Among the tasks on New Orleans’ long new year list: launch guaranteed income.
The city recently secured $500,000 to pilot unconditional cash payments to a select group of residents. But getting guaranteed income up and running takes more than just money, and the city has a long way to go before it can start distributing funds.
“Administratively there are a lot of components to it,” said Joshua Cox, director of strategic initiatives for the City of New Orleans. “How are you evaluating it? How are you making sure that the cash payments are getting delivered? How do you do the selection process?”
The city is currently in the proposal phase and is working to shape a year-long pilot. There is no official start date, but Cox said the city hopes to complete the selection process and begin distributing funds to pilot participants by the middle of next year.
“Whenever we find money, our goal is to put it on the ground so that it can help people as quickly as possible,” Cox said. “But, that's also got to be balanced with it being administered in a way that makes sense, that's efficient and effective.”
Roughly 44,000 New Orleanians are unemployed in New Orleans due to the pandemic and some are staring down the threat of eviction once the federal moratorium is lifted.
New Orleans is one of nine U.S. cities expected to launch or expand guaranteed income in 2021 in partnership with Mayors For A Guaranteed Income (MGI). The city’s pilot funding comes from MGI and is part of a $15 million grant from Twitter CEO Jack Dorsey.
While the cities can look to one another and to earlier pilots in Stockton, Calif. and Jackson, Miss. for guidance, guaranteed income researcher Stacia Martin-West said New Orleans should look to its own residents first.
“We know so little, as researchers, about how a guaranteed income works because this is so new. But folks that live in poverty know so much about economics,” Martin-West said. “I think it should really be up to each city, to those residents to decide how [the money should be used].”
Martin-West is a researcher on the Stockton pilot, the first mayor-led guaranteed income pilot in the U.S. and the catalyst for MGI. She’s also an assistant professor at the University of Tennessee College of Social Work and the co-founder and director of the Center for Guaranteed Income Research at the University of Pennsylvania, which was founded in October as an MGI partner organization.
To develop Stockton’s pilot, which ran for two years and comes to a close next month, researchers and city officials partnered with two community groups, a resident council at a public housing complex, and high school students participating in a college readiness program called Stockton Scholars.
“We asked them, ‘What do you think this program should look like? Who should it go to? Who should we target? How much should it be?’” Martin-West said.
That’s how they settled on a zip-code specific lottery for residents 18 years or older. Residents were randomly selected from neighborhoods where the median income was at or below $46,033.
Ultimately 125 residents were selected to receive unconditional monthly payments of $500 for 18 months. Due to the pandemic, the pilot was later extended to two full years.
“When we talk about guaranteed income, we consider it as a floor that we're unwilling to let folks fall beneath,” Martin-West said. “Can someone survive on $500 a month? Absolutely not. But it can smooth out some of those economic shocks or income shocks that we see.”
Cox said New Orleans also plans to work with community stakeholders and is interested in gearing the pilot payments toward residents who already receive specific forms of public assistance.
“We want to try to figure out a way to have this pilot work as an additional layer so families who are struggling can see increased impacts,” Cox said.
Jasmine Araujo, a community organizer who works with New Orleanians who are unhoused, said she’s happy the city is working to strengthen its social safety net. At the same time, she’s worried implementation hurdles could exclude people who need the most help.
In Stockton eligible participants received letters directing them to an online form. Araujo said if New Orleans takes a similar approach they risk leaving out those without a stable mailing address or internet access.
She thinks the city should partner directly with community groups to select pilot participants from a specific population, such as people who are just getting out of prison or are undocumented.
“I think that $500,000 doesn’t even begin to scratch the surface of the kind of needs that we’re seeing,” Araujo said.
She’d like to see unconditional payments closer to $2,000 a month, which she said would provide participants with rent security.
Araujo also thinks the monthly payments should come with wraparound services and that the city should pair participants with counselors who can help them make the most of the money, whether it's securing an apartment, finding a job, or going back to school.
Her vision for a guaranteed income pilot is in line with Jackson’s guaranteed income pilot, known as the Magnolia Mother’s Trust. The program works with a specific population, low-income African-American mothers living in affordable housing, and is run by a community nonprofit. Participants received $1,000 a month for 12 months and had access to a caseworker.
When the pilot ended in Nov. 2019, the 20 participating mothers had collectively paid off more than $10,000 in predatory debt and reported higher rates of food security and educational attainment.
As a community organizer Araujo said she’s less concerned with the research aspect of the city’s pilot. She thinks it’s already clear that unconditional cash payments improve people’s lives.
“We can already see from a global perspective what’s working elsewhere,” Araujo said. “To be looking at it from an experimental approach at this point is really ridiculous.”
