Paterson, New Jersey gave residents $400 a month, ‘no strings attached.’ Here’s what happened.

Paterson, New Jersey gave residents $400 a month, ‘no strings attached.’ Here’s what happened.
Paterson, New Jersey gave residents $400 a month, ‘no strings attached.’ Here’s what happened.

By S.P. Sullivan

See original post here.

What would you do if you suddenly had an extra $400 every month?

Dante used it to set up a bank account and get a credit card. His credit score is now a solid 712.

Angela, a single mother, put the money toward a new car to ferry around her toddler. Maria started setting aside 10% of her paycheck each month, finally building up savings.

Those examples come from a new University of Pennsylvania study on a “guaranteed income” pilot program in Paterson, New Jersey’s third-largest city, which found the “no strings attached” monthly stipend led to “statistically significant gains in employment, financial stability, mental health, and overall well-being.”

It’s part of a growing body of research on guaranteed or “universal” income programs, which look to alleviate poverty and cut red tape by doing something controversial: Giving people free money.

Most social safety net programs, such as food assistance, housing vouchers, and childcare aid, come with strict rules on who is eligible and how they can use the funds. Skeptics of unrestricted cash payment programs say free money is bound to be wasted and misused.

But Andre Sayegh, Paterson’s mayor and a proponent of guaranteed income, said when his city gave $400 debit cards to some of its residents most in need at the height of the coronavirus pandemic, the data showed the opposite.

“We give them a card where we could track the expenditures,” he told NJ Advance Media. “So we can see, are they spending the money on liquor or cigarettes? No, what we found is that they were spending it on food, they were spending it on medication, they’re spending it on rent. One woman said for the first time in her life she had a real Thanksgiving with her family.”

Guaranteed or universal income, in various forms, is an idea with a range of proponents through history, from civil rights icon Martin Luther King Jr. and conservative President Richard Nixon to 2020 Democratic presidential candidate Andrew Yang.

Newark, New Jersey’s largest city, undertook its own two-year pilot program in 2021, giving $500 a month to 400 residents, prioritizing those who were homeless, with results similar to the Paterson study. Mayor Ras Baraka, who recently announced plans to run for governor, has argued for expanding guaranteed income programs statewide, saying they’re the best way to lift people from poverty.

So who gets paid?

In the Paterson pilot, the University of Pennsylvania’s Center for Guaranteed Income Research, which conducted the study, oversaw a random lottery that chose the 110 recipients from a pool of more than 3,500 applicants whose income fell below New Jersey’s living wage standard of $30,000 for individuals and $88,000 for families.

Over a year between 2021 to 2022, Paterson sent those people $400 debit cards each month. During the same period, university researchers kept tabs on a “control group” of residents who did not receive the $400 stipend. As the global pandemic raged, the study measured how Paterson residents already struggling to make ends meet fared with and without assistance.

“The $400 monthly cash allowance, while not a panacea, offered financial relief for many participants and served as a valuable blueprint for future policy initiatives — particularly in a diverse city landlocked by extraordinary wealth and exorbitant housing costs,” researchers from the university wrote in a 62-page report published Monday.

Still, the $400 “was not enough to mitigate the broader context of the pandemic, inflation, and housing costs,” the study found. Paterson is one of most challenged cities in New Jersey, with a 21.5% poverty rate that’s more than twice the national average.

Sayegh said the thousands of applicants for the program showed “the great need” for guaranteed income. His city relaunched the program in December, with 200 more recipients.

The first round was funded by private donations, including $500,000 from Twitter founder Jack Dorsey, and the new group is being paid with federal COVID relief dollars, meaning the program has no stable source of funding. The city has requested state aid to fund payments to another 1,000 residents, the mayor said.

A bill sponsored by Rep. Benjie Wimberly, D-Passaic, would establish state guaranteed income pilots in the cities of Paterson, Passaic, Jersey City, Plainfield, Newark, Trenton and Camden, but has yet to get a hearing in the Statehouse.

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