In Stockton, Early Clues Emerge About Impact Of Guaranteed Income

| Create!

Above Photo: Susie Garza, who is participating in Stockton’s UBI pilot. Rich Pedroncelli/AP

A universal basic income experiment in Stockton, California, is nearly halfway over. How has $500 a month affected the lives of 125 residents?

A totaled car. A mother with cancer. Two kids at home, with field trips and Quinceañera outfits and football gear to pay for. Rent bills of $1,250 due each month. Two jobs—one part-time—both paying around $15 an hour, supplemented by unpredictable child support payments. Lorrine Paradela used to lie awake at night, thinking through all her expenses and income streams, struggling to breathe from the stress of it all.Now, Paradela says, she’s started sleeping again. She’s one of 125 Stockton, California, residents who have been receiving an unconditional $500-a-month payment since February, as part of the first mayor-led guaranteed income initiative piloted in the United States. Called Stockton Economic Empowerment Demonstration (SEED), it’s the passion project of Stockton Mayor Michael Tubbs, and funded by the Economic Security Project, a nonprofit that sponsors other guaranteed income experiments. Eight months into the 18-month project, researchers have released preliminary data about who’s participating, what they’re spending the money on, and how raising the income floor can change the entire structure of a life.

All adult Stockton residents living in neighborhoods where the annual median income was at or below the city’s average of $46,033 were sent postcards last year, inviting them to participate in the project. A smaller group was randomly chosen to receive money from the eligible pool who responded; and a control group, which isn’t receiving money, agreed to share financial information about themselves, too. In Stockton—a diverse, high-poverty city a few hours away from the tech epicenters of Silicon Valley and San Francisco—many residents are in need of such a boost, making it an ideal testing ground for SEED. Unemployment rates in the county reach about 7.5 percent, higher than the state average of 4.3 percent. Stockton is ranked 18th for child poverty out all U.S. cities.But the Universal Basic Income concept, which has roots dating back to the Civil Rights Era, has recently gained more national traction: Democratic presidential candidate Andrew Yang is campaigning on the idea that, to prepare for a future when automation makes most jobs obsolete, all Americans should be paid a “freedom dividend” of $1,000 a month—a sentiment shared by tech founders like Mark Zuckerberg and Elon Musk. Other Democratic candidates—Senators Kamala Harris and Cory Booker—are proposing guaranteed tax refunds for low-income families, and interest-accruing “baby bonds” accounts for all American children, respectively.

Detractors of guaranteed income say they’re concerned that free funds will discourage people from working—or encourage spending on what they’d consider the “wrong” things. Countering these narratives is one of Tubbs’ goals with SEED; the project has been described as “a hand up, not a hand out.”“In Stockton, like much of America, there’s this Puritan ethos of, ‘I work hard. If you don’t work, you shouldn’t eat,’” said Tubbs. “And [we’re] really illustrating to people, no, just like you there are people who are working hard who are struggling—not because they’re lazy, but because wages haven’t kept up with inflation, wages haven’t kept up with costs.”

About 43 percent of SEED recipients are currently working full or part-time, according to the researchers—11 percent are taking care of parents or children, 20 percent reported a disability, 8 percent had retired, 5 percent were students, and only 2 percent said they weren’t actively looking for work.

And the economic decisions they made during the first five months of the program were “really rational,” said Stacia Martin-West, an assistant professor at the University of Tennessee College of Social Work and the co-principal investigator on the project. Each recipient was given a debit card that automatically loads with $500 each month, so the researchers can categorize spending.

Of the money tracked, 40 percent went towards food. Sales and merchandise made up another quarter of the monthly spending, and about 12 percent was spent on utilities.

Not everyone trusted the trackable debit card, however, said Amy Castro Baker, an assistant professor at the University of Pennsylvania and the other co-principal investigator. “Stockton is a city that’s had experience in the past with many predatory lenders and un-banked or underbanked, neighborhoods,” she said, and some recipients have watched as other basic income experiments shut down without warning. To protect themselves, many people transferred money into traditional financial institutions or withdrew cash, using it the way they normally would: at the farmer’s market, or to pay their babysitter.

Allowing people to spend the money how they want, when they want, without oversight or judgement, is the point. “Because Stockton is so diverse, it was important to show the country and the city, to challenge tropes we have about people of color in particular … about their work ethic, intelligence, capacity,” said Tubbs. “To really show that, no: people can trust the vast majority of people to make good decisions.”***

When Paradela, who works with children who have autism, first got the SEED postcard in the mail, she was skeptical. Getting a large, no-strings-attached grant like this seemed too good to be true.

After talking to researchers and social workers about the program, Paradela felt a little more confident. And when the money finally showed up that first month, “it came just in time,” she said: Her car battery had died, and she needed money to fix it. A few months later, her car was hit by a driver making an illegal U-turn. If the vehicle stayed out of commission, she wouldn’t be able to get to work, or visit her mother in the hospital down in Hollister.

Recovering from an accident like this can plunge many Americans into debt: The Federal Reserve Board estimates that 40 percent of Americans can’t cover an unexpected $400 expense; other studies put that destabilizing amount at $1,000. If it had been a normal month, Paradela wouldn’t have been able to cover it, either. “I don’t like asking for help,” she said.

But through SEED, the help came without her having to ask, as it has every month since. Paradela was able to make a down payment on a replacement car, and is now using the funds to cover her insurance.Other Stockton residents are using the funds to plug more consistent income gaps, researchers say. “As we’re talking about guaranteed income at a national level, one of the things we often hear is that $500 doesn’t go that far, or isn’t that much,” said Martin-West. But the household median monthly income of SEED recipients was $1,800 a month, and the average was $2,700. (The median national household income is about $3,500). Adding $500 in guaranteed income to a $1,800 salary boosts those monthly earnings by about 30 percent.

One danger of supplementing low wages is that the income boost will be enough to make people ineligible for other government benefits. When the Economic Security Project launched a UBI pilot for black mothers in Mississippi, for example, the Washington Post reported that “[s]ome worried about how much their benefits would be cut … and about the bureaucracy that might be involved if they needed to reclaim those benefits”—a fear that could have contributed to the fact that though 110 women were eligible for the program, only 38 ultimately applied.

Because they’re university scientists, Martin-West and Baker had to go through an extensive informed-consent process with each participant, and counseled all participants who were on benefits about whether to move forward. Martin-West says they were conscious about wanting to “implement UBI in a way that it’s not a replacement for means-tested benefits, because we know those are important ways to disrupt poverty.”

Though they’re tracking it extensively, Martin-West and Baker say they can’t release more granular information on income volatility yet. Learning how the money influences people’s “agency and potential” could be more important than how their earnings fluctuate, Baker says.“It’s not just about getting rid of that $400 emergency, it’s about what space does that free up for you, as a human being to engage in your community and family in a different type of way,” she said. “It’s not just about whether people feel better, but are they then able to reimagine a different future for themselves because they are being treated with a bigger sense of dignity?”

Paradela says that, with the extra cushion, she’s been able to stop working her second job, which gave her irregular shifts, and can go to more of her son’s Friday night football games. Once she’s done paying off her car, she’s hoping to go back to school and get a B.A. to advance her career in behavioral work.

But along with feeling less stressed, she’s dealt with judgment and shame. During a T.V. interview about SEED, she felt that a reporter made fun of her for taking the cash.

“They think that people that get that money don’t work. They use it on drugs and alcohol; to buy themselves nice clothes and stuff,” she said. “It would be nice to get clothes, and buy stuff for myself. But I use that money for my family.”