The first findings are in from a groundbreaking program in Stockton CA in which 500 financially struggling residents were given $500 per month for a year by the city with no string attached.
Advocates of universal basic income, a concept used around the world but not in the U.S., have to be happy about the results. The program, known as the Stockton Economic Empowerment Seed, got rave reviews from an independent study.
Here’s how the Atlantic reported it:
“An exclusive new analysis of data from the demonstration project shows that a lack of resources is its own miserable trap. The best way to get people out of poverty is just to get them out of poverty; the best way to offer families more resources is just to offer them more resources.
“The researchers Stacia Martin-West of the University of Tennessee and Amy Castro Baker of the University of Pennsylvania collected and analyzed data from individuals who received $500 a month and from individuals who did not. Some of their findings are obvious. The cash transfer reduced income volatility, for one: Households getting the cash saw their month-to-month earnings fluctuate 46 percent, versus the control group’s 68 percent. The families receiving the $500 a month tended to spend the money on essentials, including food, home goods, utilities, and gas. (Less than 1 percent went to cigarettes and alcohol.) The cash also doubled the households’ capacity to pay unexpected bills and allowed recipient families to pay down their debts. Individuals getting the cash were also better able to help their families and friends, providing financial stability to the broader community.
“It let me pay off some credit cards that I had been living off of, because my household income wasn’t large enough,” one recipient named Laura Kidd-Plummer told me. “It helped me to be able to take care of my groceries without having to run to the food bank three times a month. That was very helpful.” During the study, Laura also experienced a spell of homelessness when the apartment building, she was living in had a fire. The Stockton cash helped her secure a new apartment, ensuring that she could afford movers and a security deposit.
The researchers also found that the guaranteed income did not dissuade participants from working—adding to a large body of evidence showing that cash benefits do not dramatically shrink the labor force and in some cases help people work by giving them the stability they need to find and take a new job. In the Stockton study, the share of participants with a full-time job rose 12 percentage points, versus five percentage points in the control group.”
Mashable also weighed in on the initial success of the Stockton program:
“After a year of operating the program, cash transfer recipients were more likely to obtain full-time jobs than a group of people who were not receiving money but providing data to researchers as a comparison. Recipients also primarily spent the money on basic needs, paid off debt, and saw improvements in their emotional health, program officials announced Wednesday.
“While not a full-fledged universal basic income, the program’s findings will likely crop up time and time again in UBI arguments as support for the concept continues to pick up steam. Since former presidential candidate and UBI evangelist Andrew Yang announced his candidacy for New York mayor, the most populous city in the U.S., others in the race have been promising some form of basic income, too.”
While it was Yang who gave the biggest spotlight to UBI, Michael Tubbs, Stockton’s former mayor, was the young progressive force behind Stockton’s effort. Business Insider put a spotlight on Tubbs’ initiative.
“Tubbs didn’t see much risk in giving money to his city’s poorest residents, no strings attached. The former mayor of Stockton, a city in California’s Central Valley, is a strong proponent of universal basic income, a policy that essentially pays people for being alive as a way to alleviate poverty. “My belief in it came from being raised by three amazing women, including my single mom,” Tubbs told Insider. “The issue wasn’t that they couldn’t manage money. The issue was they never had enough money to manage.”
“As mayor, Tubbs spearheaded the Stockton Economic Empowerment Demonstration, a pilot program that gave 125 residents debit cards loaded with $500 each month. The program launched in February 2019 and ended in January.
“Its critics argued that cash stipends would reduce the incentive for people to find jobs. But the SEED program met its goal of improving the quality of life of 125 residents struggling to make ends meet. To qualify for the pilot, residents had to live in a neighborhood where the median household income was the same as or lower than the city’s overall, about $46,000.
“A new report from a team of independent researchers found that Stockton’s program reduced unemployment among participants during its first year and helped many of them pay off debt. The report studied the effects of the payments from February 2019 through February 2020. SEED participants also reported improvements in their emotional well-being and decreases in anxiety or depression.
“It’s really made a huge impact on my quality of life and being able to go do just normal things that a lot of people take for granted,” one participant said in the report, “whether it’s go out to eat once every two weeks and sit down for a nice dinner, or whether it’s, you know, my mom’s birthday and I just want to get her a birthday present.”
“Tubbs said it was likely that the $500 monthly payments helped in other ways during the pandemic, such as tiding people over until their stimulus checks arrived or allowing them to take days off work if they got COVID-19.”
Here’s a link the Stockton Economic Empowerment Seed demonstration project.