Editor’s Note: Andrew Yang is a Democratic candidate for mayor of New York. The opinion expressed in this commentary are his own.
A city can’t consider itself prosperous when its poorest residents are unable to even afford the basics of housing, food and childcare. And no one should consider the economic recovery from the coronavirus pandemic a success until the gains in employment, income and social mobility are evenly distributed.
By far, communities of color have suffered the most during this ongoing pandemic. Black workers are overrepresented in jobs that have been deemed essential during this crisis, yet they are among the hardest hit. The loss of life and the loss of jobs have completely upended neighborhoods that were already struggling to make ends meet, especially in expensive cities like New York, Los Angeles and San Francisco.
Congress has offered some direct cash relief in the form of one-time payments and supplemental unemployment benefits during this crisis. They now seem poised to give more thanks to President Joe Biden, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi. While this is a good start, we need cash relief on a consistent basis for far more Americans.
That’s why, in my bid to become New York’s next mayor, implementing the largest basic income program in the country and establishing a public bank – the People’s Bank – are among my top policy priorities. We need policies that will lead to a fair and robust recovery.
Our initial basic income proposal is a $1 billion initiative that would give up to $5,000 annually, paid out every month, to the 500,000 poorest New Yorkers. As the city’s tax base recovers and as we secure private philanthropic commitments, those payouts will grow. This investment will help thousands of New Yorkers avoid situations that cost the city dearly in both human and economic terms.
Fortunately, several other municipalities have already begun trial programs to understand the benefits of providing a basic income to its residents. For instance, Stockton, California recently completed a program that provided 125 residents with $500 a month for two years while another program of participating Black mothers in Jackson, Mississippi received $1,000 a month for one year. A report of the latter found that among the successes, the number of mothers that completed their GED jumped from 63% to 85%.
Cash relief has taken off as a core way of combating poverty because the idea is as simple as it is effective. Giving people money leads to better outcomes for individuals and their families. According to the Stanford Basic Income Lab, which looked at different basic universal income programs globally, “Findings are generally positive that UBI-type programs alleviate poverty and improve health and education outcomes.” It also found that the “effects on labor market participation are minimal,” meaning people continued to work and not rely solely on the cash payments.
Of course, a basic income program isn’t sufficient on its own. As mayor, I also plan to establish a People’s Bank in New York City that will help small businesses access affordable loans and New Yorkers access bank accounts.
The bank would initially launch with a $100 million loan and will partner with local Community Development Financial Institutions (CDFIs), which focus on loans to low-income communities. I made a pledge to help 15,000 small businesses open in New York City, and we won’t achieve that unless we create an investment system that isn’t purely driven by profit and supports businesses that make New York such a dynamic economy.
The bank will also help New Yorkers open accounts throughout the city.
Right now, over 11% of households in New York have no bank account. The lack of bank accounts means the most vulnerable New Yorkers – including undocumented immigrants and individuals with experience in the criminal justice system – are forced to turn to check cashing and other alternative financial services, like payday lending, which often charge high interest rates and have unfair terms of repayment, that leave them in a growing and unending cycle of debt. Households that rely on such services can pay over $600 a year just to cash checks. That’s not a sustainable foundation for a broad-based recovery.
Still, a public bank shouldn’t be the only place vulnerable New Yorkers can gain access to a legitimate bank account or financial services. That’s why US Representative Ritchie Torres of the Bronx and I recently called for financial institutions to stop denying immigrants and other vulnerable populations the opportunity to sign up for their offerings.
Taken together, I believe a basic income program and a public bank are essential ingredients for New York and other cities to recover quickly and equitably.
But cities cannot be solely responsible for pursuing an anti-poverty agenda. During a time of severe budget restraints, we need the federal government to be a partner as well.
Most importantly, President Biden and Vice President Kamala Harris must continue pursuing a rapid acceleration of vaccine distribution so that New York and other cities can ramp up inoculations, especially in communities of color. Any recovery hinges on near-universal inoculations.
And of course, we also need Congress to pass President Biden’s $1.9 trillion American Rescue Plan to help struggling Americans, businesses and state and municipal budgets.
I have no doubt New York and other cities will continue to be the bedrock of America’s economy. That means the mayors of our country’s urban areas have to set the tone for what our economic priorities will be. Cash relief and establishing a public bank are a great place to start.