The Bottom LineThe Bottom Line

Economics in Brief: New Basic Income Programs Launch in Minneapolis and New York City

Also: The New York State Comptroller asks for racial equity audits at major companies, and more.

New York City skyline

(Photo by farmboyted / CC BY-NC 2.0)

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Basic Income Program Aiding Growing Families in New York City

Guaranteed income programs are picking up.

Launched in July, New York’s Bridge Project is providing 100 new mothers with $500 or $1,000 a month for three years. The program is funded by a $16 million donation by a venture capitalist and his wife, the New York Times reports.

Participants in the program have average household incomes of $14,500, and about 20% of the mothers are undocumented. While most new mothers use the funds towards baby supplies, others have used the extra money to help them get through nursing school, purchase a special high chair for a child showing symptoms of cerebral palsy and as additional support when food stamps run out.

This support is especially beneficial as the child tax credit came to end this month, with studies by Columbia University estimating that it will lead to a jump in the nation’s child poverty rate, McClatchy DC reports.

The Bridge Project plans to aid an additional 500 expecting mothers by April.

But it’s not just New York. Minneapolis will also launch its own basic income pilot for 200 families in the city, according to the Star Tribune. The city is planning to use $3 million set aside from the American Rescue Plan to provide participants with $500 per month for two years.

Unlike traditional welfare programs that require participants to adhere to strict work and education conditions, Erik Hansen, the city’s Director of Economic Policy and Development, said that the pilot would help address Minneapolis’ racial disparities in a radically different way.

“We have some of the largest gaps in wealth-building in the country. We have some of the highest gaps in homeownership by race, in high school graduation by race. Workforce participation rate is going to be determined based on skin color in Minneapolis and St. Paul,” he said. “We need to start thinking of different ways to try and address this disparity.”

Next City has been tracking basic income programs on an interactive map. We know about more than 30 so far. Is your city on the list?

New York State Comptroller Calls for Racial Equity Audits at Five Major Companies

New York State Comptroller Thomas P. DiNapoli has filed shareholder proposals asking for independent audits of corporations’ racial equity practices.

Chipotle Mexican Grill, Dollar General Corp., Dollar Tree, Inc. and Match Group, the parent company of Match.com, Tinder, and other popular dating apps, were among the group asked to complete a racial equity audit. DiNapoli’s office also re-filed a racial equity audit request to Amazon, originally filed last year. Since the state’s pension fund invests some of its $267.8 billion assets into these corporations, the Comptroller has a stake in these and many other companies.

A press release from the Comptroller’s office cites concerns including Chipotle’s COVID-19 practices, general mistreatment of minority workers, and a use of algorithms that reinforce racial bias.

“After George Floyd’s murder, and as the American public cried out over the killings of other Black men and women, corporations pledged to fight against racial injustice,” DiNapoli said. “Companies are responsible for their business practices and must ensure that they do not harm their bottom line. Our state’s pension fund is committed to ensuring the companies we invest in address racial equity.”

DiNapoli’s proposal asks that the results of the audits be publicly disclosed on the company’s website.

Cities Should Stop Trying to ‘Scale’ Local Businesses

Policymakers have long focused on the potential of entrepreneurship to revitalize local communities. A Harvard Business Review report, however, indicates that this may not be the case.

Research shows that entrepreneurial training initiatives that aim to address income disparities through venture investment do not address urgent local issues and instead lead to greater income gaps in communities. Researchers shadowing a founder participating in a business accelerator found that founders often had to forgo their original vision to appeal to more investors.

The impact locally is therefore short-lived, as many companies left their local communities “for greater access to the capital, talent, and industry-specific knowledge necessary to secure larger rounds of funding.”

Founders that developed their ventures through “entrepreneurial bricolage,” meaning they relied on local resources that were readily available (as opposed to outside funding), however, had different results. While these founders did not expand their projects beyond the local level, the direct impact and collaboration they shared with the local community allowed them to scale deeply.

“I want us to be like an oak tree that takes all of its energy for the first 20 to 50 years to set deep, deep roots, [and then] produces a lot of deep, rich offspring [and becomes] the anchor of the ecosystem,” said a participant in the study.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Solcyre (Sol) Burga was an Emma Bowen Foundation Fellow with Next City for summer 2021. Burga graduated from Rutgers University with a degree in political science and journalism in May of 2022. As a Newark native and immigrant, she hopes to elevate the voices of underrepresented communities in her work.

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