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What if residents got no-strings-attached monthly stipends? Lansing could try basic income program

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Flickr - MI SHPO

Updated on April 13 at 7:31 p.m. ET

Lansing could test out a program where certain residents get no-strings-attached monthly stipends.

A proposal submitted by Mayor Andy Schor would earmark $1 million in federal pandemic recovery money from the American Rescue Plan Act for a more limited version of what's often referred to as a universal basic income program.

Officials are still ironing out details about who would qualify and when the program would start, assuming City Council approves the funding.

But as many as 150 households could get $500 monthly payments over an 18-month time period, said Amber Paxton, who leads the city's Office of Financial Empowerment.

Under a true universal basic income program, every adult gets regular payments, regardless of need. The concept gained attention nationally when Democratic presidential candidate Andrew Yang included it as a pillar of his failed 2020 campaign.

In Lansing, however, Paxton suggested the city could limit applicants for the payments to people living in under-resourced neighborhoods that City Hall calls neighborhoods of focus.

Paxton emphasized that any plans are far from final, however. Other options might include limiting eligibility to people making less than 80% of area median income or to certain groups like single mothers.

Proponents of guaranteed income say it keeps people out of poverty by helping to cover bare minimum costs and that it eliminates the red tape of need-based social assistance programs.

But critics worry such plans would be costly or that they would lead to waste and discourage work.

Paxton believes it can be more effective, however, to give people flexibility with their money instead of tying payments to specific uses like rent or food.

"If we make the assumption that people will spend it quote-unquote, irresponsibly, that is really not a fair way to treat people," Paxton said. "We know that some families are in so much need, that this can mean the difference between having medication and not having medication, seeking medical treatment and not seeking medical treatment, having enough money for clothes for their children."

Lansing's basic income proposal is based off a similar pilot in Stockton, California, where 125 randomly selected residents got $500 monthly payments for two years.

Preliminary findings, evaluated by university researchers and funded by the Robert Wood Johnson Foundation, determined that people who got the payments were more likely than a control group to gain full-time employment after one year.

Researchers suggested it was because greater financial stability gave people more time to invest in training like coursework and internships that resulted in promotions or better jobs. They also found, based on surveys, that the payments improved participants' overall mental health.

And Paxton says the concept of unconditional payments has gained credence after the federal government sent stimulus checks to millions of Americans during the COVID-19 crisis.

"People saw that not only could it be done, but it could be done and really, really keep people who were close to the edge financially from having this sort of, you know, mountain to climb when it was over," she said.

Lansing could tie its guaranteed income program to financial counseling from Lansing's Financial Empowerment Center.

Officials plan to test the pilot’s success by comparing the credit scores and other financial metrics of people who got the payments to those in a control group. And Paxton says the city could track how residents spend the money by giving people prepaid debits cards — a method used in other cities where officials are testing out such payments through an initiative called Mayors for a Guaranteed Income.

More than 5% of Michigan households don't have a checking or savings account at a bank or credit union, according to a 2019 survey from the Federal Deposit Insurance Corporation, and Paxton says the debit cards could have the added benefit of connecting participants to traditional banking.

In all, Lansing is getting more than $49 million from the American Rescue Plan. The money must be earmarked by the end of 2024 and spent by the end of 2026.

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