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New Orleans Will Give Unconditional Cash Payments To 'Opportunity Youth'

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A pile of money.

While New Orleans has yet to publicly announce the specifics of its upcoming guaranteed income pilot, it has identified its target population: "opportunity youth" — young people between the ages of 16 and 24 who are neither in school nor working.

Now, city officials are looking to unconditional cash payments as a potential way to help them reconnect.

“To my knowledge, there hasn't been a pilot in the world that's been targeted at this specific demographic,” Joshua Cox, director of strategic initiatives for the City of New Orleans, said in an interview with New Orleans Public Radio.

“We think it's a tremendous opportunity to show the effects of direct cash and giving folks the ability to make decisions that are best for their lives.”

New Orleans secured $500,000 last December to distribute direct, recurring cash payments to a select group of residents, no-strings-attached.

In the true spirit of guaranteed income, there will be no restrictions on how the money can be spent.

“The undergirding value of this whole program is trusting people to make financial decisions that are going to be in their best interest,” Director of the Mayor’s Office of Youth and Families Emily Wolff said.

“That doesn't mean that we can't all benefit from some external resources, coaching or budgeting, financial management, those kinds of things. But that won't be a requirement at all for people who participate in this program.”

The money comes from Mayors for a Guaranteed Income (MGI), a coalition of 40 mayors who support guaranteed income.

New Orleans Mayor LaToya Cantrell is not a founding member of the coalition, but joined its ranks soon after its founding.

The MGI was started by Michael Tubbs, the former mayor of Stockton, California. New Orleans’ pilot money is part of a $15 million grant Twitter CEO Jack Dorsey gave to the organization.

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…

During Tubb’s time as mayor, Stockton conducted the country’s first city-led guaranteed income experiment. For two years, 125 randomly selected residents received $500 every month.

Researchers in Stockton found that providing residents with $500 a month measurably improved participants’ job prospects and quality of life, according to data gathered during the pilot’s first year.

New Orleans' pilot will be studied by researchers at The Center for Guaranteed Income Research, a joint venture between MGI and the University of Pennsylvania School of Social Policy & Practice.

Stacia Martin-West, the center’s co-director, told New Orleans Public Radio researchers will “replicate" the strategies used in Stockton to study New Orleans’ pilot, including long-form surveys and participant interviews.

Martin-West and her co-director Amy Castro Baker served as lead investigators on the Stockton pilot and are responsible for assessing all of MGI’s member city pilots. They plan to hire fellows in each community to work with participants and conduct in person interviews.

“What we've learned from Stockton is it's really hard to keep folks engaged if you don't have someone there on the ground representing the research that has experience with the target population,” Martin-West said.

New Orleans is just one of several southern cities preparing to launch guaranteed income in the next few months. Like New Orleans, these cities will distribute payments specific populations, including single parents, homeless youth, and people who were recently incarcerated, according to Martin-West.

“What we know about people that are struggling financially is that they will prioritize cash to cover their basic needs,” Martin-West said. “What happens after that may look different based on the population, but for most folks that are struggling, that's really what we see happen.”

Reaching Disconnected Youth Is More Complex Than It Seems

Louisiana has one of the highest rates of youth disconnection in the country, at 16.4 percent, according to a recent report from Measure of America.

Black youth are nearly twice as likely to be disconnected than white youth and Black young men are 1.5 times as likely to be disconnected as Black young women.

While the overall youth disconnection rate in Orleans Parish is slightly lower at 15.5 percent, certain neighborhoods outpace the state average.

If you zoom in on central New Orleans, the youth disconnection rate jumps to 22.9 percent, the fourth-highest rate in the state. The neighborhood's Black youth disconnection rate is even higher at 27.5 percent.

The rate of youth disconnection in New Orleans East is slightly higher than the city-wide average, at 15.8 percent.

NOLADotDensityBook.png
If you zoom in on central New Orleans, the youth disconnection rate jumps to 22.9 percent, the fourth-highest rate in the state.

The majority of the city’s disconnected youth live beneath the poverty line and have likely lived in poverty for much of their lives, Rashida Govan, executive director of the New Orleans Youth Alliance, said.

Govan’s organization, also known as NOYA, serves as the youth development intermediary for the greater New Orleans area and frequently works with disconnected youth.

