Two years ago, well before the pandemic and stimulus checks, the city of Stockton, California, gave a selected group of low-income citizens a $500 monthly payment. There was no restriction on the money they received, which they could spend how they pleased. The participants to the program (which is basically a universal basic income scheme) were not required to take drug tests or prove they were employed or seeking employment.
Some might shake their heads in disbelief, thinking nothing good could come out of this unconditional income. If you give people money, they will stop working — this has been the American paradigm around social benefits, particularly since the Regan administration.
But a new report on the results of this experiment proves this prejudice wrong. According to Stacia Martin-West of the University of Tennessee and Amy Castro Baker of the University of Pennsylvania — who were in charge of centralizing and analyzing data from the 125 randomly selected individuals living in neighborhoods with a household income smaller than the city’s median of $46,000/year — virtually all quality of life indicators improved.
Rather than slacking, the extra monthly income was associated with a 12% increase in the share of participants with a full-time job, compared to 5% in the control group (that received no stipend). Unemployment among the basic-income recipients dropped to 8% in February 2020 down from 12% in February 2019, compared to an unemployment rate of 15% (rising from 14%) in the control group.
Most of the participants’ stipends were spent on essential items. The average breakdown looks like this: 37% of the money went toward food, 22% for sales and merchandise (i.e. goods from Walmart or dollar stores), 11% paid for utilities, 10% went to auto costs such as gas and repairs, while less than 1% was spent on alcohol or tobacco.
The researchers also reported decreases in anxiety, depression, and extreme financial distress among the participants who received the stipends. In fact, it is to these improved indicators that the authors of the report attribute the improvements in employment.
“I had panic attacks and anxiety,” one of the participants said in the report. “I was at the point where I had to take a pill for it, and I haven’t even touched them in a while.”
The stipends offered headroom that allowed the participants to set goals and ultimately improve their employment outcomes, the authors added.
The report’s assessment only covers one year up to February 2020, but the program itself, known as SEED, continued until January 2021. During this time, the participants received a stimulus check, just like any other citizen of the country, but the stipend was still very useful allowing them to take days off work if they got COVID-19.
Inspired by these positive results from Stockton, the city of Saint Paul in Minnesota started its own basic-income program last fall, offering a $500 monthly stipend to 150 low-income families for up to 18 months. Similar programs are underway in Richmond, Virginia, and Compton, California, which are part of a broader civic movement known as Mayors for a Guaranteed Income.
Hopefully, the Stockton experiment can be replicated elsewhere to provide more work and stability, as well as better mental health and wellbeing.