Guaranteed Basic Income — City of Rochester
Locations
- City of Rochester, New York
Focus Area
- Self-Sufficiency
"GBI programs are founded upon the belief that the people enduring financial instability or poverty are best positioned to make informed financial decisions that efficiently address their household’s needs—whether that means paying for rent, a new tire, or an unexpected trip to urgent care. These participants are granted the freedom to meet their most pressing needs without delay."
The Issue
For families living in poverty, a sudden expense can be devastating. Accessing emergency cash assistance is complicated and often takes too long compared to the urgency of the financial need.
Guaranteed basic income (GBI) programs are based on the idea that families in poverty understand their financial needs best. Month to month, they can decide whether to spend that money on daycare costs, car repairs, or any other household expenses.
There is growing evidence that cash transfer programs can have positive effects for low-income families. For example, a quasi-experimental study of the impact of the US Department of Veteran Affairs’ Disability Compensation program found that receiving an additional $1,000 per year had positive impacts on veterans’ well-being. The payments reduced food insecurity by 4.1% and reduced homelessness by 1.3% over five years, and the number of collections on VA debts declined by 6.4% over five years.
Another study found evidence that unconditional cash transfer programs–meaning that participants don’t need to meet any requirements to receive the payments–improved outcomes. A randomized controlled trial—the gold standard approach for establishing causal relationships between a program and participants’ outcomes—tested the Stockton Economic Empowerment Demonstration (SEED), which provided monthly $500 payments to 100 people. The researchers found that these payments reduced the monthly fluctuations in income that low-income households often experience, increased the percentage of participants who were employed, and improved mental health.
However, more research is needed to determine what amount of assistance is required to ensure that unconditional cash transfers are successful.
Poverty touches the lives of almost 38 million people across America. In Rochester, NY, the Black Community Focus Fund (BCFF) and the City are partnering to close their community’s wealth gap. According to the most recent U.S. Census data, 29.3% of Rochester residents are living in poverty.
The path to self-sufficiency and long-term financial stability often includes unexpected hurdles. The City of Rochester is looking for an innovative solution to help their residents overcome poverty.
The Intervention
The City of Rochester and the Black Community Focus Fund (BCFF) are implementing a new guaranteed basic income program that will provide monthly payments to low-income individuals and households in Rochester, NY.
The City is focused on providing assistance to families in their community. Applicants must be a Rochester resident for one year before the start of the program to be eligible. Those who are selected will receive $500 per month from the City for one year. The direct cash payments are unconditional, meaning that participants can spend them however they see fit, and are designed to supplement existing welfare programs.
Through this program, the City hopes to improve the economic well-being of low-income individuals and households in the city.
Research Question
What is the impact of receiving monthly unconditional cash transfers on participants’ economic well-being, physical and mental well-being, and housing stability?
Intended Outcomes
- Individuals and households who receive the guaranteed basic income will have better economic outcomes—higher educational achievement, smoother spending patterns, better credit, and higher rates of employment—than non-participants.
- They will also report improved physical and mental well-being, as well as better housing stability.
Research Study Design
The Rochester City program is a randomized controlled trial. Due to limited resources and the high cost of the program, the City cannot provide payments to everyone who would be eligible and interested in participating. To be eligible for the program, applicants must have an income at or below 185% of the federal poverty line, be a Rochester resident for at least one year, and reside in a qualifying census tract.
From the list of eligible applicants, LEO researchers will randomly assign participants to the control group or the treatment group. The treatment group will receive monthly payments of $500 each month for a year. The control group will receive no monthly payments, but may access other services available in the community.
At the conclusion of the study, LEO researchers will compare the financial and overall well-being of the two groups.