She said the young people she works with have grappled with mental health issues, learning disabilities and homelessness. Many have experienced gun violence, been involved in the criminal justice system or became parents at a young age.

Govan and local officials believe the city's tally of "opportunity youth" is likely an undercount and the pandemic may be pushing the true number even higher.

“Youth disconnection [has] been exacerbated through the pandemic,” Wolff said. “We thought [the pilot] would be a really good investment in young people to try to keep them connected to supports like school and jobs.”

In an interview with New Orleans Public Radio, Cox and Wolff said the city plans to formally partner with organizations that already work with opportunity youth and will rely on these organizations to refer eligible young people to the city’s pilot program.

Govan said she’s worried about the city solely relying on referrals from organizations like hers, instead of conducting broad outreach.

She said the current approach could mean excluding the young people who are already the hardest to reach and likely the most in need of assistance.

“That's the part that I think I'm most concerned about, not because I don't think [the city] will do their best … but because [organizations like ours] haven't figured out well enough how to connect with that population,” Govan said.

She thinks the city should take steps to broaden its recruitment strategy, including contacting recent high school graduates who attended the city’s highest poverty schools to see if they’re eligible for the pilot.

“I would also go to community agencies and strongholds within the highest poverty communities in the city and use them as ambassadors for this program,” Govan said. “You could even look at the zip codes or neighborhoods where a lot of violent crime is happening or where there's the highest unemployment rate and focus your energy there.”

Wolff and Cox said the city’s current recruitment approach is partially built out of necessity. They don't have the time or money to canvass the entire city. Cox said it doesn't feel like a productive use of resources when the final number of pilot seats will likely be incredibly limited.

“Frankly, we've got such a finite amount of resources that the last thing we want to do is build folks' hopes up when we know that we're not going to be able to deliver money to them,” he said.

While the city can’t afford to cast a wide net, Wolff said there are other ways the current plan promotes accessibility.

“There may be language or literacy barriers that would require organizations to help walk young people through this process,” Wolff said. “That's really the thinking around working with organizations ... to be able to ensure that the young people have support along the way.”

For A Lucky Few, Pilot Could Prove Life-Changing

Nearly 7,000 residents city-wide were classified as opportunity youth in 2014, the last year local Census tract data was made available for this population.

For the very small percentage of disconnected youth who do get to participate in the pilot, Govan said the opportunity could be life-changing.

She said financial insecurity is often the reason youth become disconnected in the first place.

“This is not a function of young people who just dropped out of school and made a series of bad decisions,” Govan said. “It's not like that.”

The majority of disconnected youth graduate from high school and some go on to attend college, according to data reviewed by the Cowen Institute at Tulane University.

Govan said the problem is they’re seldom college-ready.

She points to the city’s ACT scores, which some see as a barometer for college readiness. The class of 2020 had an average composite score of 18 on a 36 point scale.

Govan said the kids who go on to attend college may find themselves stuck in remedial classes, spending money on tuition but not earning credits toward graduation.

She said students often don’t have the money needed to stay in college long enough to progress, and even for students who are successful, financial strain often leads them to drop out before receiving a diploma.

Then there’s the issue of why disconnected youth aren’t working. Govan said this can often be traced back to the city’s high cost of living and low minimum wage.

“Folks are not making enough [money] to sustain themselves,” Govan said. “So we see a revolving door of young people coming in and out of employment opportunities.”

According to Govan, a young person may start working a low-wage job, less than $15 an hour, and soon find the expenses associated with the job outweigh the benefits.

For example, someone in New Orleans East could spend hours taking public transportation to and from a minimum wage job in the French Quarter. When they weigh the time and money associated with getting there, they may decide it isn’t worth the expense or effort.

If the young person is a parent the cost of childcare during the hours they work could ultimately exceed their wages.

And even when they’re not supporting their own children, Govan said disconnected youth often cite caring for younger siblings or another family member as the reason they aren’t in school or employed.

When it comes to guaranteed income, Govan said any amount of money would be helpful, but $500 a month or more could make a meaningful difference.

“A lot of the time [opportunity youth] just need a little bit of help to get stable financially so they can focus on their long-term goals,” she said.

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