California Program Giving $500 No-Strings-Attached Stipends Pays Off, Study Finds

A high-profile universal basic income experiment in Stockton, Calif., which gave randomly selected residents $500 per month for two years with no strings attached, measurably improved participants' job prospects, financial stability and overall well-being, according to a newly released study of the program's first year.

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AP

The Stockton Economic Empowerment Demonstration, or SEED, was founded in February 2019 by then-Mayor Michael Tubbs and funded by donors, including the Economic Security Project.

It gave 125 people living in neighborhoods at or below Stockton's median household income the unconditional monthly stipend. A study of the period from February 2019 to February 2020, conducted by a team of independent researchers, determined that full-time employment rose among those who received the guaranteed income and that their financial, physical and emotional health improved.

"The last year has shown us that far too many people were living on the financial edge, and were pushed over it by COVID-19," Tubbs said in a statement. "SEED gave people the dignity to make their own choices, the ability to live up to their potential and improved economic stability going into the turmoil of the pandemic."

The idea of universal basic income was featured prominently in the 2020 campaign of Democratic presidential candidate Andrew Yang and has gained further traction during the coronavirus pandemic. Supporters say that for people living in poverty, a guaranteed income can alleviate stress and provide the financial security needed to find good jobs and avoid debt.

Critics worry it could eliminate the incentive to work, as well as endanger certain existing safety net programs.

Tubbs countered this criticism in a 2018 interview with NPR's All Things Considered, saying research and trials from the previous three decades did not indicate that $500 a month would discourage people from working. He argued that more financial stability would "make people work better and smarter and harder," as well as make it possible to spend time with their families and participate in their communities. In a subsequent interview this January, he told NPR that the money had decidedly not quashed people's work ethic.

"It did not change us into a different country, but it actually allowed folks to have a floor to persist during times especially like these ones," he said.

Among the key findings outlined in a 25-page white paper are that the unconditional cash reduced the month-to-month income fluctuations that households face, increased recipients' full-time employment by 12 percentage points and decreased their measurable feelings of anxiety and depression, compared with their control-group counterparts.

The study also found that by alleviating financial hardship, the guaranteed income created "new opportunities for self-determination, choice, goal-setting, and risk-taking." It furthered recipients' ability to cover unexpected expenses, which researchers noted was particularly important given the onset of the pandemic.

Individuals spent most of the money on basic needs, including food, merchandise, utilities and auto costs, with less than 1% going toward alcohol and/or tobacco.

"Before SEED came along, I was paying a lot of bills and didn't know how I was gonna eat," a participant named Laura said in a testimonial. "It's like being able to breathe."

The study also noted that positive effects of the $500 sum rippled outward in ways that "alleviated financial strain across fragile networks and generated more time for relationships." For instance, stabilizing food security for members of one household also alleviated any strain on those they ordinarily relied upon for food.

The stipends helped recipients stretch resources to cover needs like caring for aging or ill family members, school or sports supplies and transportation to and from doctor's appointments that they might otherwise have skipped — strategies, the researchers noted, that were more commonly utilized by women, who typically bear the brunt of most unpaid care work. Under less financial strain, they wrote, many women were able to attend to their own needs in ways they had not in years.

"Mona bought diapers for her grandchildren and an adequate amount of feminine hygiene products for the first time in months. Like many, she ordinarily bypassed meeting her basic hygiene for her grandkids," the paper reads. "Bunny purchased new shoes for herself while paying someone to mow her grass rather than having to do it under a blazing Central Valley sun with health limitations."

While the study's findings were cheered by those involved, as well as many mayors, on Wednesday, some experts said more research is needed.

Matt Zwolinski, director of the Center for Ethics, Economics and Public Policy at the University of San Diego, told The Associated Press that while the findings are "really good news for supporters of a basic income guarantee," the study is limited because it lasted only two years, adding that people are unlikely to drop out of the labor force if they know the extra money is temporary.

Several participants shared their stories publicly on SEED's website, highlighting the ways in which the monthly stipend made their lives easier and more fulfilling.

A married father of three who works in construction was able to repair his broken vehicle without needing to save up, making it possible for him to get to his job out of town. A mother of six and grandmother of six has put much of the money toward her teenage sons — football camp, new shoes, money for food — as well as rent and bills.

One recipient, mourning the death of his daughter, said the money gave him time to take opportunities for himself and be around more for his family, noting that "a lot of people have noticed a positive change." During the program, he wrote that even after the program's end, "it'll still get better because they opened my eyes to it."

Research spanning the full two years of the project will be available in 2022. In the meantime, similar initiatives are cropping up in cities across the United States.

Tubbs, prior to losing his bid for reelection last year, founded a group called Mayors for a Guaranteed Income. The coalition now includes 40 mayors advocating for direct, recurring cash payments in cities from Seattle to San Antonio to Pittsburgh.

A number of pilot programs are already in the works in places like Durham, N.C., New Orleans and Gary, Ind., where officials announced one such initiative just last week.

Tubbs told NPR in January that he believes the time is right for the idea of universal basic income — of which Martin Luther King Jr. was an early proponent in the 1960s — to finally take hold.

"We are literally at ground zero with sort of the racial reckoning we're having but also with the economic impacts of COVID-19," he said. "When I think if we can get a guaranteed income, an income floor, at this time, we also have to have a conversation about the moral awakening our country needs because, again, as Dr. King said, poverty robs us of the richness of a society where everyone's given the opportunity to realize their full potential."

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