NYC: Income Savings Plan Program (ISP)

25.09.2019 - New York City - Pressenza New York

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NYC: Income Savings Plan Program (ISP)
(Image by Ed Yourdon/wikimedia)

On the Department of Homeless Services proposal to amend the Rules of the City of New York to establish an income savings program for shelter residents with earned income, to be known as “ISP” or “Income Savings Plan Program”

By Diane R. Pagen

The Department of Homeless Services Income Savings Plan program (ISP) proposal to amend Title 31 of the Rules of the City could only have been cooked up by people who are not poor and not homeless. It is a bad idea. It is not innovative. It is not evidence-based. It is discriminatory. I explain why here in this document.

The ISP will create new bureaucracy. Homeless New Yorkers do not need new bureaucracy. They need new housing, and more income support to pay for housing. Their current incomes are precarious and below the amount we know people need to remain alive—being forced to save part of an already insufficient income will only increase the precarity and anxiety they already have daily. Making New Yorkers in poverty save 30% of an already insufficient income is the same as taking food out of their mouths, warm clothing out of their closets, and opportunities out of their lives. The ISP will create a new mechanism that shelter operators will use to justify kicking single adults out of shelter. The result will be more DHS spending on enforcement bureaucracy and staff, greater financial hardship every month for New Yorkers in shelter, worse health and nutrition, and more single adults leaving shelters, not for real homes, but to sleep on the streets.

Important Points:

  • The ISP proposal does not tell us the cost of implementing and running the program. We need to know the dollar cost of the administration, new staff, and the compliance bureaucracy. We need to know what DHS is intending to spend to run this program so we can ask if this program is the best use of these public funds.
  • The ISP as planned discriminates against people of color. We know that the median income of black New Yorkers ($57K) and Latino New Yorkers ($48K) is less than half of white New Yorkers ($124K). We can logically conclude that to apply a savings requirement that is the same for all when we know there is a racial disparity in their incomes makes the savings requirement discriminatory. It is likely that the black and Latino single adults will have a harder time saving and will end up on the street in disproportionate numbers. 
  • The ISP proposal does not cite data that show the model has been successful in another large, high cost city. This is problematic for reasons too obvious to list.
  • The ISP proposal forces New Yorkers living on poverty incomes to get by on less of their income putting their health and lives at risk. People who are earning between $10 to 15 per hour, and even less than that, cannot afford sufficient food, toiletries, and clothing even when spending their full income. Single adults in shelter often have to spend more for food because they do not have kitchens to prepare meals—this means they need more money for food, not less.
  • The ISP does not increase the incomes of homeless adults. The fundamental cause of homelessness is the widening affordability gap. ISP does not address this cause. The incomes of adults in shelter are insufficient for them to afford a rent. Even if an adult is able to comply with the requirement that he deposit 30% of his wages into the ISP program, he still has the same insufficient income to work with to get out of shelter. The ISP does not raise the incomes of single adults in shelter, therefore, it is not resolving the primary problem that drives poverty—inadequate incomes.A single adult in shelter is in shelter because that person is unable to afford to pay a New York City rent despite having a paid job. Let’s consider a person who earns $12 an hour and works 40 hours a week. That is $1920 a month gross income, of which the ISP program expects them to save $600 per month, leaving them with about $1000 cash after taxes for all their needs for the whole month. Even if they managed to go without basics to make the savings deposits during 6 months in shelter, they would only have saved $3600 at the end of 6 months. Within a month or two of moving out of shelter and paying rent, they will be back where they started, with inadequate income and in danger of losing their new home.
  • The ISP is not equitable nor realistic. It requires single adults in paid employment to set aside 30 percent of their gross income each month, a behavior that is not required of the general population. According to data, the average American does not have $500 in cash to use for an emergency, and the average American is not as poor as a single adult in shelter. If the average American does not earn enough to save money, why would we make saving a condition of staying in shelter and becoming eligible for housing?If saving money is such a positive and do-able practice for people who are earning at the poverty line or near it, then surely the population earning far more than homeless adults in shelter should have to set aside savings, too. The “normal” American does not have $500 in cash in an emergency, and the normal American earns far more than a person in shelter. If we do not expect the average American to save and understand why he can’t, why expect it of homeless adults? 
  • The ISP program holds on to the participants’ savings for too long. The standard time lag to give participants their savings once out of shelter is 30 to 45 days. The participants are New Yorkers with low incomes who need their funds upon moving out to meet their basic needs and pay their new rent. There is no sensible reason to make New Yorkers already living on low incomes and in precarity to wait a month to get the money they saved. Participants who want to and can save should be permitted to save in an ordinary bank where they can get their money immediately, like the rest of us. The proposal also does not tell us whether the participants earn interest on the savings. We need to know.
  • The ISP program embraces negative myths about poor people. The median rent In NYC is $2980 a month for a one bedroom apartment. This is unaffordable to median income earners, much less to single employed adults earning poverty line incomes, yet the ISP pretends that it can help “such employed individuals get back on their feet and exit shelter by budgeting for and developing savings…” Creating a compulsory savings requirement to remain in shelter embraces the myth that people are poor because they have money but mismanage it. Our principle homeless services agency should not be embracing that colonial era myth. It also legislates continued infantilizing of poor people—why should they have to explain why they chose to buy food, or a bicycle, or a present for their niece, instead of making the ISP deposit? It’s insulting to the intelligence of poor people.
  • The ISP will increase the number of single adults put out of shelter and onto the streets. When they cannot comply with the savings requirement because they choose to eat and pay their bills instead of saving, the “non-compliance” allows DHS workers to kick them out of shelter. They also lose their eligibility for whatever housing they were in line for. This practice will be a gross violation of the NYS right to shelter.
  • The ISP excludes more innovative, evidence-based approaches to reducing homelessness, like implementing a local Universal Basic Income. A Universal Basic Income is an agreed upon amount of income, paid to all in a community at regular intervals, regardless of their other income and whether or not they have a paid job. The World Health Organization has recommended a UBI as an effective way to reduce homelessness (see WHO, Universal Basic Income Policies and Their Potential for Reducing Health Inequities). There are UBI pilots in various stages of launch in Mississippi, in California, in Newark, and in Kenya (and one in Ontario that was improving lives, cancelled by their new government) yielding good results for these communities; so why is NYC, a mecca and leader in so many areas unwilling to join these innovators? Instead, DHS is proposing a costly, means tested, discriminatory and compulsory savings program rather than propose a UBI trial for New York City. This does not make sense to any rational person looking at the facts.Universal Basic Income goes to everyone in a community, so it would not discriminate; studies show cash is the least costly way to address homelessness and poverty; and Universal Basic Income would not require the outdated means tests that oppress poor New Yorkers and subject them to the mistreatment that they suffer in DHS and HRA facilities such as was exposed this year in the press. A Universal Basic Income for NYC would reduce homelessness for all single adults and it would provide adults already living on the streets to use their UBI to immediately get off the streets. There is abundant data that show that UBI works; there is no data to show forcing poor people to exist on a smaller portion of their income works.
  • ISP data will mislead the public. As participants fail to comply because they don’t have enough money to save 30% of their gross income, they will forced to leave the shelter. Data will show reductions in the numbers of single adults in shelter, which may lead the public to believe these people are no longer homeless, and that ISP is helping people. Moving people from shelter to the streets is not helping them. In the bigger picture, it harms not just those put into the streets, but also will harm those who somehow manage to go without basics to comply.

