‘Guaranteed Income’ For Every Newark Resident? Here’s The Plan

NEWARK, NJ — Wages are plummeting. Rent and other living expenses are skyrocketing. And long before the coronavirus crisis, nearly half of American families were unable to survive a $400 emergency. These are just a few reasons why Newark is considering giving its 282,000 residents a “guaranteed income,” city officials say.

On Thursday, Mayor Ras Baraka and the recently formed Guaranteed Income Task Force released their plan to try out the concept of universal income in New Jersey’s largest city.

Read the full report here.

Universal basic income – offering people regular cash payments with little or no requirements –remains a controversial way of fighting poverty. Supporters hail its simplicity and equity, but skeptics worry about its fiscal cost and incentives, according to the International Monetary Fund.

Newark would dip its toes into the water before rolling out the program on a citywide basis. Currently, officials are planning to roll out a small-scale pilot program that would involve between 500 and 1,000 participants.

The task force is proposing three different options for the pilot, which would cost the city from $4.5 million to $12 million. Participants would get between $250 and $500 per month, or a lump sum of $9,000 to cover an 18-month period.

Overhead costs would run about 20 percent in any of the three scenarios, researchers said.

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The report also recommended that the city convene a “Municipal Fines and Fees Task Force” to find out if Newark’s collection of revenue from its residents could be contributing to their financial insecurity.

Baraka – who pushed for the idea of guaranteed income during his 2019 state-of-the-city speech – offered strong words of support for the pilot program.

In the report, Baraka pointed out that Stockton, California tried out a universal income program last year, offering $500 a month for 18 months to 125 low-income residents. Another initiative was launched in 2018 in Jackson, Mississippi, where $1,000 a month was given for a year to 20 black women living in public housing.

Many reported spending the money on crucial needs such as dental work, car repairs or paying off “predatory debt” and higher education costs, Baraka wrote.

The mayor continued:

“Even as our city undergoes an unprecedented renaissance with a growing entrepreneurial community, a thriving arts and entertainment scene, and world-class transportation infrastructure, our residents are walking a financial tightrope. In a city where 78 percent of households are renters, median rents are up 20 percent while median income is down 10 percent since 2000. Newark’s median income is less than $40,000 a year, while United Way estimates that a family must make $63,000 a year to meet basic needs. Of course, this financial insecurity isn’t unique to Newark. According to the Federal Reserve Board, nearly 40 percent of Americans would not have enough cash on hand to cover a $400 emergency expense.”

Baraka added:

“A guaranteed income implicitly recognizes that poor and working-class families, like all families, should be able to lead self-directed lives. In doing so, it provides an essential recalibration of our societal values. We all deserve dignity, and we all deserve self-determination. This is where our nation should be heading.”

WHERE WILL THE MONEY COME FROM?

The next steps of the plan involve trying to find the funds to run the program from the “local, state and national foundation and donor community,” Newark officials said.

Interested donors can contact Kevin Callaghan, Newark Philanthropic Liaison, at callaghank@ci.newark.nj.us for more information. Individual and smaller donors can contribute online here.

HOW LONG WOULD THE PROGRAM RUN?

How long would Newark’s guaranteed income pilot program run? As long as possible, its supporters recommend.

According to the task force report:

“Two additional considerations for the pilot and research center on the length of the program (i.e. for how long will disbursements be offered?) and of follow-up (i.e. how long after the pilot ends will researchers continue to track participants?). In abstract, a pilot should resemble as closely as possible the potential policy. Guaranteed income policies are, however, meant to provide indefinite cash support to participants. Since that is not possible, the Newark pilot should be designed to be as long as it is feasible. Intuitively, participants may respond differently to a program if the end is in sight than if they can count on the program for the foreseeable future. Perhaps the most well-known current study of guaranteed income, the Stockton Economic Empowerment Demonstration (SEED), includes 18 months of disbursement. The Newark pilot should aim for at least this time frame and exceed it if possible.”

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