Mayor Levar Stoney announced Thursday the city will launch a universal basic income pilot program.
The Richmond Resilience Initiative will provide $500 per month to 18 working families who don’t qualify for other aid, but that Stoney said still do not make a living wage. Funds for the program will come from both the Robins Foundations, a Richmond-based nonprofit, and the CARES Act.
Stoney said the program will help Richmonders suffering from what he called, “the cliff effect.”
“Our current system tells you to get a job, work hard, put food on the table,” he said. “But make too much money to qualify for federal benefits and all of a sudden you fall off the steep cliff between federal support and the sustainable economic security that comes with a living wage.”
The 18 families were randomly selected from a pool of people who are employed, do not receive government support and have children. Valaryee N. Mitchell, the director of the city Office of Community Wealth Building, said the people in the program represent the city.
“They’re like you, and they’re like me,” she said. “They go to work everyday. They work in production, they work in healthcare, administrative jobs, in food services. They have families, they love their children. They want better lives for themselves and for their families.”
Universal basic income rose to national attention during Andrew Yang’s unsuccessful run for the Democratic presidential nomination. He proposed the United States implement a “Freedom Dividend,” consisting of a $1,000 monthly payment to each American adult.
He and other proponents say these programs give people security and help grow the economy, sentiments Stoney echoed at the announcement. He called the city’s initiative, “a creative way to expand the safety net for those who are continuing to work hard, put food on the table and raise their children.”
The programs are not without their detractors, however, with some suggesting universal basic income programs disincentivize work. Virginia Tech economist Djavad Salehi-Isfahani said this criticism makes logical sense, but that the truth is more complex.
“There is a very reasonable, responsible argument in economics that people work because they need money,” he said. “And if you give them the money, the need for work subsides.”
However, in studying an Iranian program that provided the equivalent of $300 per month, he found that people who received cash transfers didn’t cut back on work.
Salehi-Isfahani argued the amount that is paid is the key in determining if people work less. He said that with amounts such as the $500 in Richmond, people can’t just give up work.
“People have so many needs that are unsatisfied,” he said. “The idea that those expenditures will take a back seat to spending more time watching television is very far from the way poor people think.”
Another area where Salehi-Isfahani said the argument fails is in saying money is the only incentive to work.
“I know personally very few people who wake up on Monday morning and say, ‘I wish I didn’t have work to go to.’ People like their workplaces, which is why they're complaining now that COVID is preventing people from going to work,” he said.
He added, however, that if the payment is too large, and consequently the taxes needed to fund it, some people may be disincentivized to work.
Salehi-Isfahani praised universal basic income programs for allowing individuals to make spending decisions, rather than governments. In his announcement, Stoney alluded to this, saying he believed the money would be spent judiciously.
“I know my grandma would have spent this $500 on enough groceries for two growing boys and to start a rainy day fund,” Stoney said. “I trust these families to be the standard bearers for this program, just as I would my own grandmother.”
Stoney described the program as, “part of something much much bigger,” and said they would consider expanding the program if it is deemed successful.
Maurice Gattis, a professor at the VCU School of Social Work, stressed a need for accessibility in any expansion. He said the stimulus checks sent out earlier this year show some of the potential pitfalls a universal basic income program could stumble into.
“They didn’t all reach everyone, because they’re people experiencing homelessness who didn’t receive the checks, and that money would have been beneficial for them, “ Gattis said.
He also noted that people without access to bank accounts can struggle to access direct government payments. A 2015 report by the Federal Deposit Insurance Corporation showed 7.2% of people in the Richmond area were “unbanked.”
Gattis said universal basic income programs would need to invest in outreach to these communities and make sure they can conveniently access the payments.
“I would like to see an explicit acknowledgement that there is a segment of the population that this exists for,” he said. “And real, clear information on what the steps are for people who don’t have access to access, and how can people help people access their money.”
Despite the caution, Gattis expressed optimism toward the pilot.
“On a small scale, we have an ability to begin to examine what works for whom,” he said. “The reality is the idea of giving people a fair amount of money consistently over time, you know, Richmond hasn’t seen this before. So I think that’s an exciting opportunity.”
