Stockton’s Basic-Income Experiment Pays Off

Two years ago, the city of Stockton, California, did something remarkable: It brought back welfare.

Using donated funds, the industrial city on the edge of the Bay Area tech economy launched a small demonstration program, sending payments of $500 a month to 125 randomly selected individuals living in neighborhoods with average incomes lower than the city median of $46,000 a year. The recipients were allowed to spend the money however they saw fit, and they were not obligated to complete any drug tests, interviews, means or asset tests, or work requirements. They just got the money, no strings attached.  

These kinds of cash transfers are a common, highly effective method of poverty alleviation used all over the world, in low-income and high-income countries, in rural areas and cities, and particularly for households with children. But not in the United States. The U.S. spends less of its GDP on what are known as “family benefits” than any other country in the Organization for Economic Cooperation and Development, save Turkey. The Temporary Assistance for Needy Families (TANF) program spends less than one-fifth of its budget on direct cash aid, and its funding has been stuck at the same dollar amount since 1996—when the Clinton administration teamed up with congressional Republicans to turn it into a compulsory-work program. Those changes sliced into the safety net, allowing millions of people to fall through.   Most adults without children have no program to help them keep gas in the car and a roof over their head, no matter how poor they are. Most families with kids don’t have one either. In the United States, poverty is used as a cudgel to get people to work. We got rid of welfare for poor families’ and poor individuals’ own good, the argument goes. Give people money, and they stop working. They become dependent on welfare. They never sort out the problems in their life. The best route out of poverty is a hand up, not a handout.   

Stockton has now proved this false. 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.

Derek Thompson: Busting the myth of ‘welfare makes people lazy’

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. In an interview, Martin-West and Castro Baker suggested that the money created capacity for goal setting, risk taking, and personal investment.“The big change was how it helped me see myself,” Tomas Vargas, another recipient, told me. “It was dead positive: I am an entrepreneur, I think of business ideas, I make business choices, I want to be financially stable.” When the program started, he worked in logistics. Now, in addition to nurturing his side projects, he is a case manager for individuals on parole.  

Zach Parolin: Welfare money is paying for a lot of things besides welfare

He noted that receiving the money had made him more civically and politically engaged, if also more infuriated at the country’s scorn toward low-income households. “It’s like it’s a big game,” he said. “These people are living with a silver spoon, talking—but how about you walk this life? Have you ever even seen it?”

Finally, the cash recipients were healthier, happier, and less anxious than their counterparts in the control group. “Cash is a better way to cure some forms of depression and anxiety than Prozac,” says Michael Tubbs, a former mayor of Stockton, who spearheaded the project. “So many of the illnesses we see in our community are a result of toxic stress and elevated cortisol levels and anxiety, directly attributed to income volatility and not having enough to cover your basic necessities. That’s true in the public-health crisis we’re in now.”

More work, less destitution, more family stability, less strained social networks, less stress, fewer incidences of homelessness, fewer skipped meals: This is what welfare could give the country.

And it just might. America’s welfare politics have shifted radically of late, in part because of the economic pressures felt by Millennials, the first generation in recent U.S. history likely to end up poorer than their parents. Two once-in-a-lifetime recessions, persistent wage stagnation, wild wealth and income inequality, the student-debt crisis, housing shortages, and a broader cost-of-living crisis have made redistributive policies much more palatable to them—and they’re now the country’s largest voting bloc. The pandemic has shifted U.S. welfare politics too, emphasizing the need for child-care benefits and demonstrating the power of cash as stimulus.

Right now, Democrats are pushing to send low- and middle-income parents $300 a month for each child younger than 6 and $250 a month for children ages 6 to 18 as part of President Joe Biden’s $1.9 trillion coronavirus-relief package. The program would be temporary, but there is wide support for making it a permanent entitlement. Senator Mitt Romney, a Utah Republican, has put forward a proposal to eliminate TANF and replace it with a straightforward child allowance. A number of state, local, and nonprofit efforts are getting going too.

The Stockton demonstration project is ending. But a group Tubbs founded, called Mayors for a Guaranteed Income, is extending the initiative nationwide, with cities from Compton to Gary to Newark making plans to send low-income residents cash.

Universal Basic Income (UBI) is here in USA, Inc.

Ulster County Exec Details Universal Basic Income Program And More

Dave Lucas

By Allison Dunne • 4 hours ago 2/18/2021

Ulster County Executive Pat Ryan delivers his State of the County address via Facebook, February 16, 2021

Democratic Ulster County Executive Pat Ryan delivered his state-of-the-county address earlier this week. He spoke with WAMC’s Hudson Valley Bureau Chief Allison Dunne about the start of a basic income pilot program as well as initiatives under his Green New Deal.

