Sep 16, 2022 - News

How universal basic income will work in Denver

Illustration of a ladder with hundred-dollar bills on the rungs.

Illustration: Brendan Lynch/Axios

For one year, Denver will provide 140 people experiencing homelessness $12,000 with no strings attached as part of a program testing universal basic income.

Why it matters: The experiment with guaranteed income is one of the more novel programs in the nation, but joins other major cities, including Chicago and Los Angeles, in an attempt to provide stability to people in vulnerable circumstances.

Driving the news: The Denver City Council this week approved using $2 million in American Rescue Plan Act money to provide monthly cash assistance.

  • The money is paying for a contract with the Denver Basic Income Project, the agency responsible for giving out the funds.
  • Most of the money in the contract ($1.8 million) will pay for cash installments, according to city staff, with the rest allotted for administrative costs.
  • The $2 million provided by the city is a portion of the overall funding, as the project seeks to help 820 people in total. The entire initiative will cost about $9 million, Denver Basic Income Project founder Mark Donovan told Axios Denver.
  • He said most of the money is being raised through charitable foundations, including the Colorado Health Foundation and the Denver Foundation.

State of play: Angie Nelson, deputy director of Housing Stability and Homelessness Resolution, said participants include those who are already using local resources, such as shelters. They cannot have a severe and unaddressed mental health or substance use need.

  • Denver Basic Income Project will be responsible for choosing the participants.
  • "As excited as we are about it, this isn't something you can call in and apply for," Nelson told Axios Denver.

By the numbers: Overall, 520 people in Denver will get $12,000 for one year as part of the project.

  • 260 people will get $6,500 up front, and $500 a month for 11 months.
  • 260 people will receive $1,000 monthly over the course of a year.
  • 300 people will be part of a control group and get a $50-a-month stipend to determine whether there's a difference in outcomes.

Of note: Donovan said all participants will be able to get a free phone with a year of service included.

Between the lines: Nelson explained the city wants to use its money for direct cash payments to women, transgender and gender non-conforming people.

  • The number of unhoused women using the shelter system in the city has tripled since the start of the COVID pandemic.
  • Nelson added that the city wants to use the federal money to alleviate the compounding effect the pandemic had on homelessness in Denver, and families, who Nelson pointed out often have a harder time finding safe and inclusive shelter options in the metro area.

Yes, but: The city won't know whether this experiment has been effective for more than a year. HOST spokesperson Derek Woodbury told Axios Denver results likely won't be available until 2024.

  • People participating are expected to begin getting money starting in November.
  • The city is keen on figuring out not only whether the income provides people with housing stability, but also improves overall mental health — including substance use disorders like addiction.
  • The University of Denver's Center for Housing and Homelessness Research will evaluate the payment's impact.

The intrigue: Critics have suggested that providing free income could lead people to work fewer hours.

  • Yet, when economists looked at Alaska, which has given money to every resident since 1982 using a statewide fund, they found the cash payments had no effect on employment, according to Vox.

What to watch: Donovan said he expects similar programs in 100 cities by the end of the year.

"It's a growing movement," Donovan told Axios Denver. "The reason that there is so much activity is it's working."

  • The program in Chicago will distribute more than $30 million to 5,000 low-income residents, each getting $500 per month for one year. Chicago's initiative prioritizes households at or below the federal poverty level, per the University of Chicago.
  • Los Angeles' program, launched in August, will give 1,000 residents $1,000 a month for three years. Recipients were chosen at random from a pool of 180,000 applicants, according to the ABC News affiliate.

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