Issues & Insights
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Mayors For Free Money

Earlier this year, Stockton, California, Mayor Michael Tubbs formed a new coalition, Mayors for a Guaranteed Income, with the goal of lifting Americans out of poverty by providing monthly, no-strings-attached, cash assistance. Cities started to embrace the idea as local economies ground to a halt and millions of families faced serious hardship.

Some of the nation’s largest municipalities have now pledged support, including Los Angeles, Newark, Shreveport, New Orleans, Atlanta, Philadelphia, Pittsburgh, and Richmond. The number of mayors in the coalition, only 11 in July, stands at 30 today, and the effort has won support from Twitter CEO Jack Dorsey, who recently donated $15 million. The project is even gaining steam in Texas: San Antonio mayor Ron Nirenberg has publicly signed on.

The idea of a guaranteed basic income or universal basic income is not new, of course. Unlike other welfare programs, the GBI has no work requirement; recipients receive funding without conditions. But no matter how it’s structured, a guaranteed income can’t provide a long-term, sustainable solution for low-income residents struggling to pay their living costs.

The primary component of high living costs, particularly in American cities, is housing. In metropolitan areas with living costs above the national average, housing accounts for roughly 88% of the variation, according to the Urban Reform Institute’s Standard of Living Index. 

Overly burdensome local-development regulations – environmental and impact fees, material-specific building requirements, permitting delays, urban-growth boundaries, strict zoning rules – drive up housing costs. The Texas comptroller noted that, on average, roughly 25% of the cost of new residential development can be attributed to local regulations. These costs are rising quickly, and even a supplemental income from pilot guaranteed-income programs won’t ensure that recipients keep pace with these cost increases long-term.

While the pilot programs are garnering support from charities and philanthropies, nonprofits, and even the private sector, their ultimate purpose is to serve as a template for a federally subsidized program – meaning that taxpayers would end up picking up the tab.

“Guaranteed income has to be a federal solution,” said Tubbs, who lost his reelection bid in November. “But we understand Washington can’t move as fast. We need to give folks in D.C. the stories and cover to do this.” Dorsey echoed those sentiments in a tweet following the announcement of his $15 million commitment, saying that he hoped the pilot programs would “inform federal policy in the future.” If that happens, the price tag would be massive – totaling $1.2 trillion, estimates David Harrison in the Wall Street Journal. That’s equivalent to 5.9% of U.S. annual economic output.

But while its costs alone are prohibitive, the guaranteed basic income’s core problem is its flawed premise. Rather than encouraging economic mobility through work or educational attainment, guaranteed-income programs require recipients to stay under an income ceiling in order to stay eligible for funding. As with many other local soluti ons, GBI is an ill-fitting fix to a government-created problem. Instead of handing out free money, cities should focus on improving economic opportunity for those at the bottom of the economic ladder. Mobility, not cash, is the only reliable guarantee for a better life.

Charles Blain (@cjblain10) is the president of Urban Reform and Urban Reform Institute. He is based in Houston and writes on municipal finance, urban politics, and other issues. This piece originally appeared in City Journal.

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1 comment

  • Give everyone free money. Use the income tax to claw back from those that already have enough income. Eliminate welfare, make it simple. The market will adjust incomes as well knowing that everyone is getting a government check.

    Of course it is never simple.

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