund to create The Workers Fund: COVID-19 Rapid Response. The Workers Lab had trusted relationships, tested tools, and respected partners in place to be a financial first responder. 

We chose to focus our fund on gig workers (folks who work outside the traditional nine-to-five jobs), who have historically been excluded from our social safety net programs. The rise of the gig economy in recent years has illustrated how many workers are vulnerable to income volatility and income insufficiency. Gig workers often lack access to the benefits tied to traditional employment, such as paid sick leave, health and disability insurance, and workers compensation. The pandemic exacerbated this as the number of workers who needed emergency financial support drastically increased.

Through this effort, The Workers Lab delivered $2.6 million in emergency cash to more than 12,600 workers across the country. More on this important effort can be found here. 

4. In Order To Scale, Emergency Cash Needs Private AND Public Interests Working Together

The financial needs of workers that surfaced during the Workers Strength Fund pilots convinced us that we needed to move this idea to scale, so we looked to Rachel Schneider, a key advisor to the Workers Strength Fund pilot, who had simultaneously been exploring the use of emergency funds sponsored by employers. The advantage of these funds is that they have an ongoing source of revenue (employer and employee contributions), a community-building orientation and the potential to be offered alongside other types of support. 

Rachel founded Canary, a new social enterprise incubated at The Workers Lab, that is taking these learnings and the lessons of the Workers Strength Fund experience and bringing them to scale. The Canary team designed, built, and tested a new micro-grant program called the Grant Circle. In Fall 2019, Canary conducted a test of its program with five New York City-based stores of a national retailer and a Michigan-based call center with employees across the country. Learnings from this work informed Canary’s design and technology development in early 2020, and Canary is now prepared to offer emergency grants to employees at scale.

5. Emergency Cash Can Help Build Power For Worker Organizations 

We are now exploring how emergency cash can also help build power for worker organizations. 

We have partnered with Open Society Foundations (OSF) to run an experiment and investigate how emergency cash grants can help grow the ranks and build the power of worker organizations that give them out. Our hypothesis is that the act of giving someone cash in an emergency could then translate into that same person becoming an active, card-carrying member of the organization that supplied the cash, thus building the organization’s membership and power. We just finished phase one of this experiment, where we conducted interviews and research with six organizations who administered emergency cash programs last year. The organizations ranged from national groups including One Fair Wage and the National Domestic Workers Alliance to local community-based organizations like Adelante Alabama, Twin Cities Hospitality, Massachusetts Immigrant Collaborative, and Texas’s Workers Defense Project. Hearing from these extraordinary leaders convinced us that emergency cash can be a powerful tool for building an organizations’ membership and power. However, these organizations need the capacity to train organizers and put strategies in place to convert these touchpoints into deeper, long-term, membership engagement. We are now entering phase two of this experiment, where we’re partnering with the Workers Defense Project as they administer cash grants and find answers to the challenges that emerged in phase one. We will then take what we learn and share those best practices for worker power building later this year. 

What’s Next: More Learning and More Making Sense

We’ll be the first to admit that we don’t have all of the answers on emergency cash. But we continue to explore emergency cash because our learning thus far illustrates how powerful it can be for so many workers. Workers need and deserve short-term solutions to help them address life’s ups and downs, and emergency cash offers them a chance to stay working and on track to meet their needs. Emergency cash also offers a lesson in resilience and hope: with just a small amount of help, workers are empowered to handle financial emergencies, which moves us toward a society where all workers are safe, healthy, secure, and free.