Policy Areas: Poverty in the District of Columbia

In 2018, the Office of the Budget Director of the Council of the District of Columbia released the “Economic and Policy Impact Statement: Approaches and Strategies for Providing a Minimum Income in the District of Columbia.” This statement provides concrete examples of the benefits of cash transfers and expanded tax credits, which are the backbone of the DC Guaranteed Income Coalition’s mission to gather public and bipartisan support and funding for additional guaranteed income pilot projects. Highlights and updated facts from this statement will be analyzed to exemplify the need for guaranteed income in D.C.

Why Minimum Income?

The minimum wage in D.C. does not meet basic needs, and D.C. maintains some of the highest costs of living in the nation. While D.C. has local and federal social safety net programs to assist with this lack of income, they are extremely limited and difficult to fully benefit from. In 2018, it was estimated that the social safety net program only fully benefits a person who has between 1 and 2 children, and only if they were able to secure a housing voucher and file their taxes. Housing vouchers are extremely limited as affordable housing remains in low supply. For those who are able-bodied, of working age, and do not have children, the Budget Office found that the existing social safety net programs would not lift them out of poverty.

In order to assist a wider range of low income individuals and families, concepts of additional supplementary incomes have been proposed. Similar examples exist today, including the Alaska Permanent Fund (paid from Alaska’s oil revenue, each resident receives a portion based on that), Temporary Assistance to Needy Families (TANF), Social Security, Earned Income Tax Credit (EITC), and the Child Tax Credit (CTC).

Three Options to Supplement Income

Guaranteed Basic Income (GBI)

GBI has the potential to uplift the largest number of low income people out of poverty and beyond the Federal Poverty Line (FPL). This option may be expensive, due to in particular fees associated in creating this program, but in the end it would benefit a far wider breadth of people, and in turn expand the economy. GBI would provide people below a targeted income amount with supplementary income to assist with the difficulties of poverty, and bring them above a set income floor. This would reduce the need for social insurance programs which do not traditionally target the causes of poverty. Additionally, the Budget Office proposes that GBI would cost less to administer compared to in-kind benefits. However, with this option there is a strong possibility that needs-tested federal funding will no longer be needed, which typically brings billions of dollars of funding resources to the District every year. To circumvent this, the Budget Office notes that the federal government could instead allow individual states to turn social safety net programs into block grants instead.

Negative Income Tax

Expanding the existing EITC is a safe and affordable policy option to supplement income, but it would not likely supplement people’s incomes high enough to lift them above the FPL. Only those who currently work would benefit from this option, which still leaves unemployed people, or approximately 5% of D.C. residents, stuck in poverty. Additionally, this option requires residents to consistently file taxes. However, EITC is not typically included in federal income eligibility formulas, which would allow for participants to still easily receive federal benefits.

Universal Basic Income (UBI)

While worth mentioning due to its popularity, UBI is not a practical way to alleviate poverty. UBI would provide each resident with a blanket supplementary income, no matter their financial status. In 2020, Andrew Yang’s presidential campaign put UBI on the map, and has left its mark in media and socially. This option does have substantial public support, as it is a type of aid that everyone would benefit from, similar to Social Security. However, it is an expensive policy to implement, and it would provide aid to those who do not need it. It would also likely be funded by taxpayers who do not need it, who would in turn be receiving this aid. It is an inefficient and expensive option that would not succeed in uplifting people out of poverty.

Potential Effects of Supplemental Income

Further research is needed to fully assess the effects of guaranteed income. The MINCOME study, among others conducted in the 1960s and 1970s and beyond, produced inconclusive and inconsistent results on the effects of cash transfers and/or supplementary income. There is a consistent fear from politicians, policymakers, and the public alike, that providing supplementary income would decrease or entirely eliminate the public’s desire to participate in the labor force. However, results from the MINCOME argue against this, suggesting that family composition has more to do with effects on participating in the workforce. Additional research is needed in this area in order to evaluate the effects on guaranteed income on workforce participation rates.