Building an economic floor

Ray Mahar’s view on guaranteed basic income initiatives is clear.

“1,000 percent it works,” he says. “You see it in people putting time into their own projects, being able to hire sound technicians, volunteer with kids, play more shows,” adds Mahar, director of the Local Sound Collaborative, a music arts support organization. “It all trickles out into other people’s pockets, either with money or creative output, which keeps this ship moving along.”

Last year, the Rochester community agreed with that sentiment. With contributions from 500 donors at LSC’s concert fundraiser, the organization was able to launch its own unique Artist Grant Program, which borrows concepts from guaranteed and universal basic income programs.

Through the AGP, people in the local music community, such as live and studio musicians, sound technicians and production engineers, who were in monetary need could apply for monthly payments of $200. LSC was able to aid five musicians last year, and is expanding to six spots this upcoming cycle. Eventually, LSC hopes to have enough resources to create a program even more in line with UBI and GBI principles.

LSC’s program is not the only basic income effort underway in Rochester. Today, city government began accepting applications for its own guaranteed income initiative. Rochester joins a host of other cities that hope this approach will alleviate income volatility and enhance well-being. 

Mayor Malik Evans is one of several mayors advocating for a guaranteed income at the local, state and federal level, and investing in changing the narrative to highlight lived experiences of economic insecurity. Mayors for a Guaranteed Income, a network of U.S. mayors launched in June 2020, aims to invite other cities to join the effort, provide technical assistance and funding support for new pilots.

“Rochester’s GBI program has the potential to create significant opportunities for our residents to not only survive, but to thrive,” says Evans. “We continue to work to take our city from a poverty mindset to a prosperity mindset, and to prioritize the well-being and economic stability of our community. GBI is one more program helping to do that.”

The city plans to try the program for a year, offering a monthly payment of $500 to 351 individuals. Recipients have no restrictions on use of the funds. Officials hope GBI will supplement, rather than replace, the existing social safety and become a tool for racial and gender equity. 

Typically, guaranteed income offers a stipend of sorts to people who need it most–those who have limited access to opportunities–over a defined period of time. This sets it apart from universal basic income, which gives all people, regardless of income or need, a defined amount of cash.

Many GBI programs, inspired by COVID pandemic-related relief, are still in their infancy, either only a few years in or just beginning like Rochester’s program. Measuring their true impact this early is difficult, although researchers have been collecting data on different standards for success.

Various approaches

The largest and longest-running UBI experiment in the U.S. is Alaska’s Permanent Fund Dividend. Since 1982, Alaska has given its residents a monthly sum from revenue by the University of Alaska found it cut poverty by 20 percent in the state.

In contrast to Alaska’s UBI, which extends to all state residents, Rochester’s GBI pilot and others like it typically are available only to people in poverty for a defined period of time. Other pilots are even more specific in their focus.

For example, the Excel Pilot Program in Durham, N.C., makes $375 per month for one year available to city residents who are within five years of release from the prison system and who also have an income below 60 percent of the Durham-Chapel Hill area median income. The Ithaca Guaranteed Income makes $450 a month available to caregivers for children and aging or disabled adults who also have an income below 80 percent of AMI for one year.

Still other GBI pilots are focused on youth, single-parent families, females, or the impoverished elderly. 

GBI proponents point to recipients’ ability to seek full-time employment, live healthier lives, improve financial security and increase self-determination. In Rochester, surveys conducted by LSC point to an increase in both mental and physical health for participants.

Critics, however, question if these programs can actually make a difference and have worries about program costs. Most GBI programs have been relatively short term or have only recently been enacted, so research on their effectiveness and price tags is still preliminary.

Rochester’s program

Rochester’s GBI pilot is funded by $2.2 million in American Rescue Plan Act funds and a private donation from local philanthropist Linda Philips to the One City Fund 2 at the Rochester Area Community Foundation.

Eligibility for the program is limited to one individual 18 years of age or older per household that is below 185 percent of the federal poverty level. A single person’s maximum qualifying income is $26,973 while an eight-member household’s qualifying income limit is $93,536. Residents must live in a specific census tract of the city as defined by an ARPA eligibility checker.

The money will be split between two years, with two cohorts of 175 people receiving the $500 a month each year through direct cash settlements. 

