By Harrison Freuck and Zhen Wang (Wisconsin Watch)
Milwaukee Neighborhood News Service
This story was originally published by Milwaukee Neighborhood News Service, where you can find other stories reporting on fifteen city neighborhoods in Milwaukee. Visit milwaukeenns.org.
The typical white family has eight times the wealth of the typical Black family and five times the wealth of the typical Hispanic family, according to the Federal Reserve Board’s 2019 Survey of Consumer Finances. (Claire DeRosa / Wisconsin Watch)
Towanda Perkins is a single mother with two grown sons. She works as an office manager at a nonprofit organization in Milwaukee.
During the pandemic, she has seen many mothers with children who have lost their jobs and been evicted by landlords. Perkins is expecting to see more homelessness once the temporary halt on certain evictions issued by the CDC — recently extended to Oct. 3 — ends.
Perkins knows from personal experience what many low-income African-Americans families are facing — and how a basic income program being pushed by some politicians and policy makers could change their lives.
She participated in the New Hope Project, an experiment conducted in Milwaukee in the mid-1990s. In 1994, she was a 23-year-old single mother, six months pregnant with her second child. The program helped her find a job and to get off welfare. Perkins said the support helped her set a new course for her life.
Today, in addition to counseling prospective homeowners, she works as an office manager overseeing payroll for the Dominican Center, a nonprofit social service agency that works with residents of Milwaukee’s Amani neighborhood.
“It was a big help because I felt like without the New Hope Project, I don’t know where I’d be,” Perkins said.
Entrepreneurs, scholars and politicians, including 2020 Democratic presidential candidate Andrew Yang, have proposed programs such as guaranteed income or universal basic income (UBI) to alleviate the persistent wealth and income disparity between whites and people of color. Such programs give all residents, or in some cases just low-income residents, a set income to be used however recipients see fit as a way to meet basic needs.
In fact, the Child Tax Credit in President Joe Biden’s American Rescue Plan, which gives parents up to $3,600 per child, has been called 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 government funding 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 launched that city’s program in February 2019. The Stockton Economic Empowerment Demonstration (SEED) gave 125 Stocktonians with an income 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 in March. Erin Coltrera, one of the authors of the preliminary analysis, said the numbers show the program worked.
One key finding in Stockton was an increase in full-time employment among recipients across the first year, from 28% to 40% — weakening the common critique that guaranteed income would result in fewer people working.
The extra money also allowed recipients to buy small luxuries like birthday cakes and afforded free time to spend with friends or family, the report found. Additionally, the supplementary income stabilized households where the money for necessities routinely runs out.
At the start of the program, only 25% 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 into debt.
“I don’t think anyone on the team thought that it would play out that drastically,” Coltrera said.
Wisconsin joins basic income movement
Similar programs in Madison, Milwaukee and Wausau are still in the planning stages. While none of them has fully laid out how its guaranteed income program would work, the source of the funding is set: Twitter CEO Jack Dorsey, a well-known proponent of guaranteed income. He gifted $15 million to Mayors for a Guaranteed Income to 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 Tom Barrett announced the city’s plan to participate in late March.
Wausau Mayor Katie Rosenberg said the city is searching for additional funding from local organizations to aid more residents with its program, which is geared toward the working poor.
“We’re almost at 15% poverty in Wausau,” Rosenberg said. “It might 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 and homelessness in our city.”
Madison Mayor Satya Rhodes-Conway said the city’s program will likely include at least 125 families with children who will receive $500 per month for a year.
Coltrera said guaranteed income programs aim to show that poverty isn’t caused by poor people doing something wrong, but because of systems stacked against them. In fact, the wealth gap between Black households and their white counterparts has been consistent — and striking.
The Federal 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 less than 15% of the wealth of their white counterparts.
Based on data from 1949 to 2016, the agency found that “Over seven decades … no progress has been made in closing the black-white income gap. … The typical black 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 white counterparts in 2018, said Marc Levine, the founding director of the Center for Economic Development at the University of Wisconsin-Milwaukee.
Said Coltrera: “We’re trying to shift the narrative away from the idea that if you are poor or if you are experiencing negative financial outcomes that it’s because of a personal choice that you made and that it’s because you failed in the 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 package of benefits, including a supplementary income, child care services and health insurance. Created by community activists and business leaders, the poverty reduction program ran from August 1994 to December 1998.
In the project report, researchers described it as a social contract rather than a welfare program due to requirements that participants work at least 30 hours per week.
The project connected Perkins with a job close to home as receptionist at the West Side Conservation Corp. New Hope supplemented her income to put her above the poverty line.
She also used the program’s child care services.
Before enrollment, Perkins received Aid to Families with Dependent Children (AFDC), a federal monthly cash assistance program that primarily aided single mothers with children under 18. Congress abolished the program in 1996 and replaced it with the Temporary Assistance for Needy Families program, which allowed states to design their own welfare systems that have shrunk cash assistance over the years.
West Side Conservation Corp. ultimately closed, and Perkins lost 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 the first job, she landed a second job a couple of months later, at Housing Resources, 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 New Hope Project ended found that about one-third of the participants relied on the available community-service jobs. That experience helped them find jobs after the program ended.
According to another retrospective study, work among New Hope participants increased by 9% and average annual earnings increased by $2,500 in 2005 dollars, the equivalent of $3,560 today. It also improved school performance and eased behavioral problems among children in New Hope families, likely decreasing crime rates and indirectly generating large taxpayer benefits, according to the report.
The program was funded by a variety of sources, including local, state and national organizations, as well as by the state of Wisconsin and 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 driven by Silicon Valley tech moguls including Dorsey, Facebook co-founder Chris Hughes and Tesla CEO Elon Musk.
Yang, a tech entrepreneur and philanthropist, championed UBI as the centerpiece of his 2020 presidential campaign, and later in his unsuccessful race for mayor of New York City.
Yang’s efforts — and the pandemic — have pushed the idea of a universal basic income from the margins to the center of political debate. As proof of how far this idea has come:
The Trump administration provided two rounds of cash-based stimulus checks to all citizens to support them during the pandemic. A recent study showed the cash infusions 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 polled by 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 are working.
But the idea of guaranteed income may be destined to gain steam over time. Pew found that 67% of people in the 18-29 age range favor such a program.
Critics often say that cash assistance reduces the incentive to work. But Perkins argues the opposite; that such programs offer opportunities, providing single mothers the means to work for a better life for themselves and their children.
“We need somebody to step in to say, ‘Hey, here we’re going to 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.