A bad idea by any other name is still a bad idea.
Last week, the Dallas City Council floated a plan to give roughly $250 a month for a year to 325 low-income families — a $1 million taxpayer-funded statement in support of the city’s commitment to promote racial equity and reduce poverty. The money is coming from a pot of at least $20 million in sales tax revenue that city officials plan to spend on racial equity-related initiatives.
The pilot is not unlike similar guaranteed income experiments to reduce poverty underway in at least 30 cities, including Austin, Houston and San Antonio in Texas. Los Angeles County’s program will send $1,000 a month to 1,000 residents for three years, and Chicago’s $31.5 million program, funded from pandemic relief dollars, promises to distribute $500 monthly cash payments to 5,000 low-income households for a year.
Despite noble aspirations, these approaches are flawed and unsustainable as a long-term anti-poverty strategy. Guaranteed income programs are subsidies designed to provide breathing room for families struggling to make ends meet, not unlike various public assistance programs or even the checks that the federal government paid to most Americans during the pandemic. Anecdotally, such payments during the pandemic saved families and businesses and gave other Americans more disposable income to spend.
There are, however, limits to this approach. Just as the federal government cannot afford to provide unlimited rounds of payments, neither can cities, which unlike the federal government, have to balance budgets and can’t print money. And that’s where the wishes of guaranteed income programs confront economic reality.
What works for a handful of carefully chosen people in a pilot becomes less effective and affordable as the pool of participants expands. In addition, inflation will erode purchasing power of recipients, requiring more dollars to address the same number of people. Most guaranteed income programs also are so new that impact is difficult to measure, and the possibility exists that these additional dollars would negatively impact income eligibility rules for other assistance programs.
Dallas officials say eligibility criteria and other details still need to be established and that the program would likely include a partnership with a nonprofit to administer the program and further assist participants to obtain social services.
Instead of initiating a guaranteed income program, Dallas should focus on how it can positively impact housing affordability, homelessness and a long list of community challenges. The city’s role should be to rebuild underserved communities to provide foundations for sustainable growth and economic vitality that will not just benefit a few hundred people immediately but benefits thousands for years.
The city’s greatest contribution to racial equity and poverty reduction would be to remove problematic zoning, environmental degradation and substandard infrastructure hurdles that have stymied investments in under-resourced communities.
Working with nonprofits and the business community to encourage landlords to accept housing vouchers; provide transitional housing and services for homeless individuals; ramp up workforce training; and promote economic development and opportunities in underserved neighborhoods is a much better way to combat poverty and build generational wealth for many than a monthly check to a few.
