Some New Orleans youth could get 'unconditional cash payments,' but the criteria is complicated
Jazmin Gil Rivera is one of thousands of young people in New Orleans who are neither in school nor working regularly.
Gil Rivera, 21, graduated from high school in 2019 and has worked hourly jobs on and off since then. She wants to become a nurse, but said saving money for college has been close to impossible.
“I’m trying to find another apartment, but rent is so high.” she said. “If I had more money it would go to food, rent and bills.”
Since Mayor LaToya Cantrell took office in 2018, city officials said they’ve been trying to improve outcomes for teenagers and young adults who are disconnected from work or school. On the surface, the city’s newest plan is its simplest one yet: Just give people like Gil Rivera cash.
Starting in January, the city plans to launch a guaranteed income program specifically for opportunity youth. Over the course of 10 months, 125 participants ages 16 to 24 will get $350 a month, no strings attached.
“We're excited to get this money in the hands of young people who no doubt need it and families that no doubt need it,” said Joshua Cox, the city’s director of strategic initiatives.
More than 60 U.S. cities have already endorsed guaranteed income — unconditional, recurring cash payments — as a way to help people living at or beneath the poverty line, and dozens of cities are preparing to or have already launched a variety of pilot programs.
The only states with more than one active pilot city are California, New Jersey, Massachusetts and Louisiana, where pilots are planned for both New Orleans and Shreveport. California is the only state in the country where guaranteed income pilots are state-funded.
The money for New Orleans’ pilot comes from a national organization called Mayor’s for a Guaranteed Income (MGI), which was started in 2020 by Michael Tubbs, the former mayor of Stockton, California.
New Orleans received a $500,000 grant from MGI in December 2020 and has spent the last year developing its pilot. In order to recruit qualifying participants, the city is only taking direct referrals from 10 community groups that already work with opportunity youth.
“They knew that if they reached out to us, we would be able to connect them with youth who are undocumented and make sure that they’re included in the program,” said Lisa Maria Rhodes, the founder of ALAS, one of the city’s partner organizations.
Rhodes said the young people her organization works with face additional barriers to work and education because of their immigration status.
“This is going to be an opportunity to account for some of the barriers that they face,” Rhodes said.
There were 4.4 million disconnected young people in the United States before the pandemic, according to the U.S. census. Experts believe the pandemic has dramatically increased the ranks of out-of-work, out-of-school young people, a belief bolstered by recent college enrollment data.
“The pandemic will likely erase a decade’s worth of progress in bringing down the youth disconnection rate, with as many as one in four young people nationwide finding themselves out of school and out of work by the end of 2020,” said Kristen Lewis, director of Measure of America, in a report focused on Louisiana released last year.
Louisiana has the fourth highest youth disconnection rate in the country at 16.4% — well above the national average of 11.2%. While New Orleans’ overall youth disconnection rate is slightly lower at 15.5%, certain neighborhoods outpace the state average.
When zooming in on central New Orleans, the youth disconnection rate jumps to 22.9%. The neighborhood's Black youth disconnection rate is even higher at 27.5%.
Rhodes’ organization started recruiting young people for the city’s pilot over the summer, before the application deadline was pushed back to November 22 due to Hurricane Ida. She said the long application period has created some challenges since young people may meet the criteria one day and not the next.
To qualify, they have to live within Orleans Parish and be disconnected from work and school, though the city has carved out some exceptions. Most notably, high school and college students can apply if they are truant or have failing grades, warning signs that they could drop out.
“We had a lot of kids who were in school and they were doing fine. Now they're not because of Hurricane Ida,” she said. “They had to evacuate, and they didn't have the funds to come back right away. They couldn't finish their classes, so now they're failing.”
Rhodes said some of the young people she works with lost their jobs because of the storm or lost valuable income because they were unable to work for multiple months. For them, the pilot can’t get started soon enough.
But Rhodes also said there are young people she recruited that are no longer eligible, in some cases because they were forced to relocate beyond the city’s limits due to hurricane damage.
Cox said the city is trying to be flexible whenever possible.
“The goal is to be able to offer the opportunity as widely as possible,” Cox said. “Some of these things change on a week-to-week basis. A young person might be able to make it to school this week or month and then life happens and they're disconnected.”
He said he understands that “a lot of this work happens in the gray,” and that the city has been working with its partners to provide added clarity while also making sure the pilot is accessible to the people that need it.
Once a young person is accepted into the program, there’s “no way that they can get out of it,” said Jack Shaevitz, policy and research analyst for the Mayor's Office of Youth and Families.
“One of the main components of this program is unconditional cash payments, so there are no stipulations. They won't lose their payments, for example, if they find a job or they go back to school.”