A representative from the Black Community Focus Fund, the organization in charge of enrollment, says interest has been immense with BCFF fielding thousands of calls about the program already. BCFF officials did not respond to a request for comment in time for this article.

“This program will put Rochester on the path to equity and fairness and create a city that is filled with hope and excitement for the future,” BCFF’s website reads. “The GBI program will provide marginalized communities with critical resources and help to close the community’s wealth gap while boosting our residents’ ability to become homeowners.”

“This council will be monitoring progress closely, and it’s our hope that when this program is successful, we can find the necessary resources to continue and expand the program,” City Council President Miquel Melendez said at the program’s announcement.

The city’s neighborhood service centers, libraries and community organizations will offer assistance with applications. The application window closes on June 29.

Measuring impact

In addition to the monetary awards, the city of Rochester has partnered with the University of Notre Dame’s Wilson Sheehan Lab for Economic Opportunities to create an impact report on year-long process. Previously, LEO has assessed projects in Rochester such as Bridges 2 Success.

The anti-poverty focused lab also is in charge of the randomization process for the program, which will aid in having proper control and participant groups for study. Data will be collected primarily from surveys that track earnings, employment status and mental health, as well as through anonymized credit reports which will better illustrate financial wellbeing.

“When studying a program like this, we want to see, do participants change their labor patterns? Are there differences in household expenditures? Are they less likely to have debt balances?” says Patrick Turner, an assistant research professor of economics at Notre Dame and LEO researcher.

“With a report like this, we have precise and reliable data to use when measuring impact,” Turner continues. “A city could use this to understand cost and effect: What was the bang for our buck with this program?”

For instance, an impact report could measure the effect GBI has on physical and mental stress. From there, it is in the hands of the community and lawmakers to determine whether that effect is worth the financial cost.

Turner is glad Rochester is creating an impact report as it will not only assist the city in decision making, but also will add to the understanding of GBI’s impact overall.

“It’s a testament to how Rochester is willing and committed to learning what works through this study,” he says. “For the future, I’m looking forward to what we’ll learn after we pool data from across the country in pilot programs like Rochester’s.”

Success stories

The Mayors for a Guaranteed Income initiative stems from the success of a program in Stockton, Calif. The Stockton Economic Empowerment Demonstration, the nation’s first mayor-led effort, began in 2019 under former Mayor Michael Tubbs. SEED gave 125 randomly selected residents $500 a month for two years. Similar to the Rochester pilot, the money came with no strings attached and no work requirements.

SEED hoped to test whether a cash influx could reduce poverty and inequality. When the program began, only 25 percent of recipients could pay for an unexpected expense with cash. One year into the program, 52 percent found they could pay off such an expense with cash. 

The guaranteed income recipients also sought to use the cash to find full-time employment. In February 2019, 28 percent had full-time jobs. A year later, 40 percent were employed full-time, findings show. Recipients spent the SEED money on basic needs, including food (nearly 37 percent), sales/merchandise (22 percent on home goods, clothes/shoes and discount/dollar stores), utilities (11 percent) and auto costs (10 percent), officials say. Less than 1 percent was spent on alcohol and/or tobacco.

Researchers from Stanford University found similar results when studying spending trends of 25 different GBI programs across the country. The top categories for purchases were retail sales and services (40 percent) and food and groceries (28 percent).

Researchers found that transport costs, housing and utilities, and financial services (such as taking a loan) were the next greatest incidence of spending. Travel, leisure and entertainment made up 3 percent of all spending.

SEED created a human-centered model, keeping relationships with recipients at the forefront. It practiced consent among the group across the program–participants could leave at any point–and worked to elevate community voice. Throughout the program, recipients were cognizant of the fact that research was being conducted with the community.

More recently in Chicago, to support an equitable economic recovery from the COVID pandemic, Mayor Lori Lightfoot and the city’s Department of Family and Support Services launched the Chicago Resilient Communities Pilot in April 2022. 

Larger in scale, the $31.5 million investment aimed to provide $500 monthly payments for one year to 5,000 households. The pilot was open to all Chicago residents at least 18 years old, residing in a household with an income less than 250 percent of the federal poverty level and experienced hardship due to COVID. Applicants living in poverty and in communities with pre-existing economic hardship were given priority, a 2023 report states.

