Hester St image / Thomas Breen photo
Consultant report: Try out guaranteed income pilot with ARPA $. Mayor Elicker: Not worth it with this pot of money.
Should the city use federal aid to send $500 per month to a small group of economically vulnerable residents?
Or would such a “guaranteed income” pilot program offer too little long-term bang for the city’s buck, and is therefore not the best use of New Haven’s limited pandemic-relief funds?
Those questions — about whether or not the city should invest in temporary unconditional cash transfers to low-income city residents — are raised in a recently released 46-page report put out by the urban-planning consultants Hester Street and DC Design.
The Elicker Administration hired those two firms last year to help lead a series of community outreach efforts around how the city should spend a large chunk of its $100 million-plus in federal American Rescue Plan Act (ARPA) pandemic-relief aid.
The report — which is dated December 2021 but which Hester Street sent out on March 16 via an email press release — includes among its handful of income-inequality-busting recommendations a proposal to fund a temporary “guaranteed income pilot” modeled on universal basic income (UBI) programs already tried out in other cities, such as Stockton, California.
“Across the engagement process, income inequality was identified as the most pressing issue area in addressing the racial wealth gap,” the relevant section of the report reads in its advocacy for such a pilot program.
“An overwhelming number of stakeholders expressed the need for direct financial support for New Haven’s most vulnerable populations. The overlapping structural barriers to building wealth for Black and Latinx households highlight a need for programs such as guaranteed income and a comprehensive approach to increasing financial literacy and planning, as well as effectively accessing federal supportive funding streams that have come online through the COVID-19 pandemic.”
The consultants recommended that the city allocate $8 — $10 million of federal ARPA aid in part towards giving $500 per month for a year or two to roughly 800 qualifying households.
They also recommended that the city use the rest of that $8 — $10 million allocation to hire five new counselors/navigators at the city’s Financial Empowerment Center.
The consultant-written report backing a guaranteed income trial comes out roughly a month after Westville Alder Darryl Brackeen, Jr. introduced a similar proposal to the Board of Alders in early February. Brackeen’s proposal — to use $18 million in ARPA money to give qualifying families $250 a month for a year and a half — is still awaiting a public hearing by an aldermanic committee before it can move ahead in the legislative process.
The Elicker Administration, meanwhile, has also submitted to the Board of Alders a proposed $53 million “Phase 3” ARPA spending plan that is based in part on the community outreach and research led by Hester Street and DC Design.
That recommended spending plan — which includes money for a hodgepodge of housing, vocational technical education, youth engagement, business support, and climate resiliency initiatives — does not include any aid for a guaranteed income pilot. Despite the recommendation in the Hester Street/DC Design report.
Why not?
Mayor Justin Elicker and city Community Services Administrator Mehul Dalal told the Independent in separate phone interviews that they both support the concept of a guaranteed income pilot program.
The problem, they said, is that such an effort is not sustainable and would not have enough of a far-reaching and long-lasting impact on income inequality citywide with the limited one-time cash the city has on hand thanks to ARPA aid.
“Allocating funding is about choices,” Elicker said. It’s about figuring out “what’s going to have a long-term impact on people.” His administration found that — for now, at this time and with this bundle of federal aid — a guaranteed income pilot is just not the right route to go down.
In a note at the bottom of page 25 of the consultant-written report, Hester Street and DC Design implicitly recognize the Elicker Administration’s decision not to take up their recommendation to spend ARPA aid on a guaranteed income pilot.
“These program descriptions reflect community input,” that section of the report reads. “However, not all aspects of these programs were deemed feasible for the Phase 3 proposal (e.g. guaranteed income pilot). New Haven will continue to explore incorporating aspects of these programs into the Phase 3 and future funding streams.”
Click here to read the Hester Street/DC Design report in full.
And the Elicker Administration has declined to pursue funding a local guaranteed income pilot program with ARPA aid, a growing number of other cities across the country has decided to do just that.
The Case For A Guaranteed Income Pilot
The cover page of the Hester Street/DC Design report.
The Hester Street/DC Design report summarizes the results of the city’s ARPA spending public input sessions — and includes several recommendations for how the consultants think the city should use this once-in-a-generation glut of federal money to help address income inequality and the racial wealth gap.
“While the funds allocated in the American Rescue Plan provide a much-needed infusion of resources to people and neighborhoods that have suffered a disproportionate brunt of the pandemic, the funding allocation and implementation process also provides New Haven with an opportunity to heal and reignite trust in city government,” the report’s introduction reads.
“It is an opportunity to reimagine the way City-led policies and programs are implemented, and to reknit the fabric of social and civic life, anchored in justice and equity.”
With these goals in mind, and after taking into consideration feedback from “residents, non-profit and service providers, and community leaders” that participated in these ARPA planning sessions, the report puts forward three proposed programs the consultants think the city should fund with this federal aid.
Those include providing 100 Black and Hispanic small businesses with grants worth $10,000 to $25,000 each, as well as building out a “vocational and entrepreneurial pipeline that will guide young Black and Brown residents towards living wage careers and entrepreneurial opportunities in high growth areas.”
