L.A. Set to Be Largest City to Offer Guaranteed Income for Poor
(Bloomberg) -- Los Angeles Mayor Eric Garcetti is proposing a guaranteed income program for poor residents, making it the largest U.S. city to test such a policy.
Garcetti will ask the City Council on Tuesday to set aside $24 million in next year’s budget to send $1,000 monthly payments to 2,000 low-income families in America’s second-largest city, the mayor said in an interview. Funds from council districts and other sources could bring the total to $35 million.
Candidates for the one-year program would be selected from the city’s 15 districts, based on each area’s share of those living below federal poverty guidelines. Garcetti is targeting households with at least one minor, and suffering some hardship relating to the Covid-19 pandemic.
While the movement is nationwide, the magnitude of Los Angeles’s poverty, where one in five of Los Angeles’s nearly 4 million residents are barely able to make ends meet, puts a national spotlight on the program.
“How many decades are we going to keep fighting a war on poverty with the same old results,” Garcetti said. “This is one of the cheapest insertions of resources to permanently change people’s lives.”
The idea of the government providing poor residents with some basic level of income has been floated by a number of prominent people over the years, including civil rights leader Martin Luther King Jr., libertarian economist Milton Friedman and Republican President Richard Nixon.
Businessman Andrew Yang made the idea a centerpiece of his unsuccessful bid last year to be the Democratic presidential nominee, and he’s continuing to advocate for the policy in his campaign for mayor of New York City.
Los Angeles would join a handful of other cities experimenting with a guaranteed income program. They include Stockton, California, Saint Paul, Minnesota, and Chelsea, Massachusetts. In many cases, the programs are funded by philanthropic organizations.
The coronavirus has accelerated plans for the program. In the past year, the Mayor’s Fund for Los Angeles, a non-profit affiliated with Garcetti’s office, has given out $36.8 million to 104,200 residents through a prepaid debit card called the Angeleno Card.
The city will be the recipient of more than $1.3 billion in federal stimulus funds from the recently passed American Rescue Plan, which could be used to fund the payouts. Los Angeles had a budget of roughly $10.5 billion in the current fiscal year.
“There’s no question the pandemic is proof that this works,” Garcetti said. “Small investments have big payoffs.”
Garcetti, a Democrat in his second term, is co-chair of Mayors for a Guaranteed Income, which has been advocating for the policy at the federal level and funding local programs. The group, which has 43 elected officials as members, was founded last year by then-Stockton-mayor Michael Tubbs. It has received $18 million in seed money from Twitter Inc. co-founder Jack Dorsey as well as $200,000 from Bloomberg Philanthropies, the charitable arm of Michael Bloomberg, founder and majority owner of Bloomberg News’s parent company.
California cities have been taking a lead with these programs. Compton, just south of Los Angeles, fully rolled out its program last week, with 800 families getting between $300 and $600 a month. Oakland and San Francisco also recently outlined details of their projects.
In San Francisco, grants and some revenue from hotel taxes will fund monthly payments of $1,000 to about 130 artists for six months beginning next month. Organizers said the pilot is the first to solely target artists. Oakland will tap private donations this summer to fund its guaranteed income program, providing $500 monthly to about 600 poor families.
Still, a majority of Americans oppose the federal government providing a guaranteed basic income, according to a survey last year by the Pew Research Center. Support for the policy is much higher among Democrats, younger people, Blacks and Hispanics. Nearly 80% of Republicans and Republican-leaning independents oppose the idea of the federal government providing a basic income of $1,000 a month proposed by Yang.
Stockton, about 80 miles east of San Francisco, distributed $500 a month for two years to 125 families. Research from the first year found that recipients obtained full-time employment at more than twice the rate of non-recipients, according to a release from Mayors for a Guaranteed Income. They were also less anxious and depressed, compared with a control group.
Beneficiaries of the Los Angeles program, which Garcetti is calling Basic Income Guaranteed: L.A. Economic Assistance Pilot, or Big:Leap, will be asked to participate in studies to evaluate the impact of the payments on their lives. The mayor said he was targeting $3.5 million in additional funding to study the results.
Ultimately the costs of such programs will be too big for cities to finance alone, he said. But with data proving it works, Garcetti said states and the federal government could be inspired to fund them.
“Everybody said: ‘You give people money, they’re going to buy even bigger TVs,” Garcetti said. “Stockton showed that’s just not true. Low-income Americans know what to do with additional resources to build health and wealth, but too many of them are caught in the cycle of poverty.”
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