While giving people money may sound easy, for most cities, including New Orleans, it's proven labor intensive. That’s because MGI, the organization funding most of the pilots, requires cities to run the programs as sanctioned experiments and work with its research partner The Center for Guaranteed Income Research on data collection.
Pilot payments are unconditional, but participants and members of the control group will be asked to complete optional surveys and interviews. If they complete them, they’ll receive additional compensation. Shaevitz said surveys will be distributed every five months with the last one happening after the pilot is completed.
Another stipulation on partner cities from MGI is that participants need to be counseled on how the pilot money might impact their finances, especially if they’re receiving welfare, since benefits can drop quickly when a person’s income increases.
Shaevitz said the city is working with the state to secure waivers that would allow participants to retain their pre-existing benefits and is “hopeful” they’ll be approved. MGI requires grant recipients to preserve recipients’ existing benefits, so it’s unclear what will happen to the pilot if the city’s exemption request falls through.
New Orleans pilot participants will receive the money on a MoCaFi immediate response card, which allows cities to distribute recurring payments. New Orleans cards will also provide access to recreation centers as part of the city’s Crescent City Card program.
While most MGI cities have fundraised additional dollars to supplement their grant money, allocated money from their budgets or dipped into money from the American Rescue Plan — allowing them to launch more expansive pilots with payments ranging from $500 to $1,000 a month for an entire year — New Orleans hasn’t. Cox said the city will only use its $500,000 grant.
Approximately $440,000 will go toward direct payments and $60,000 will go toward pilot support services, Cox said, including stipends for partner organizations, salary for a social worker who will help with onboarding and wraparound services, and a partnership with the United Way of Southeast Louisiana, which has agreed to provide benefits counseling for participants.
To determine how much money to give participants, Cox said the city looked at data from other pilots and a Federal Reserve study that found 40% of adults would have a hard time paying for a $400 emergency. The cost of living in New Orleans also has increased by 9.1% since 2019, according to McNeese State University, and is now higher than the national average.
It also considered the projected impact of the child tax credit, which researchers believe could cut childhood poverty in half. That program maxes out at $360 a month.
Birmingham, Alabama, one of New Orleans’ nearest pilot neighbors, is also relying solely on its grant and plans to give participants $375 a month for a full year.
“It was kind of the sweet spot in our ability to be able to fund a meaningful amount of basic income for as many people as possible,” Cox said. “Surely it would have been possible for us to give larger monthly sums, but that would have meant having fewer participants in the program.”
Rhodes said while higher payments would have been better, she still thinks the money will have a significant impact.
“It's better than zero. It's not enough, but it's better than nothing. Something is a start and I'll be eager for when our city can expand this and increase the amount and increase the number of people who have access to it,” Rhodes said.
Kenneth Johnson, the senior director of Collegiate Academies Next, one of the city’s other pilot partners, agrees. His program, which is part of New Orleans and Baton Rouge charter operator Collegiate Academies (CA), provides post-secondary support for more than 3,000 CA graduates.
He said many working students have dropped out of high school and college due to finances, and giving current students $350 a month could help prevent that.
“If nothing else, it should be able to provide some support [so students] have the ability to cut back from work a few hours a week to focus on school,” he said. “We know it's not enough to cover everything, but it definitely will help students.”
He thinks the money will also give young people the breathing room necessary to think about their futures and make decisions based on their professional desires.
“When you get this kind of financial support you can focus on, ‘Hey, I now have this opportunity focus on getting back in school, or I can focus on getting into a program that will help me get to the type of job that I really want, not the type of job that I feel like I have to have,’” Johnson said.
Following a similar rationale, a New Orleans high school, Rooted School, just wrapped up its own guaranteed income micro pilot. Starting in Oct. 2020, 10 students were given $50 a week for an entire year.
Shaevitz said New Orleans is aiming to recruit more than 125 people so that there are enough applicants leftover to form a control group and an alternate group in the event people selected ultimately choose not to participate in the pilot.
After the pilot’s enrollment window closes next week, Shaveitz said the applications will be sent to MGI for review and random selection. He expects participants to be selected in the next two to three weeks and for onboarding to happen in mid-December.
Rhodes, with the city’s pilot partner ALAS, said some of the young people she’s referred to the pilot already have plans for the money.
“I have students who have already told me that the $350 is going to go towards paying for their books for college, so that might be the difference in whether or not they can study this semester,” she said.
Others are planning on putting the money toward rent, childcare or family home repairs.
Gil Rivera has applied for the pilot and is waiting to hear back. She said the money likely won’t be enough to help her start saving for school, but it would help her take care of her bills.
“Even though it's little, it would help me a lot,” she said.