Low-income Minneapolis residents to receive $500 a month

A new city-wide initiative tests a guaranteed basic income program for Cedar-Riverside and other neighborhoods.

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The Cedar-Riverside neighborhood as seen on Wednesday, Oct. 3, 2018.

by Caleb Hensin

Two-hundred families in Minneapolis will start receiving $500 a month in spring as part of a new Guaranteed Basic Income (GBI) program.

Mayor Jacob Frey and city officials created the program, which will run for two years. The money will come from the American Rescue Plan Act, which is federal money allocated for COVID-19 relief.

Applicants must live within the nine zip codes listed on the website, including area code 55454, which is in Cedar-Riverside. Eligible residents must earn at or below 50% of the Area Median Income and have proof of negative financial impact due to the pandemic, such as losing a job.

Applications for the program are open and will close Dec. 31. The 200 families will be selected by lottery from the pool of applicants.

City officials selected certain zip codes for the program because they “encompass the highest concentrations of poverty,” according to a press release by the Office of Mayor Frey. This evaluation will “add to the body of national research on the impacts of GBI programs and inform future city initiatives.”

AJ Awed is the Executive Director for Policy and Programs on the Cedar-Riverside Community Council (CRCC). Awed ran for mayor in November and came in fourth.

“We think of this as a great opportunity for low-income, working class income individuals.” Awed said.“It’s a good start to something that will hopefully be expanded to bring in a lot more neighborhoods.”

Awed said the CRCC plans to reach out to neighbors in person and via flyers to inform them of the program.

“Economists from around the world have long posited that Guaranteed Basic Income must become a reality to lift people out of poverty,” City Council Vice President Andrea Jenkins said in a press release. “This pilot is an opportunity to support the most vulnerable members of our society and learn what are the most effective ways to accomplish that.”

The Office of Mayor Frey is working with the Minneapolis Federal Reserve to develop a metric for success and potential next steps for the program.

It is unclear what will happen for families after the initial two years of payments. As of now, the program is only intended for people who live in the listed zip codes, so potential applicants in other parts of the city cannot apply.

“We plan to evaluate throughout the pilot and at the conclusion of the pilot program, but GBI programs are most effectively run with ongoing state and federal resources available to GBI-specific initiatives,” the Office of Mayor Frey wrote in an email to the Minnesota Daily.

This is not the first time in the United States that a GBI program has been implemented. In 2019, randomly-selected residents in Stockton, Calif. started receiving $500 per month as part of a program intended to last two years. After the first year, the program website published that the money “alleviated financial scarcity creating new opportunities for self-determination, choice, goal-setting, and risk-taking.”

Edward Goetz is the director of the Center for Urban and Regional Affairs at the University of Minnesota. Citing the Stockton study, Goetz said that people who receive a guaranteed income saw improvements in overall life experience and a stronger social network. He said these programs can also save state and federal money.

“When people receive a guaranteed basic income, they have to rely less on other programs such as food assistance, which results in those programs requiring less funding,” Goetz said.

Goetz added that people who receive GBI are increasingly likely to seek out employment.

“In most studies such as the one in Stockton, they actually saw an increase in labor force participation, most likely because recipients were able to better afford childcare and transportation,” Goetz said.