10 Things NJ Can Learn From Newark's 'Guaranteed Income' Experiment

NEWARK, NJ — When Newark launched its experiment with guaranteed income two years ago, giving hundreds of local residents $12,000 in “free money” over 24 months with no strings attached, many skeptics said it was a big waste of cash.

“A windfall for drug dealers,” a Newark Patch reader commented on a previous article.

But according to Anyanwu Carter, one of the people who took part in the city's ambitious pilot program, his family is proof that’s not the case at all.

“People might think that recipients would spend this extra cash on lottery tickets or something luxurious, but that’s not the case,” said Carter, who works full-time along with his wife in an effort to support their two children.

And that $500 a month they received? It was spent on things like an extra shirt for his kids’ school uniforms and doctor visit co-pays, he said.

“The $500 we received every month wasn’t a huge amount, but that money filled our financial gaps and helped us sleep better,” Carter said. “Now that the program has ended, we feel the pinch and I’m forced to search for a second job to supplement our income.”

Carter and his family aren’t the only Newark residents who are struggling to keep the wolves from the door these days. In a city where nearly one in three residents live below the federal poverty line, and many can’t survive a simple $400 emergency, the cash is a much-needed source of financial relief, supporters say.

Other people who took part in Newark’s experiment have reported that they spent the money in similar ways.

When Shamonique Jones began receiving her payments from the program, there were two immediate thoughts when it came time to spend the money: her kids and her debts. But in every storm cloud lies a silver lining.

“What I thought was going to be the coldest winter ever turned out to be one of the best,” she said.

“The Guaranteed Income Program helped me pay off all of my preexisting debt, buy my four kids new uniforms, winter clothes and boots,” Jones said, echoing a story that many of the participants shared with city officials.

According to researchers, here’s how most of the money was used:

• 40 percent of the funds were spent at retailers and discount superstores on things like food, clothes, household goods and hygiene products
• 26 percent was spent at grocery stores
• 10 percent was spent on transportation costs like gas and car repair
• 12 percent went to housing and utilities

Other expenses included loan repayments, medical expenses and tuition fees, city officials reported.

The cash came from a mix of private and corporate donations, as well as public funds from the federal American Rescue Plan. The program was rolled out as vast sections of the city were still struggling to recover from the coronavirus pandemic.

According to Mayor Ras Baraka, the experiment was a success.

“Hopefully, someday, there will be no need for this program,” Baraka said. “But until then, there is no good argument not to offer our residents the benefits of guaranteed income.”

Michael Tubbs, founder of Mayors for a Guaranteed Income, said that people are playing by the rules, working hard and going to school … but still can’t pay their rent.

“The issue is not that people don’t know how to manage money, but that they don’t have money to manage,” Tubbs said (article continues below).

• See Related: NJ Rent Surged 12 Percent Last Year, Surpassing Most Of Nation
• See Related: Essex County's Homeless Total Drops, But Still Leads New Jersey

EXPANDING THE EXPERIMENT

With the pilot program ending, Newark officials recently held a roundtable discussion to highlight its success – and what it could mean for other towns and cities in the Garden State.

At the event, a new coalition – the New Jersey Movement for Economic Equity – announced that its members plan to reach out to state lawmakers in Trenton in an effort to keep the momentum from Newark’s experiment going.

The partners include New Jersey Policy Perspective, New Jersey Citizen Action Education Fund, the New Jersey Institute for Social Justice, the United Way of Greater Newark, and the Newark Community Development Network.

As part of the effort, the coalition released a report that outlines several steps that state leaders can take in the short, medium, and long-term to “eradicate poverty in New Jersey” (read the full version online).

Here are 10 lessons that New Jersey can learn from Newark’s guaranteed income experiment, advocates say.

Expand the New Jersey Child Tax Credit – “New Jersey should expand its Child Tax Credit to $2,000 for all children up to age 18.”

Expand the Earned Income Tax Credit – “New Jersey should open eligibility for the EITC to all New Jersey workers, expand the credit to 70 percent of the federal EITC, and include childless workers at 100 percent of the federal credit.”

Reform Temporary Assistance for Needy Families (TANF) – “New Jersey should: increase the minimum TANF benefit to 50 percent of the federal poverty level and eliminate administrative barriers to usage.”

Expand Food Assistance (SNAP) – “New Jersey can and should provide a state supplement to the federal SNAP allocation to ensure no family goes hungry. New Jersey should replace the federal temporary SNAP benefit with its own supplemental benefit amount.”

Cut The Red Tape – “New Jersey should review every state cash-like program such as housing assistance (Section 8), child care eligibility, WIC, SNAP, and TANF to reduce administrative burden, increase data sharing, and eliminate paperwork for applicant households.”

Automate Tax Filing – “New Jersey should create an automated state tax filing system that uses administrative data to send pre-populated tax forms to all households, especially those with low incomes.”

Invest in Tech, Share Data – “New Jersey should invest in technological changes to integrate applications; mandate data-sharing across agencies for Medicaid, SNAP, WIC, and TANF; and encourage co-enrollment in multiple programs once eligibility for one is determined.”

Establish a Baby Bonds Program – “New Jersey should create a baby bonds program with a robust initial deposit for all children born into low-income families in New Jersey.”

Fund More Guaranteed Income Pilots – “New Jersey should fund a guaranteed income pilot for at least five additional areas statewide — on the scale of the Newark pilot — including urban, suburban and rural communities.”

Create A Task Force – “New Jersey should create a task force with at least $5 million in funding to research and develop a 10-year plan to implement guaranteed income in New Jersey.”

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