By Eric Klefer
Hundreds of Newark residents were each given thousands of dollars with no work requirements. Here’s where the money went, a new report says.
NEWARK, NJ — The bottom line? People who are struggling to make ends meet know exactly what they need to do for their families – and we should trust them to do it. That was the message from city officials as they released an update about Newark’s recent experiment with “guaranteed income.”
On Tuesday, Mayor Ras Baraka and other stakeholders gathered for a press conference to announce a new report about the city’s unique pilot program, which rolled out in October 2021 and ended in September 2023.
Through the program, a group of 400 Newark residents were given “unconditional” payments for two years – with no work requirement and no strings attached. Half of the participants received $250 on a bi-weekly basis, and the others got $3,000 twice yearly.
The money came from a mix of private and corporate donations, as well as public funds from the federal American Rescue Plan. To qualify, recipients had to be residents of Newark, have an income below 200 percent of the federal poverty line, and have been negatively impacted by the COVID-19 pandemic.
A new report conducted by the Center For Guaranteed Income Research at the University of Pennsylvania takes a look at the results of the city’s social experiment. View it online here.
WHERE DID THE MONEY GO?
Throughout the program, participants reported spending their money on necessities like food, clothes, gas, car repairs, utility bills, school tuition and medical expenses.
Other people reported using the money to escape potentially dangerous living situations. One recipient featured in the report described how she used the first lump-sum payment to move out of a domestic violence shelter and into a safe and secure home for herself and her children.
“It was really tough not having income and trying to beg your abuser to send you $500,” she recalled, describing the guaranteed income as a “miracle.”
“I think back on all that stuff, back then, like I could not see myself being where I am now,” she said.
According to Anyanwu Carter, another participant in the city’s pilot program, his family is proof that the money was spent wisely.
“People might think that recipients would spend this extra cash on lottery tickets or something luxurious, but that’s not the case,” said Carter, who worked full-time along with his wife in an effort to support their two children.
And that $500 a month they received? It was spent on things like an extra shirt for his kids’ school uniforms and doctor visit co-pays, he said.
“The $500 we received every month wasn’t a huge amount, but that money filled our financial gaps and helped us sleep better,” Carter said. “Now that the program has ended, we feel the pinch and I’m forced to search for a second job to supplement our income.”
Carter and his family aren’t the only Newark residents who are struggling to keep the wolves from the door these days. In a city where nearly one in three residents live below the federal poverty line, and many can’t survive a simple $400 emergency, the cash is a much-needed source of financial relief, supporters say.
Other people who took part in Newark’s experiment have reported that they spent the money in similar ways.
When Shamonique Jones began receiving her payments from the program, there were two immediate thoughts when it came time to spend the money: her kids and her debts. But in every storm cloud lies a silver lining.
“What I thought was going to be the coldest winter ever turned out to be one of the best,” she said.
“The Guaranteed Income Program helped me pay off all of my preexisting debt, buy my four kids new uniforms, winter clothes and boots,” Jones said, echoing a story that many of the participants shared with city officials.
Other key takeaways from the latest report included:
- Financial Resilience – Six months into the pilot, people receiving recurring payments demonstrated reduced income volatility, and by 18 months, they showed an increased ability to handle a $400 emergency expense, compared to the control group. People receiving lump-sum payments were better able to handle a $400 emergency expense at six, 12, and 18 months, compared to the control group.
- Parenting – Both recurring and lump sum recipients were able to spend more quality time with their children, and their children were more likely to improve their grades at school or enroll in AP courses, compared to children of parents in the control group.
- Housing Security – People receiving recurring payments were better able to maintain stable housing than the control group. Meanwhile, those receiving lump-sum payments were able to handle big transitions, like moving. The rate of homelessness for recipients of recurring payments dropped from 3% to 0%, while for the control group, those rates remained between 2% and 3% throughout the study period.
- Food Security – Recipients of recurring payments reported significantly improved food security six months after the first disbursement and continued to show meaningful improvement throughout the pilot.
- Mental Health – Recipients of recurring payments demonstrated significant improvements in their stress levels at six months and reported less depression and anxiety during the first 18 months of the pilot compared to the control group.
Newark’s pilot program was one of the nation’s largest in collaboration with Mayors for a Guaranteed Income, a national network of mayors advocating for a guaranteed income to ensure that all Americans have an income floor.
The concept of giving people money with no strings attached isn’t unheard of. In California, the city of Stockton tried giving people a universal basic income program in 2019, 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 to 20 black women living in public housing for a year.
However, Newark’s pilot program – which focuses on “guaranteed income” – is a bit different from the concept of universal basic income (UBI). According to a previous statement from city officials:
“UBI is a government program that proposes providing every citizen with a lump sum of income every year with no strings attached. Guaranteed income, on the other hand, argues for providing cash payments to specific, targeted communities in order to address income inequality. It focuses on providing cash payments to people living below the poverty line or with inconsistent or no income.”
“Poverty is the result of failed policy … period,” Newark Mayor Ras Baraka said.
“We structured the Newark Movement for Economic Equity to gather scientific data about the best format for cash interventions, so that state legislators could adopt a proven model,” Baraka said.
“Now that we have results, it’s time for action,” he added. “Ending poverty will make our neighborhoods safer, our cities healthier and our state more resilient.”
This post was originally published on Basic Income Today.