Some Newarkers will get $500 a month - no strings attached - in pilot income program

Posted May 10, 2021

Newark families and individuals will begin receiving cash payments worth $500 a month with no restrictions on how they spend the money, under a guaranteed income trial program addressing housing insecurity, Mayor Ras Baraka announced on Monday.

The so-called Newark Movement for Economic Equity program will begin paying an initial group of 30 recipients as soon as this week, followed by another 370 households this fall, for a total of 400 participants in the two-year program, which is being paid for through private contributions from foundations and individuals.

Newark’s is one of 22 programs being launched by a nationwide coalition known as Mayors for a Guaranteed Income, which also includes Mayor André Sayegh of Paterson, who in March announced a similar program for his city.

Guaranteed income unconditionally gives monthly cash payments to individuals with no strings attached, no work requirements, and is rooted in the history of racial justice,” Baraka told reporters during a Monday press conference outside City Hall. “In 1967, against a similar backdrop, Dr. Martin Luther King called for something very similar in terms of guaranteed income for folks who needed it that most in this country.”

Baraka first broached the idea of a guaranteed income program during a state-of-the-city address in March 2019. He convened a panel to study the idea, the Newark Guaranteed Income Task Force, which produced a report in favor of the program last summer, “Building Financial Security: Newark’s Roadmap Toward a Guaranteed Income.”

Baraka said implementation of the program was slowed by the coronavirus pandemic.

Unrestricted payments differ from rent vouchers, food coupons, healthcare subsidies or other forms of support that are limited to specific needs, often with spending decisions in the hands of bureaucrats. Rather, the payments put the decision-making power in the hands of recipients, who know their needs better than anyone else, and have both the responsibility and flexibility to allocate those resources in the most efficient and effective ways possible, Baraka said.

“Through the Newark Movement for Economic Equity, we will show the world that we give our residents freedom of choice and recognize and affirm their inherent dignity,” the mayor said. “They will make decisions that will help us build a stronger and more resilient city.”

The Newark Movement program director, Hawwa Muhammad, said the city had worked with some non-profit and community-based organizations to develop a pool of people eligible, out of which the initial 30 participants were chosen at random.

The remaining participants will be chosen later, also randomly, from among applicants to the program following a public awareness campaign targeting people likely to be eligible. Basic qualifications are Newark residency and a household income less than 200% of the poverty level.

All 400 recipients will receive a total of $12,000 each over the two-year duration of the program. But the recipients will be divided into two groups, with half of them receiving monthly payments of $500 each, and the other half receiving two lump-sum payments of $3,000 each year, or four payments in all.

Two of the recipients were on hand during Monday’s event.

Magaly del Carmen, a 62-year-old woman who was doubly affected by the pandemic last year, when she contracted the coronavirus and was sickened with COVID-19, and when her husband lost his job a local restaurant that closed due to the downturn. Del Carmen, who speaks only Spanish, said she would use her monthly payments for utilities.

Another participant, 19-year-old Duwan Priester, a lifetime Newark resident, said he will rent an apartment that will let him focus on his studies at junior college this fall.

“They do not have dorms on campus,” Priester told the gathering.

A fundamental goal of the pilot program is to assess how effective the payments will be in providing housing security to the participants. The idea behind allocating payments two ways is to determine whether providing lump sums was more or less effective at doing that.

For example, Muhammad noted that a family could use a lump sum to put down a security deposit and pay other up-front costs involved in moving to a new house or apartment. Moving to a new home could better meet a household’s needs and could even be cheaper in the long run, but nonetheless might require more cash than that family would have on hand, even if they were receiving the $500 monthly payment.

Muhammad said the program will cost just under $4 million, including $2.2 million that has already been raised, with contributions from the Victoria Foundation, Mayors for a Guaranteed Income, and individual and anonymous donors. Additional support came from the Jain Family Institute and the Economic Security Project. Additional donors are invited to contact Kevin Callaghan, the city’s philanthropic liaison at the Council of New Jersey Grantmakers.

Research to determine the effectiveness of the project will be led by the University of Pennsylvania’s Center for Guaranteed Income Research (CGIR). MoCaFi, an African-American-owned financial tech firm with offices in Harlem and Newark, will assist with distribution of the funds and provide credit-building and wealth coaching services to participants.

Residents of Newark and Paterson could use the extra income. Both cities have household incomes of less than half the statewide average, with Newark households taking in $35,199 a year and Paterson’s $41,360, compared to New Jersey’s statewide figure at $82,545, according to composite census figures for the years 2015-2019.

Newark’s poverty rate for the same period was 27.4%, while Paterson’s was 26.6%, both about triple New Jersey’s statewide rate of 9.2%.

Paterson, which is about half the size of Newark, will conduct a more modest guaranteed income program, with 110 participants all receiving $400 monthly payments for one year, not two, and no lump-sum alternative. Before its April 30 deadline, the Paterson program received just over 4,000 applications, said Sayegh, adding that participants will be chosen by the end of this month, with payments to begin in July.

Baraka and Sayegh said they’ve been in touch regarding their programs and would compare the results they see as time goes on.

Newark and Paterson are the state’s only two cities with guaranteed income programs at this point.

“But I’m sure we’ll inspire others,” Sayegh said, “because the need is there.”

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published this page in News and Politics 2021-05-11 03:06:27 -0700