Wisconsin cities look to basic income to close racial, other wealth gaps | Milwaukee Neighborhood News Service
Harrison Freuck and Zhen Wang (Wisconsin Watch)
August 18, 2021
Towanda Perkins is a single mother with two grown sons. Sheworks as an office manager at a nonprofit organization in Milwaukee.
During the pandemic, she has seen many mothers with childrenwho have lost their jobs and been evicted by landlords. Perkins is expecting tosee more homelessness once the temporary halt on certain evictions issued bythe CDC — recently extended to
Oct. 3— ends.
Perkins knows from personal experience what many low-incomeAfrican-Americans families are facing — and how a basic income program beingpushed by some politicians and policy makers could change their lives.
She participated in the New Hope Project, an experimentconducted in Milwaukee in the mid-1990s. In 1994, she was a 23-year-old singlemother, six months pregnant with her second child. The program helped her finda job and to get off welfare. Perkins said the support helped her set a newcourse for her life.
Do you have feedback on Milwaukee NNS's reporting? Take our survey to let us know how we're doing!
Today, in addition to counseling prospective homeowners, sheworks as an office manager overseeing payroll for the Dominican Center, a nonprofit social service agencythat works with residents of Milwaukee’s Amani neighborhood.
“Itwas a big help because I felt like without the New Hope Project, I don’t knowwhere I’d be,” Perkins said.
Entrepreneurs, scholars and politicians, including 2020Democratic presidential candidate Andrew Yang, have proposed programs such asguaranteed income or universal basic income (UBI) to alleviate the persistentwealth and income disparity between whites and people of color. Such programsgive all residents, or in some cases just low-income residents, a set income tobe used however recipients see fit as a way to meet basic needs.
In fact, the Child Tax Credit in President Joe Biden’sAmerican Rescue Plan, which gives parents up to $3,600 per child, has beencalled a “baby step” toward a guaranteed income program.
Basic income
programs proliferate
Madison, Milwaukee and Wausau are just three of 50-plus U.S. cities participating in the Mayors for a Guaranteed Income program, which advocates governmentfunding of an “income floor for all who need it.”
Stephen Young is a University of Wisconsin-Madison assistant professor who studies basic income programs in the United States and worldwide. Young said universal basic income is not a “magic bullet solution” but an idea that has gained traction in the past decade to “address structural unemployment and poverty.”
Former Stockton, California Mayor Michael Tubbs launchedthat city’s program in February 2019. The Stockton Economic EmpowermentDemonstration (SEED) gave 125 Stocktonians with anincome under $46,033 — the city’s median income — $500 per month for 24 months.The program was funded with more than $3 million in private donations,including $1 million from the Economic Security Project.
SEED released its first-year data inMarch. Erin Coltrera, one of the authors of the preliminary analysis, said the numbers show the programworked.
One key finding in Stockton was anincrease in full-time employment among recipients across the first year, from28% to 40% — weakening the common critique that guaranteed income would resultin fewer people working.
The extra money also allowedrecipients to buy small luxuries like birthday cakes and afforded free time tospend with friends or family, the report found. Additionally, the supplementaryincome stabilized households where the money for necessities routinely runsout.
At the start of the program, only25% of recipients could pay for an unexpected expense without borrowing money.A year into the program, 52% could pay for such an expense without going intodebt.
“I don’t think anyone on the teamthought that it would play out that drastically,” Coltrera said.
Wisconsin
joins basic income movement
Similar programs in Madison, Milwaukee and Wausau are stillin the planning stages. While none of them has fully laid out how itsguaranteed income program would work, the source of the funding is set: TwitterCEO Jack Dorsey,  a well-known proponentof guaranteed income. He gifted $15 million to Mayors for a Guaranteed Incometo help fund programs across the country.
Wausau’s program expects to receive $100,000, and Madison expects $600,000. Madison has also raised another$300,000 from local donors, totaling$900,000. Details of Milwaukee’s program are not yet publicly known; Mayor TomBarrett announced the city’s plan to participate in late March.
Wausau Mayor Katie Rosenberg said the city is searching foradditional funding from local organizations to aid more residents with itsprogram, which is geared toward the working poor.
“We’re almost at 15% poverty in Wausau,” Rosenberg said. “Itmight only tackle a few individuals, maybe it’s only 18 or maybe it’s only 15,but it will still take steps toward tackling that problem of poverty andhomelessness in our city.”
Madison Mayor Satya Rhodes-Conway said the city’s programwill likely include at least 125 families with children who willreceive $500 per month for a year.
Coltrera said guaranteed income programs aim to show thatpoverty isn’t caused by poor people doing something wrong, but because ofsystems stacked against them. In fact, the wealth gap between Black householdsand their white counterparts has been consistent — and striking.
