Stockton gave people $500 a month. A similar program could come to Sacramento
The premise was simple — $500 a month to 125 Stockton residents, no strings attached, no work requirements.
Officials with the pilot program touted the payments as a hand up, not a handout, in a city, battered by the recession and once dubbed “America’s foreclosure capital,” where about one in six residents live below the poverty line.
Now, newly released results from the first year of the guaranteed income experiment that began February 2019 reveal that those who received payments were employed at a higher rate, were happier, were healthier, and were more able to weather sudden expenses compared to non-recipients in the control group.
Researchers and advocates behind the Stockton Economic Empowerment Demonstration said during a virtual press conference Wednesday that the pilot program’s first year results prove that cash payments are a simple and effective way to help residents lift themselves out of dire financial circumstances by providing a kind of safety net.
“A guaranteed income illustrates an understanding that we all have inherent dignity for being people, and because of that, we deserve to have our basic necessities met, we deserve to have an income floor at the very least,” said former Stockton mayor Michael Tubbs, who helped lead the creation of the pilot program more than two years ago.
Notably, the new results do not include findings from payments given out during the pandemic, which has been punctuated by “a set of crises ... that have exploited and exacerbated all of the non-resiliencies in our economy,” said St. Paul Mayor Melvin Carter, who proposed a similar pilot program last year.
“We need to take into account the lessons we’ve learned over the past year in building a much more resilient economy,” Carter said. Dubbed the People’s Prosperity Guaranteed Income Pilot, the program in St. Paul was approved in September and will provide up to 150 families with $500 per month for 18 months.
In Stockton, those who received payments went from part-time to full-time employment at more than twice the rate as those who didn’t, squashing the common concern that benefits programs disincentivize people to find work. Recipients also found more work overall — unemployment dropped from 12% to 8%, while non-recipients in the control group saw unemployment increase from 14% to 15%.
“There were a lot of folks out there who were eligible for full-time employment but literally could not take a single shift off of work to apply for a new job,” said Dr. Amy Castro Baker of the University of Pennsylvania, one of the pilot program’s lead researchers. “When you know to the day, to the hour, to the week when your money is going to run out, you don’t have time to just stop, breathe and actually set a new goal for yourself.”
People were less anxious and depressed, researchers also found, and could more easily pay for unexpected expenses, avoiding further debt: Prior to payments, only about one in four recipients could pay for sudden expense with cash. Now, more than half can.
Though researchers have not finished reviewing the data collected in the last year, they said that anecdotal evidence suggests that participants who were receiving payments were better prepared to handle the financial fallout of the pandemic.
“We essentially have two experiments,” said Dr. Stacia West of the University of Tennessee, one of the study’s lead researchers. “An experiment that happened when the economy was somewhat normal yet still not working for most people, and then when during COVID when the economy quit working for nearly everyone.”
“The fact that folks went in (to the pandemic) in a much stronger position, I think bodes really well for the ways in which cash can really alleviate chronic strain that shows up in the body,” Baker added.
No-strings-attached financial assistance program — also known as universal basic income — was once considered a radical idea, but has gained increased attention over the last couple years as a potential way to address wealth inequality and reimagine government benefits.
A major campaign platform of former Democratic presidential candidate Andrew Yang, there are now several pilot programs running across the country and state, such as an 800-person pilot program in Compton that began last fall. COVID-19 stimulus checks from the federal government to Americans over the past year have also further normalized the idea of direct aid to residents.
The Stockton recipients — full-time workers, stay-at-home caretakers, disabled individuals, students — overwhelmingly are spending the money on basic needs to feed, clothe and house themselves, researchers found. Of all the payments, about 37% went to food; 22% went to other merchandise like clothes, shoes, home goods, and items from discount and dollar stores; 11% went to utilities, and 10% went to auto costs. Less than 1% was spent on alcohol and/or tobacco.
“The second thing I hope people take away from this is that these outdated, antiquated, racist tropes we have about why people are struggling, about why people are poor, about economic insecurity, are just put to bed,” Tubbs said.
In the Sacramento region, nonprofits and local governments have already poured millions into direct payment programs to help struggling residents pay rent, take off work when sick, and otherwise weather the pandemic.
And a Sacramento-based direct-payment program similar to Stockton’s model is already in the works. Local nonprofit United Way California Capital Region hopes to get a similar program off the ground called a Community Independence Initiative, sending payments to 100 families in the Sacramento region by the end of this year.
It will use a model called the Family Independence Initiative that was created by an Oakland organization and has been implemented in several cities. There have been promising results: On average, participating families increased their monthly income by 22%, and decreased their use of government assistance like food stamps by 42% after two years.
“For so long, anti-poverty efforts have relied on case management, ‘Go to this government agency to get financial literacy or job training,’ ” said United Way California Capital Region CEO Stephanie Bray. “FII is different. You’re accountable to yourself and your social network. There’s no case manager telling you how to use those dollars. The goal of FII is, trust families, because they know what they need and the data bares that out.”
United Way California Capital Region has thus far raised $200,000 for the program, and is looking to raise another $700,000, Bray said. Though the nonprofit had been in talks with the city of Sacramento prior to the pandemic, neither the county nor the city are involved as of now.
The need in Sacramento is acute, Bray said. Nearly 1 in 6 live in poverty in Sacramento County, and unemployment has tripled in the last year. Many are working second and third jobs, struggling to save for a better car, or better place to live, or to pay for a class to secure new skills, Bray said.
“If we can see the same outcomes they’ve seen in Stockton and in other FII communities around the country, that would be extraordinary,” Bray said.
This story was originally published March 4, 2021 at 9:54 AM with the headline "Stockton gave people $500 a month. A similar program could come to Sacramento."