St. Paul could become the latest American city to provide low-income residents with a guaranteed monthly income as part of a growing movement by mayors across the country to test-drive a policy they hope to see enacted at the federal level.
Mayor Melvin Carter announced during his budget address Thursday that he intends to use federal CARES Act money to fund a guaranteed income pilot program in St. Paul, which would give up to 150 families $500 a month for 18 months. It’s the latest in a series of mayoral initiatives offering a boost to the city’s poorest residents — including opening $50 college savings accounts for babies born in the city and providing emergency cash assistance to families and businesses that lost income as a result of COVID-19.
In an interview, Carter said he’s been interested in the idea of a guaranteed income for years, but the pandemic has added fresh urgency.
“This COVID economy certainly changes everything in a way that requires us to find creative, new and more expansive ways to care for the community,” he said.
Carter will need City Council approval to launch the pilot program, which he said will be paid for first with CARES Act dollars and then with philanthropic and, if needed, public money. Council members say they support the idea but need more information about what the program will look like and what will happen when the 18 months are up.
“I have a lot of questions about how it’ll work,” said Council Member Rebecca Noecker. “I wonder if it’s something that we can afford in the long term, and if it’s what we should be using our dollars on.”
Like cities across the country, St. Paul is facing budget shortfalls in both 2020 and 2021. The city got $23.5 million in CARES money through the state, which must be spent by mid-November and cannot be used as a revenue replacement.
Some council members say the pandemic has only clarified the need for a guaranteed monthly income. This spring, the city got nearly 5,300 applications for fewer than 1,300 St. Paul Bridge Fund family grants — and for some of those selected, the $1,000 check from the city was gone within days.
“There’s no time like now to try something like this,” said Council Member Jane Prince. “We have simply discovered in St. Paul that low-wage workers can’t afford to live whole lives in our city.”
Guaranteed income initiatives exist in communities across the country. In Jackson, Miss., a yearlong program pays $1,000 a month to Black mothers who without it would earn an average of $11,030 a year. In Stockton, Calif., an 18-month study — recently extended to two years — measures the effects of a guaranteed $500 monthly income on randomly selected residents.
Most programs have been funded through philanthropy, which isn’t sustainable, said Madeline Neighly, director of guaranteed income at the Economic Security Project.
“In the current economic climate, when cities’ and states’ budgets are decimated and we’re not sure when they will be back on track, a federal guaranteed income really is the only way to have a long-term, sustainable guaranteed income in this country,” she said.
Carter’s proposal is similar to the Stockton program, which was the genesis for Mayors for a Guaranteed Income — a group of mayors across the country, including Carter, who’ve pledged to advocate for a guaranteed income at the local, state and federal levels.
St. Paul is one of the first participating cities to announce a pilot program, said Sukhi Samra, who directs both Mayors for a Guaranteed Income and the Stockton Economic Empowerment Demonstration (SEED). As in Stockton, the St. Paul program would include a research component, Carter said.
SEED launched in February 2019 and provides $500 a month to 125 adults living in neighborhoods where the median income is at or below the city median of $46,033. Data collected so far show participants spend about 40% of the money each month on food, followed by merchandise and utilities.
Samra said the program was always intended to be temporary. Participants were prepared for an end date from the start, she said, and will get help finding other resources when monthly payments end.
“Our primary guiding belief at SEED is to trust people and to recognize that no one probably knows better what’s in their bank account at any given moment than someone who’s struggling with economic insecurity,” Samra said.
As in Stockton, the ultimate aim of the St. Paul program will be not just to help 150 families for 18 months, Carter said, but to advocate for policy changes beyond the city.
“We definitely want to help the cohort of families that this trial period would impact,” he said. “But the goal is to think about an entirely new way of being for our American economy that benefits all of us.”