Final Comments:

Making this program compulsory perpetuates one of the core flaws of the shelter system, which is that rather than being focused on helping homeless people find and pay for permanent homes, it focuses on putting financial resources toward behavior modification of poor people. DHS already makes poor single adults participate in mental health services, job training, and adhering to purposeless curfews that impede their freedom to find new opportunities, network, spend time with family and friends. The premise of these costly services is to enhance their lives, but in reality all the behavior modification is isolating, time consuming, expensive for NYC and frustrating for homeless New Yorkers who entered shelter with one purpose: to find an apartment. There is no evidence that compulsory savings for people with low incomes reduces homelessness. It can’t because it is not raising their incomes. These DHS non-housing related services cost millions of dollars and have absolutely nothing to do with the construction of permanent housing nor with moving homeless adults into apartments. The Department of Homeless Services should be devoted to building housing, collaborating with other agencies to create income supplements, and moving homeless New Yorkers into that housing.

One additional final comment: this year, galvanized by the assault of a New Yorker seeking public assistance, as well as the release of a report on the mistreatment of low income New Yorkers in welfare offices, the City Council agreed to place a licensed social worker in every welfare center to assure decent treatment. I would like to review here a few of the elements of the social work code of ethics, which says that public policies need to be 1) socially just 2) provide dignity to the person aided 3) and operate with integrity. The ISP program does none of these things. It is unjust, because it blames the homeless person for his homelessness when we know it is not his fault; it is undignified because it doesn’t respect his decisions; and it does not operate with integrity because it promises to help homeless people when the designers know it won’t. 


Prepared by Diane R. Pagen, Social Worker, Resident of the City of New York

Co-Founder, Basic Income March

Categories: Economics, Human Rights, North America, Opinions
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