TheFederal Reserve Bank of Minneapolis found that the median Black households
earned half as much as their white household counterparts in 2016. The median Black household has lessthan 15% of the wealth of their white counterparts.
Basedon data from 1949 to 2016, the agency found that “Over seven decades … noprogress has been made in closing the black-white income gap. … The typicalblack household remains poorer than 80% of white households.”
The gap is even larger in some metro areas like Milwaukee,where Black households earned just 42% of the income of their whitecounterparts in 2018, said Marc Levine, the founding director of the Center forEconomic Development at the University of Wisconsin-Milwaukee.
SaidColtrera: “We’re trying to shift the narrative away from the idea that if youare poor or if you are experiencing negative financial outcomes that it’sbecause of a personal choice that you made and that it’s because you failed inthe market. Instead, it’s because the market failed.”
Project
short-lived
Perkins was among the 678 participants that the New Hope Project helped using a packageof benefits, including a supplementary income, child care services and healthinsurance. Created by community activists and business leaders, the povertyreduction program ran from August 1994 to December 1998.
In the project report, researchers described it as asocial contract rather than a welfare program due to requirements thatparticipants work at least 30 hours per week.
The project connected Perkins with a job close to home asreceptionist at the West Side Conservation Corp. New Hope supplemented herincome to put her above the poverty line. She also used the program’s childcare services.
Before enrollment, Perkins received Aid to Families with
Dependent Children (AFDC), a federal monthly cashassistance program that primarily aided single mothers with children under 18.Congress abolished the program in 1996 and replaced it with the TemporaryAssistance for Needy Families program, which allowed states to design their ownwelfare systems that have shrunk cash assistance
over the years.
West Side Conservation Corp. ultimately closed, and Perkinslost her job and the child care benefits, circumstances that left her“depressed.”
New Hope
offered new start
But thanks to contacts and experience she built with thefirst job, she landed a second job a couple of months later, at HousingResources, Inc., in May 1997.
Perkins moved to a new house, leaving behind the one-bedroom apartment she had shared with her two boys for eight years. She also bought a new car. In 2010, she finished an associate degree in business management.
A study completed five years after the NewHope Project ended found that about one-third of the participants relied on theavailable community-service jobs. That experience helped them find jobs afterthe program ended.
According to another retrospective study, work among New Hope participantsincreased by 9% and average annual earnings increased by $2,500 in 2005dollars, the equivalent of $3,560 today.  It also improved school performance and eased behavioral problems amongchildren in New Hope families, likely decreasing crime rates and indirectlygenerating large taxpayer benefits, according to the report.
The program was funded by a variety of sources, includinglocal, state and national organizations, as well as by the state of Wisconsinand the federal government. It ended in 1998 after its limited funding ran out.
Basic income
idea growing
The popularity of basic income is growing, partially drivenby Silicon Valley tech moguls including Dorsey, Facebook co-founder ChrisHughes and Tesla CEO Elon Musk.
Yang, a tech entrepreneur and philanthropist, championed UBIas the centerpiece of his 2020 presidential campaign, and later in hisunsuccessful race for mayor of New York City.
Yang’s efforts — and the pandemic — have pushed the idea ofa universal basic income from the margins to the center of political debate. Asproof of how far this idea has come: The Trump administration provided two rounds of cash-based stimulus checks to allcitizens to support them during the pandemic. A recent study showed the cashinfusions cut poverty and
boosted quality of life for millions of people, decreasing anxiety and depression.
And while the American Rescue Plan enjoys broad bipartisan
support,fewer people endorse the idea of a guaranteed income. Just 45% of people polledby the Pew Research Center last August said they would support a $1,000 per
month guaranteed income for all U.S. adults, regardless of whether they areworking.
But the idea of guaranteed income may be destined to gainsteam over time. Pew found that 67% of people in the18-29 age range favor such a program.
Critics often say that cash assistance reduces the incentiveto work. But Perkins argues the opposite; that such programs offeropportunities, providing single mothers the means to work for a better life forthemselves and their children.
“We need somebody to step in to say, ‘Hey, here we’re goingto give you some help to push you,’ ” Perkins said.
This
story was produced as part of an investigative reporting class at the
University of Wisconsin-Madison School of Journalism and Mass Communication
under the direction of Dee J. Hall, Wisconsin Watch’s managing editor. The
nonprofit Wisconsin Watch (www.WisconsinWatch.org) collaborates with
WPR, PBS Wisconsin, other news media and the UW-Madison School of Journalism
and Mass Communication. All works created, published, posted or disseminated by
Wisconsin Watch do not necessarily reflect the views or opinions of UW-Madison
or any of its affiliates.