How would an extra $500 a month change your day-to-day life? Would you pay off your loans? Put it towards your rent? Shop for healthier food?
Policymakers in Alexandria, Virginia—a large city south of Washington, D.C. where Free the Facts’ headquarters happens to be located—hope to answer these questions through their brand-new Guaranteed Income Pilot (GIP) program.
Using $3 million in American Rescue Plan Act funding, the Alexandria City Council will work with local non-profits to distribute $500 a month to a group of low-income residents for the next two years.
These payments aren’t just being disbursed at random. The City Council and its partner non-profits, including ACT for Alexandria, the Bruhn-Morris Family Foundation, and Mayors for Guaranteed Income, are treating this pilot program as a learning experience. They will carefully monitor recipient outcomes and determine whether guaranteed income is worth pursuing on a larger scale in the future.
The program has a very ambitious scope. City Council members are hopeful that it will create economic stability, alleviate poverty, and address the city’s racial income gap.
Since Free the Facts is based in Alexandria, we’re particularly interested in how the GIP program shakes out over the next two years. Here’s our handy breakdown of everything you need to know.
First off, can you explain the GIP program in more detail?
Sure! The city will be selecting 150 local households and sending them the aforementioned cash payments of $500 per month for two years. These payments are “no-strings-attached,” meaning there are no specific work requirements or restrictions on how they can spend the money.
In order to qualify, city residents need to be considered “low-income” by meeting one of two requirements:
- They must have a household income that is 30 to 40 percent of Alexandria’s “area median income.” Determined by the Department of Housing and Urban Development, area median income is the exact midpoint of a city’s income distribution. Half of Alexandria’s households earn less than the median income and half earn more.
- They must be considered “ALICE,” which stands for Asset Limited, Income Constrained, and Employed. This is a set of criteria developed by Alexandria United Way to determine what constitutes poverty. ALICE households earn above the federal poverty level, but still struggle with costs of living and operate on bare-bone budgets.
The partner non-profits mentioned above (such as ACT for Alexandria) will invite qualifying residents to join a large selection pool, from which the city’s research partners will randomly select 150 households for the pilot test.
Did you say research partners?
Yep! The City Council has brought on third-party researchers to measure the program’s success over the next two years.
They will run a randomized control trial, comparing the 150 households receiving guaranteed income payments to a control group of 180 random Alexandria households. Specific metrics and details about the trial have not been released yet, but the study will determine whether the monthly cash payments improved financial outcomes for recipients.
The City Council will use these findings to determine whether guaranteed income is a viable policy option to combat Alexandria’s socioeconomic problems.
Wait, tell me more about those problems. What prompted the city to start this GIP program?
Great question. Alexandria, like many other cities over the last half-decade, has been dealing with a stagnant poverty rate and growing racial inequality.
According to the Alexandria City Council’s presentation, there are two main motivators behind the GIP program:
- Median household income in Alexandria has increased by 11% since 2018. Meanwhile, the poverty rate has remained roughly the same since 2013. Basically, economic circumstances are improving for everyone except those in poverty.
- Residents of color are overrepresented in both homeless/poverty data and low-paying jobs.
The underlying causes, according to the City Council, are “factors that are stifling economic mobility” such as the pandemic-induced recession and long-standing systematic racism.
They believe a guaranteed income program could combat those factors.
What led them to that claim? Are there other examples of guaranteed income programs?
Oh yes—there are plenty of examples, studies, and opinions. Some experts believe direct cash payments are not a viable solution and that they would simply fuel inflation. Others say that such payments must be targeted to serve the most needy individuals and households in order to be effective. Still others have found that cash can provide faster relief and be more equitable than our traditional welfare programs.
Take the Stockton Economic Empowerment Demonstration, or SEED program in Stockton, CA as an example. Just like Alexandria’s GIP program, SEED provided $500 a month to 125 Stockton residents from 2019 to 2021.
The SEED program concluded with four key findings:
- Guaranteed income reduced income volatility, or the month-to-month income fluctuations that households face.
- Unconditional cash enabled recipients to find full-time employment.
- Recipients of guaranteed income were healthier, showing less depression and anxiety and enhanced well-being.
- The guaranteed income alleviated financial scarcity, creating new opportunities for self-determination, choice, goal-setting, and risk-taking.
But SEED isn’t the only case study.
Other examples abound: Richmond, VA’s Richmond Resilient Initiative; Jackson, MS’s Magnolia Mother’s Trust; Los Angeles, CA’s BIG:LEAP Program; and Chicago, IL’s Guaranteed Income Pilot which, like Alexandria’s program, will use funds from the American Rescue Plan.
Although the jury is still out on the pros and cons of guaranteed income programs, The City of Alexandria’s hypothesis seems to be that direct cash payments can alleviate poverty and create economic stability.
So what does the future hold?
Alexandria is the latest to join a growing cohort of cities running guaranteed income experiments. If its GIP program is successful, it could shape local policy decisions for the foreseeable future and potentially have an impact on the national debate surrounding poverty and inequality.
But all that remains to be seen. As an Alexandria-based organization, Free the Facts will be keeping a close eye on this interesting pilot program in the coming months. The City Council’s website originally listed a program start date of December 1st, 2021, but has since been updated to say “late 2021/early 2022.” It also states that more details about the application process will be released soon.
Regardless of when the cash starts flowing to these 150 Alexandria households, we can expect to learn a lot from this unique use of American Rescue Plan Act funding. Stay tuned for our ongoing coverage on the Free the Facts Blog.