Guaranteed Income Gains Popularity
Over the last few years, Americans have become increasingly supportive of direct cash payments and the pandemic has persuaded many more. According to one survey, 76 percent of Americans support direct cash payments through the pandemic and 55 percent support cash payments indefinitely.
While Andrew Yang’s campaign for universal basic income, known as the Freedom Dividend, introduced UBI to a broader audience, the concept has been around for quite some time and was championed by Martin Luther King Jr. in the late 1960s.
People have become comfortable with the idea of guaranteed income in the context of a natural disaster or a public health crisis, but researchers like Martin-West and organizations like Mayors For A Guaranteed Income argue that long-term guaranteed income is needed at the state or federal level to account for poverty and inequality.
“We can kind of look at late stage capitalism as an economic disaster for most Americans. Pre-pandemic most Americans couldn't afford a $400 emergency,” Martin-West said. “Folks can kind of experience this cascade of poverty or financial ruin with the smallest emergency or what seems to be a small emergency.”
Martin-West uses the example of a flat tire. If you can’t drive your car, then you can’t get to work. That leads to a missed paycheck. Bills might pile up. If you can’t get your car fixed quickly enough, you might lose your job. Suddenly you’re in an even deeper hole.
“Those sorts of things for families that don't have a financial safety net can be absolutely devastating,” Martin-West said.
In recent decades the United States has pulled back its social safety net, reducing SNAP benefits and housing vouchers, Martin-West said. Families have been living on the edge and that’s why the pandemic has proved disastrous for so many.
Guaranteed income appears to be gaining traction especially in the Southern states, which have some of the highest poverty rates in the country. Five cities are launching mayor-led pilots this year — Shreveport, La., New Orleans, La., Columbia, S.C., Jackson, Miss. and Atlanta, Ga.
It’s worth noting that New Orleans is already home to what researchers believe is the first guaranteed income pilot for teenagers.
New Orleans Mayor LaToya Cantrell said she sees guaranteed income as a way to address cyclical poverty.
“Nothing helps a struggling family like money in the pocket, and nowhere is that more apparent than among Black Americans — who are more likely to be unemployed but less likely to get unemployment benefits,” Cantrell said in a statement announcing the city’s pilot program. “We need rapid and responsive solutions now; this is the time to invest directly in our people.”
Cox said New Orleans has demonstrated its commitment to direct payments throughout the pandemic. Over the summer the city distributed $500,000 in relief payments to 500 immigrant families excluded from federal and state assistance. The city also worked with Cash Money Records to provide $225,000 in rental assistance.
Making Sure Participants End Up With More, Not Less
Beyond the specifics of who gets how much money and when, Martin-West said there are other hidden concerns, such as how to ensure participants maintain the benefits they already have despite the increase in income.
“If your income goes up, they reduce your benefits. It's typically a dollar for dollar thing. For example, with SNAP if you get $30 dollars more a month then they're going to reduce your benefits by $30,” Martin-West said. “We didn't want to see that happen because what we're interested in looking at is how guaranteed income can exist alongside the existing safety net.”
To combat this, researchers secured waivers from the county and state agreeing not to count the pilot checks as income. Martin-West said MGI plans to work with participating cities to do the same.
If the waiver process proves unsuccessful, Martin-West said cities should conduct benefit counseling to make sure pilot participation is in the participant’s best interest.
Tracking Spending Is Complicated Researchers Say It's Essential
The other hidden challenge has to do with outcome tracking. Researchers like Martin-West want to know how the money is spent while still preserving participants' financial freedom and privacy.
At the core of guaranteed income is the idea that individual people know what they need most and that traditional welfare programs often come with stipulations that deaden their impact. In Stockton, participants received monthly payments on a debit card but had the option to transfer the funds to another card or withdraw the money as cash. About 40 percent of payments have been transferred and have not been tracked.
To gather even better data, it’s in a research team’s interest to encourage participants to make purchases using the debit card. Martin-West said the way to do this is to build trust with participants, assuring them the program isn’t a scam and is funded all the way through.
When participants did use the debit cards to make purchases, researchers assessed and shared spending data for the sample as a whole. Throughout the pilot, Stockton researchers have maintained a dashboard updating data in real-time.
Most of the funds, 37 percent, have been spent on food, followed by sale and merchandise, 22 percent, utilities, 11 percent, and auto care, 9 percent. Funds were also used for transportation, insurance, medical care and recreation. Less than 1 percent of total money tracked was spent on alcohol and tobacco.
The Center for Guaranteed Income Research will help MGI partner cities design and implement their own pilots. They’ll also help cities build their own dashboards allowing them to share updates and data on a regular basis.
Martin-West said it’s an unorthodox approach from a research perspective, but essential to promoting transparency and keeping the public engaged. The center is also hiring a fellow for each participating city, someone with an undergraduate degree and an interest in research.
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