The list of ARPA-funded program proposals includes a guaranteed income pilot and boosting financial planning and support services at the city’s Financial Empowerment Center.
How would such a guaranteed-income program work? And whom would it support?
“A portion of the allocated funds could be used to pilot a Temporary Guaranteed Income (GI) program for a combination of New Haven’s most vulnerable: formerly incarcerated Black, Indigenous and other people of color, very low-income single Black and Latinx mothers and undocumented residents,” the relevant section of the report reads. “These three population groups represent those most at risk of homelessness, unemployment or underemployment..
The report states that such a program could send around $500 per month “over a period of one or two years” to around 800 qualifying households.
“Unrestricted direct payments for very low-income households provide a safety net that enables head of households to more easily access food and essential needs, participate in workforce training or purchase interview clothes,” the report continues. “For individuals exiting prison, unrestricted funds can ease the immediate economic burden of reentry and help provide personal stability.”
The consultants recommend using the same $8 to $10 million allocation set aside for the guaranteed-income program to also fund “financial planning and economic empowerment services to participating households to support them with getting banked, debt management, financial planning and access to eligible federal, state and local support programs.” That could include creating five new “counselor/navigator positions” at the city’s Financial Empowerment Center to provide guidance on how to access federal support programs.
“Tracking and evaluation of outcomes in both the Guaranteed Income pilot and Financial Empowerment services could be carried to assess the potential for scaling up and or expanding the programs,” the report reads.
As a relevant case study, the report cites the Stockton Economic Empowerment Demonstration (SEED).
Located in Stockton, California, that program provided $500 per month for two years to 125 randomly selected residents living in neighborhoods with a median income of $46,033 or less.
“The program helped reduce income volatility, enabled participants to find full-time employment, and improved participants mental and emotional well-being,” the city-hired consultants wrote.
The Case Against. For Now
City social services chief Mehul Dalal.
Asked about why the Elicker Administration chose not to take up the consultants’ recommendation that the city use ARPA aid to fund a guaranteed income pilot, Elicker and Dalal stressed the theoretical appeal of such programs — as well as their apparent limitations when rolled out at such relatively small scales.
“We’ve had a lot of discussions about a guaranteed income pilot” and “I’m very enthusiastic about the concept,” the mayor said.
“Our calculus was that, on the municipal level, we would not be able to do enough with that amount of money to significantly move the dial” around addressing poverty and income inequality citywide.
He said that such a program would likely have to have serious, sustained buy-in at the state and federal levels to succeed in the long term.
Dedicating millions of ARPA aid towards such a program now would mean not funding other wealth-creation initiatives the city intends to back that should have a wider reaching impact, he said.
Included in the mayor’s “Phase 3” $53 million spending proposal that he has submitted to the alders is $10 million “wealth creation and economy” (to quote the aldermanic submission itself.) Some of that money would go towards direct grants for small businesses, with an emphasis on helping Black and Hispanic-owned businesses; larger grants to support “innovation and start-up business development”; and five new counselor/navigator positions at the city’s Financial Empowerment Center.
Dalal said that even before Congress passed and President Biden signed ARPA into law in March 2021, he was looking into the feasibility of setting up a local guaranteed income — or UBI — pilot.
“There’s a lot of interest, and I think it’s a very important and potentially transformative idea,” he said. But, “when you look down into the literature, the number of examples in peer-reviewed published studies is not as many as one would hope before one would adopt a large-scale investment like this.”
He recognized that that relative uncertainty about the long-term effectiveness of UBI is likely going to change, as several municipalities across the country have decided to set up pilot programs with ARPA aid — and will therefore provide significantly more data as to whether or not these programs can work at larger scales on the municipal level.
Some of the challenges to setting up a UBI program today, he said, would include making sure that low-income residents who already receive aid from the state don’t lose those benefits just because of an income boost thanks to a local UBI.
He said that most of the programs he’s looked at — including Stockton’s, and several in Canada targeted at formerly homeless individuals — rely on philanthropic funds.
There’s “no clear pathway to sustainability,” he said. “No major state or federal movement to adopt this as an idea.
“We really didn’t want it to be that we did this great program” for one or two years, and then it had to end because the funding ran out.
But if the limited research into municipal UBI programs like Stockton’s is positive, why not use this one-time federal aid to try out a pilot, see if it works, and try to scale it up if the initial limited program proves successful?
Because of “limited bandwidth, there are only so many things we could pilot,” Dalal said. And the thinking of the Elicker Administration was that “there were other opportunities that we more present and more fitting for New Haven that seemed better at generating the outcome” of reducing income inequality and closing the racial wealth gap.
There have been many UBI trials. I suspect a trial here would produce results similar to what they produced. Even modest levels of UBI payments produce real economic and psycho-social benefits. The question is, then what? Unless the city or state is willing to contemplate spending considerably more on UBI for a full-fledged program, running a trial would be disingenuous. Theoretically, UBI could replace means-tested benefits such as TANF and SNAP. But if I were receiving such benefits. I would be very skeptical UBI would replace them and that funding for UBI would be maintained in the long term.