Ryan’s THE address included two main themes.

“The first is building on all the resilience work that we did in the county with food delivery, childcare support, rent support, small business support, to add a new and really pretty innovative addition to that, which is a pilot program of universal basic income, essentially providing direct cash relief to families in Ulster County, as they try to get, you know, work their way out of the economic stress and challenges of the pandemic. So we’re really excited about that one,” Ryan says. “And I think, not only will it have a direct impact for the 100 families that will participate in, in the program, but it will also add to this growing body of research and work nationally in terms of figuring out the potential for universal basic income to help potentially millions of people around the country.”

“Is there the potential to expand this after the year is over?” asks Dunne.

“I hope that, one, I hope that our theory is right that this is a great and effective model. And, if it is, the idea would be how can we at the county level expand it. Ultimately, to do something at scale like this, it would, I think, need to be a state and/or a federal program. But our hope is as, as now the first county in the country to do this at the county level, we can add to the research and the proof points there,” says Ryan. “And I hope that in the coming years, this is something that that grows and continues to help people.”

“And correct me if I’m wrong, this is based on the community donations, just like project resilience, right? This is not going to be taxpayer funded,” says Dunne.

“Exactly. That’s an important part. I mean, given all the economic challenges, we were excited to be able to do this in a way that doesn’t add to the taxpayer burden, but still provides this relief, and it reinvest all these generous community donations right back into our community here, which is very cool,” Ryan says. “I’ve already heard from, from several folks. One, one woman actually live-watching the state of the county address commented, I’m a single mother, this $500 a month would be life-changing for my family and I, and the hope is that that can be replicated for, for many others both in this program and, eventually, hopefully for more.”

Residents who want to participate in the program and receive direct relief payments of $500 a month for one year must have an annual income of $46,900 or below.

“So we’ve been really thoughtful about doing this in the right ways, both in terms of fairness, but also in terms of academic rigor. We’re partnering with the nation-leading research institution on this, that’s the University of Pennsylvania, the Center for Guaranteed Income. So they’ve done this in 20-plus cities around the country already, and they will actually be doing a random selection of all those that apply to ensure that it’s really a totally fair and impartial process,” Ryan says. “And, and that also will help, again, feed what we learn on the ground here in Ulster County into the broader national dialogue about how to do this and how to do it in the right ways.”

Community Foundations of the Hudson Valley and Ulster Savings Bank are also partners in the program. In Columbia County, former presidential candidate and now New York City mayoral candidate Andrew Yang joined with Hudson Mayor Kamal Johnson to launch a Universal Basic Income pilot program in the city last year.

Ryan’s second theme during his pre-recorded Facebook address Tuesday was expanding a Green New Deal for Ulster County. During his first week in office in 2019, Ryan signed an Executive Order committing to transitioning county operations to 100 percent renewable energy by 2030. Since, he launched a Green Careers Academy in partnership with SUNY Ulster. This year, the county will expand the Academy by bringing on new partners including Ulster BOCES, Bard College, Cornell Cooperative Extension, Central Hudson, Citizens for Local Power, Habitat for Humanity, the Climate Reality Project and several local labor unions to help train residents and put them on a path to good-paying green jobs. And he announced this week the Ulster County Green Business Champions program, a public-private partnership to more aggressively reduce greenhouse gas emissions.

“Twenty percent of our greenhouse gas emissions come from the private sector. And the idea here is to both reward and recognize those that are already doing this work and to provide financial support and other support to businesses that want to make these investments,” Ryan says. “So for example, rooftop solar on your business, we can help finance that and actually save your business money and help protect the environment. And there are a whole menu of those sorts of things that we’re excited to help our businesses with.”

On Wednesday, Ryan and the county comptroller released 2020 sales-tax revenue figures.

“I’d say, in a relative sense, pretty good news,” says Ryan. “We were, we came in a little over $1 million under our forecasted sales-tax revenue but much better than we sort of expected at the worst of the pandemic when we were seeing 20, 30 percent drop-offs in economic activity and sales tax.”

He says it appears economic recovery efforts worked on the local level, as did putting federal stimulus checks into the hands of residents.

“And, by the way, that’s exactly ties back to the thinking on universal basic income that getting money into people’s pockets, especially in a time of crisis, not only helps them but it, but it helps our broader economy,” Ryan says,

Through September 2020, the county’s sales tax numbers were down 7.8 percent, or $5.8 million. However, the county regained ground from October 2020 through February 2021, with an increase of 11.37 percent or $5.9 million.