Guaranteed Income Works: Data from Newark, nj
Newark Movement for Economic Equity (NMEE)
Launched by Mayor Ras J. Baraka in the fall of 2021, the Newark Movement for Economic Equity (NMEE) provided cash disbursements to 400 low-income Newark residents for a period of two years. NMEE was designed to examine the impact of recurring payments and lump-sum payments, exploring the unique outcomes of each to understand how to optimally structure unconditional cash payments.
To qualify, recipients had to be residents of Newark, have an income below 200% of the federal poverty line, and have been negatively impacted by the COVID-19 pandemic. The City of Newark partnered with independent researchers to design a randomized controlled trial (RCT) that included three groups. Of the 400 people randomly selected to receive guaranteed income, 200 were given $250 twice a month (recurring payments group), and 200 received $3,000 twice per year (lump-sum payments group); both groups received payments for two years. A control group of 478 people, who did not receive any payments, was also randomly selected from the pool of qualified applicants.
Key Takeaways
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Six months into the pilot, people receiving recurring payments demonstrated reduced income volatility, and by 18 months they showed an increased ability to handle a $400 emergency expense compared to the control group.
People receiving lump-sum payments were better able to handle a $400 emergency expense at 6, 12, and 18 months, compared to the control group.
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Both recurring and lump-sum recipients were able to spend more quality time with their children.
Their children were more likely to improve their grades at school or enroll in AP courses, compared to children of parents in the control group.
Six months after the first payments, recipients had significantly lower household chaos than the control group.
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People receiving recurring payments were better able to maintain stable housing than the control group. Meanwhile, those receiving lump-sum payments were able to handle big transitions, like moving.
The rate of homelessness for recipients of recurring payments dropped from 3% to 0%, while for the control group, those rates remained between 2-3% throughout the study period
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Recipients of recurring payments reported significantly improved food security six months after the first disbursement, and continued to show meaningful improvement throughout the pilot.
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Recipients of recurring payments demonstrated significant improvements in their stress levels at 6 months and reported less depression and anxiety during the first 18 months of the pilot compared to the control group.
The results of NMEE show that both recurring and lump-sum cash payments boosted financial stability and improved child outcomes, but recurring payments also improved housing and food security and helped improve mental health.
These findings are consistent with existing research which shows that lump-sum payments are more likely to be used for larger expenses, such as car repairs or replacing broken appliances, and paying down debt, while recurring payments are more often used to supplement household budgets, improving the ability to pay bills and afford recurring expenses like food and childcare.
A hybrid model, in which recipients receive one lump-sum payment followed by smaller, recurring payments, may maximize the benefits of either approach. Mayor Baraka and leaders of the NMEE continue to advocate for state funding for guaranteed income in New Jersey.