Lansing to offer ‘guaranteed income’ to random households

THURSDAY, April 21 — At least 100 random households across the city of Lansing are set to receive $500 a month for 18 months as part of Mayor Andy Schor’s latest plan to spend nearly $49 million that was allocated to the city as part of the federal American Rescue Plan Act.

The idea is being pitched as “guaranteed basic income.” City officials said they expect to begin collecting at least 500 applications from local households sometime in the next year. From there, at least 100 — perhaps 150 — households will be picked at random for the monthly cash.

“It’s sort of the next big deal in the world of financial empowerment,” said Amber Paxton, director of the city’s Office of Financial Empowerment — which is set to administer the new program with at least $1 million in federal funds that were allocated for the project in Schor’s latest budget. “Others have done similar things, but don’t think there are any other Michigan cities doing this.”

The recent infusion of federal ARPA cash is designed to backfill the city’s budget after tax revenues declined over the pandemic. It can also be used to address “economic harms” to small businesses, nonprofit organizations, frontline city staff — as well as be paid directly to residents.

Paxton labeled the concept as a “pilot” program of the more broadly known economic mechanism known as “universal basic income,” wherein governments pay a set income to all of its residents regardless of their financial situations. The idea dates back to the Roman Empire, but more recently gained popularity after former Democratic  presidential candidate Andrew Yang made $1,000 “Freedom Dividend” payments to all Americans a key part of his campaign platform.

Paxton recognized that the funding plan in Lansing is hardly universal, namely because it’s only set to last for 18 months and will impact only about 0.3% of the city’s 49,500 total households. But it’s similar in that there likely won’t be any financial threshold to apply: Everyone will likely be eligible to apply when the application window opens within the next year regardless of income.

“We haven’t made a final decision on the income requirements but part of this is geared toward serving all people. It’s a research experiment, and there may be some research value to having a range of participants,” Paxton said. “We still have a lot of meetings before this can launch.”

Paxton said city officials are also considering requiring participants to reside within one of the city’s designated “Neighborhoods of Focus” — an annually rotating roster of specific neighborhoods that the mayor prioritizes to receive additional resources and grant funding. 

Among them: The Baker Neighborhood, a large swath of southwest Lansing near Pleasant Grove and Holmes roads and the Willow Walnut Neighborhood on the north side of the city. Paxton said additional neighborhoods can always be added (or eliminated) from the roster.

A similar program recently concluded in Stockton, California, where randomly selected residents received $500 per month with no strings attached for two years. A subsequent study showed the cash measurably improved participants' job prospects, financial stability and well-being.

Unlike in Stockton, however, the funds in Lansing will not be distributed via prepaid debit cards. Paxton said participants, instead, will likely be required to have the funds wired directly into their bank accounts. Those without a checking account — estimated to be about 6% of Michigan residents and 30% of those who make less than $15,000 — would need to create one.

The Office of Financial Empowerment can help assist residents with the process. Paxton said participants may also be required to complete six no-cost financial counseling sessions (once every three months) in order to be eligible to participate in the 18-month pilot.

City officials are also contemplating incentivizing the first 500 applicants with a $100 gift card in order to engage with underserved populations and encourage them to take advantage of the funding.

The city must earmark and spend the first tranche of its federal ARPA funding — including the cash allocated for the guaranteed income program — before 2027. Residents who want to be personally notified when the application window opens can email amber.paxton@lansingmi.gov. 

Schor’s ARPA spending plan was first introduced to the Lansing City Council earlier this month. Other highlights include: $4 million for the Equitable Economic Development Program to assist local minority-owned businesses; $3.2 million to upgrade several parks and recreational facilities; $1.4 million to various community groups as recommended by the NAACP and another $2 million for the City Council to spend as it wants. Click here to view the full budget.