Can State and Local Basic Income Policies Support Planning for Equity?

Can state and local basic income policies support planning for equity? by Daniel L. Powers B.S., Industrial and Labor Relations Cornell University, 2014 Submitted to the Department of Urban Studies and Planning in Partial Fulfillment of the Requirements for the Degree of Master in City Planning at the Massachusetts Institute of Technology May 19, 2020 © 2020 Daniel Powers. All rights reserved. The author hereby grants to MIT permission to reproduce and to distribute publicly paper and electronic copies of the thesis document in whole or in part in any medium now known or hereafter created Signature of Author: Department of Urban Studies and Planning May 19, 2020 Certified by: Karilyn Crockett Lecturer of Public Policy and Urban Planning Thesis Supervisor Certified by: Ceasar McDowell Professor of the Practice Chair, MCP Committee Department of Urban Studies and Planning 2 Can state and local basic income policies support planning for equity? by Dan Powers Submitted to the Department of Urban Studies and Planning on May 19, 2020 in Partial Fulfillment of the Requirements for the Degree of Master in City Planning Abstract: Interest in basic income has been rising as more and more cities and places undertake basic income pilots, seams in existing supports become more and more apparent, and racial and class-based disparities widen. Yet the justifications offered for basic income programs are diffuse and sometimes in tension. Questions remain about the purpose of pilots, and whether pilots will ever make the jump to permanent policies. This thesis sets out to answer whether basic income policies at the city or state level can support equity. In doing so, it reviews the existing literature; examines failed basic income programs; investigates existing federal benefits systems and policies, and how they could constrain a basic income; and compares a city-level basic income pilot (Stockton’s Economic Empowerment Demonstration) with a state-level basic income program (Alaska’s Permanent Fund Dividend). Assessing this evidence demonstrates the breadth of decisions involved in designing basic-income policies, and the tradeoffs involved in each. Ultimately, basic income policies can support equity by providing a direct, flexible benefit to the poor and avoiding administrative burdens built into many benefit programs. However, whether a policy actually supports equity goals depends on the specific decisions involved in its design, including its financing, eligibility criteria, and whether other services are sacrificed to implement it. Serious questions remain unanswered by existing pilots about how a permanent policy would be financed and implemented. Uncritical calls for a basic income risk neglecting details that determine whether policies will support or undermine equity. City and state governments could still benefit from incorporating features of basic income into their equitable development strategies, and pilots and advocates could work more to answer unknowns about the transition to policies. Karilyn Crockett Lecturer, Department of Urban Studies and Planning Thesis Supervisor Jeff Levine Lecturer of Economic Development and Planning Thesis Reader 3 4 Acknowledgments I am immeasurably grateful to Karilyn and Jeff, for their support and (especially) patience throughout this process. Karilyn in particular deserves credit for most of the things I’ve done of any value in graduate school since my first semester in her Housing, Community, and Economic Development class, and I will forever be indebted to her for her assurance and advice throughout my time at MIT. I am also so appreciative of the chance to meet my classmates in DUSP. I am running out of time as I write this so I will be brief, but you all have been the best part of my time in graduate school and I am deeply saddened that our physical time together was cut short by the Coronavirus. Thank you to my parents and brother, for your love and support. Thank you to my friends, for existing and making my life better. Thank you to the basic income researchers and practitioners who took the time to meet with me and share information. I am especially grateful to the Stockton Economic Empowerment Demonstration, for sharing access to participant interviews. 5 6 Table of Contents Abstract...................................................................................................................................... 3 Acknowledgments ...................................................................................................................... 5 Table of Contents ....................................................................................................................... 7 Chapter 1: Introduction ........................................................................................................... 9 Introduction ......................................................................................................................... 9 Methodology ......................................................................................................................12 Theoretical Grounding........................................................................................................13 Chapter 2: History of and Existing Research on Basic Income ..............................................18 Definition and History of Basic Income ...............................................................................18 Literature Review on Basic Income ....................................................................................24 Examining Basic Income Failures ......................................................................................34 Federal Social Services and Transfer Programs ................................................................44 Chapter 3: Examining Basic income in Stockton and Alaska .................................................64 Overview ............................................................................................................................64 Context-setting ...................................................................................................................65 Basic Income in Stockton and Alaska ................................................................................75 Chapter 4: Evaluating and Designing Basic Income Policies .................................................94 Overview ............................................................................................................................94 Policy Choices and Tradeoffs.............................................................................................95 Benefit Simulation in Stockton .......................................................................................... 104 Conclusion and Design Considerations ............................................................................ 105 Chapter 5: Conclusions ....................................................................................................... 109 Bibliography ........................................................................................................................ 114 7 8 Chapter 1: Introduction Introduction The US has a deeply problematic relationship with social assistance. Welfare has only been set aside for the “worthy” poor, defined in racist and regressive ways that direct aid away from the most needy, stigmatize recipients, and set up numerous administrative hurdles to claiming aid. Out of a patronizing concern that people who receive aid will use it in “unproductive” or non-socially sanctioned ways, aid is traditionally burdened with numerous conditions—such as work requirements—to control the type of beneficiary, the way that they use their benefits, and limit participation. Cities and states have a deeply problematic relationship with equity and inclusion. The tools available to each to ensure that the most-needy benefit from development are often compromised or vulnerable to compromise. Cities often view their responsibilities to their residents as magnets for private investment from which benefits will flow, rather than providers of essential services and structures that shape people’s lives. Community benefits agreements have been used to try to ensure that residents benefit from development, yet often require public giveaways as tradeoffs for private concessions and can give a façade of public approval to projects opposed to community interests.1 Cities and states often give tax incentives to projects purporting to provide public benefit without accountability mechanisms to ensure that they meet their promises.2 In March 2020, the advent of COVID-19 across the US made both failures apparent. The US social safety net is not equipped to help masses of people unable to work in conditions of social distancing, and who rely on discontinued public services to provide and offset expenses of childcare. Cities and states have strained to maintain existing systems while bleeding money from the pandemic’s economic hit.3 While COVID-19 has expanded the number of people victimized by the failings of our social safety net, those who will suffer most deeply are the same communities of color who status quo economic policies and processes have always failed. In the midst of the COVID-19 pandemic, republican and democratic politicians have considered at least a short-term, national-level universal basic income to both counteract the economic pain wrought by the pandemic and facilitate social distancing, and have

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