The program, which completed enrollment last September, received 176,000 applications. As with SEED, CRCP applicants are also participating in an optional research study run by the University of Chicago Inclusive Economy Lab. The study is evaluating how the CRCP program affects participants’ financial and overall well-being and will generate learnings to strengthen existing and future city programs and similar pilots nationwide, officials say.

Beyond economic benefits, many participants in GBI programs also report improved mental health.

“What we heard from the artists we supported was ‘There is someone out there who cares about me and my vision. Now I want to give back that to my community,’” says Mahar.

Research from SEED found that one year after receiving guaranteed income, the treatment group showed statistically significant differences in emotional health, improving in categories such as energy over fatigue, emotional wellbeing, and pain. Those with full-time employment rose as well, as many could afford a job search without necessarily having to undertake multiple part-time positions.

They also found that the economic security that came with the GBI led to greater agency and risk taking among recipients. For example, one participant was able to leave an abusive marriage she had been stuck in because she lacked the funds to leave.

A participant in Durham’s Excel Pilot Program found a path toward recovery for his substance abuse disorder in part thanks to the guaranteed income.

“I think being able to surround myself with good people, it keeps me going and keeps my head on straight,” he says. “I’m always going to have the past I had, but there’s no future that’s set in stone. So, I can make what I want to make out of it.”

Opposition to programs

While SEED’s first-year results were promising, researchers who tracked the program acknowledge that guaranteed income is not a cure-all for the consistent, market-driven obstacles that prevent many American households from achieving stability and health.

Nationwide, a narrow majority (54 percent) of U.S. adults are opposed to the general concept of universal basic income, according to a 2020 Pew Research report conducted at the height of the COVID pandemic. When asked about the possibility of the federal government providing a guaranteed income of about $1,000 per month for all adult citizens, whether or not they work, 45 percent favored the proposal.

In general, older, more conservative, white people tended to be in opposition while younger, more liberal, people of color tended to support the UBI concept.

People who aren’t in favor of universal basic income oppose it more strongly than people who support it, according to the Pew survey. For example, 74 percent of conservatives “strongly opposed” the idea, with 13 percent saying they “somewhat opposed.” On the other hand, only 38 percent of liberals “strongly supported” the statement. A further 37 percent said they “somewhat supported” the proposal.

This lack of robust support could be for a variety of reasons. While conservative criticism is usually based on individuals losing the drive to work or the issue of funding such programs, liberals have questioned the “universal” part of UBI when it comes to already wealthy individuals.

Formal opposition to basic income programs tends to be aimed at UBI, which has a wider reach than GBI and therefore, a larger price tag.

“Universal means universal, so in unconditional cash transfers, there is no particular targeting,” Turner says. “The key contrast is that, in Rochester, it is a targeted focus toward disadvantaged neighborhoods, not universal.”

Turner’s understanding is that many critics are worried about the theoretical upscaling of a program to include all of a state or the country. He says there is no risk of labor disinvestment when it comes to the small number included in Rochester’s GBI pilot.

Still, the short-term nature of GBI could itself be an issue with the programs. Among those tracked by Stanford, the median length of a pilot was 14 months with the vast majority beginning in 2021 or 2022, revealing their connection to post-pandemic recovery.

That shorter length means limited and temporary support for the most vulnerable and impoverished population. Rochester’s pilot is funded through ARPA, a unique and most likely one-time infusion of federal resources. Some left-wing critics have said these elements combined together, are a “band-aid” on the greater issue of poverty. 

Still, advocates for GBI say some relief is better than none. Even the relatively modest $200 per month from LSC has helped musicians to afford food for their families and health care. It is small, Mahar admits, but it is a step forward.

“What happens when there’s no safety net?” he says. “You’ll fall right through.”

“While no single program can reverse decades of economic and racial inequality that marginalize low-income people of color, Rochester BCFF can point the way towards a more equitable and prosperous future,” the organization says.

For Rochester, time will tell if it can replicate the success of SEED and other programs, and if funding for such initiatives will be available in the future.

Jacob Schermerhorn is a Rochester Beacon contributing writer. Smriti Jacob is Rochester Beacon managing editor. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected].